11 Ways to INVEST (not SPEND)
Your Agency Profit Sharing Check
It will soon be contingency season! We hope you enjoyed
a great 2015 and will be rewarded for growth and profitable
business. Contingency bonuses are based on achieving
predetermined premium volumes, loss ratios and other
objectives – things you’ve worked hard to accomplish. Don’t
waste these dollars! Thoughtful use of these funds can make
a true difference in your agency’s growth and value.
When your check comes in, take a minute to deliberately
plan how to INVEST the money. Here are a few ideas:
6. Develop a new marketing initiative. Are there updated
marketing efforts you should be using to increase
production? If you don’t have an agency newsletter,
consider developing one. Have you updated your website?
If not, invest the dollars to create a better user experience.
Can customers find you online? Search marketing is one of
the best ways to develop a presence online, driving leads in
your door. Purchasing lead lists, developing an educational
blog and local press are also valuable to agency growth.
1. Hire a producer. It may be time to hire that new
producer you’ve been talking about. You can instantly add
to your profit sharing production by hiring a producer with
an established book of business. Hiring a producer who is
driven to build a book is also a consideration. The bottom
line is it’s never too early to start building for the future and
with, a check in hand, now could be the time.
7. Pay down debt. Look at your current debt situation and
determine where you could use this money to pay existing
debt.
2. Dry powder for an acquisition. Many times an agency
or book of business can be purchased for little or no down
payment. A buyer that has 5% of the purchase price for a
cash down payment can improve the interest rate on the
loan, and exhibits to the seller that he or she is “acquisition
ready.”
3. Invest in legal services. If you have been procrastinating
a buy-sell agreement or other corporate housekeeping
issues, now is the time to spend a few bucks to address
this. Providing a formal process will drive an organized
perpetuation plan for an owner who is ready to move on.
4. Consider employee education. Why not earmark some
money for employee education courses? Investing in your
employees’ continued growth makes them feel valued and
can lead to strong morale in your staff.
8. Stash a little cash. When you have extra profit, it’s good
to think about putting money in your savings account.
Good agencies typically have a working capital cushion. It
is recommended that you have three months of business
operating expenses as a cash reserve.
9. Don’t forget taxes. Set aside the money now that you will
need to send to Uncle Sam in the spring.
10. Upgrade technology. Invest in tools that make running
your agency more efficient. As your products become
more complex, upgrade to accommodate. This includes
new billing systems and invoices, updated quoting systems,
and even mobile-responsive websites. This will allow your
agency to run smoother and your customer interaction to
be more efficient.
11. Fund a personal goal. A vacation, new vehicle, college
expenses – all of these are real life needs. While planning
and saving are important, you should also be rewarded
for your hard work. Just try to ration those profit sharing
funds to also advance your long term wealth.
5. Offer employee bonuses. Many agency owners share a
little of the pot with key employees. If you have not given
raises, a bonus may be appropriate.
|MARCH - APRIL 2016| KANSAS INSURANCE AGENT & BROKER
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