Any director of a broker who is in charge of strategy, whether it be overall business, marketing or IT, has to be an avid reader of newspapers, trade press and specialist publications to ensure the strategies are in line with current trends and are adjusted according to circumstances. Brokers who operate in niche areas have to keep informed of all the developments in that sector if they want to stay ahead. The secret of success is often the ability to assimilate information and spot opportunities, threats and implications that may arise from it.

Internet sales still low level
Take the Internet, for example. Brokers know they need to be involved but may not grasp the realities without regular, in-depth reading of the financial and trade press. The money being invested in IT development and marketing is enormous but most operations are trading at a loss and little information is really available about real performance. Public information is normally about the number of hits, not sales. The former makes impressive reading, the latter probably not.

Boo.com, a high-profile expensive retail site, recently disclosed that its sales-to-hit rate was 2%, and this was during a sale in which it reduced prices by 40%. Thinking strategists may ponder that if attractive retail sites have this low success rate, what is the take-up rate of a dull subject like general insurance which is not an impulse purchase but bought once a year? Little wonder that the performance figures of current insurance sites is kept very quiet. One suspects sales are low and it may take many years to recover investments.

The Boo.com data may well influence a broker developing an Internet strategy, causing a rethink about the level of an investment and the potential payback.

Recent developments
There are many recent examples of information affecting strategies, such as: steady withdrawal of legal aid providing an opportunity for the sale of legal expenses before and after the event; the Government's desire to reduce jerry-building offering scope for warranty/defects cover; the legal problems affecting credit hire/repair offering opportunities for different approaches to this issue; the withdrawal of the solicitors' compulsory PI scheme opening up new markets; and GISC developments having an impact on every broker's strategies.

These are major issues but every day one little gem of information can turn into an opportunity.

This article was prompted by a publication by Lloyd's/TSB called Business in Britain, a survey of business opinions and trends which is published twice a year. It surveys companies with turnovers between £1 million and £25m which is the core of many of the larger provincial brokers market. The latest one, published in January, gives an upbeat report on business confidence and if confidence is improving then brokers prospects improve too.

When reading it, I was struck by how much information was of value to the strategic-thinking director and how it should influence thinking. Set out are some of the major points and questions brokers need to ask themselves.

1. Growth
- 46% of firms in the survey report higher sales in the last six months with only 20% lower ones. This is the best position for some years and is coupled with the news that 43% of firms have higher orders.

Questions
- Should I increase my forecast for organic growth?
- How do I make sure client growth come through in additional revenue for me?
- If my clients are busy fulfilling orders, will they be less concerned with the insurance costs?
- Can I carry increased rates?
- Do I need to move to twice-yearly reviews?

2. Exports
In spite of the strong pound, 33% of firms report higher export orders in the second half of 1999. 24% of companies are issuing invoices in euros and 36% are receiving invoices in this currency.

Questions
- What is my marine insurance capability?
- Is it going elsewhere providing opportunities to my competitors?
- Have I really thought through the impact of the euro on my systems and processors?
- Do I need to move into the credit insurance market?

3. Prices, profits and cash-flow
Prices are still not rising, 17% of firms report increases but 21% of firms reported lower ones. 4% more firms are reporting lower profits than higher ones. Companies with cash-flow pressures have increased to 24% mainly because of late payment by suppliers.

Questions
- Should I tighten up my credit control procedures?
- Should I promote premium financing more to reduce cash-flow pressure for my clients?
- Do I need to segment my clients and have a differing approach to those there profits are improving to those where they are declining?

4. Use of the Internet
50% of middle market firms now advertise on the Internet with half taking orders on line.

Questions
- Do I know enough about the insurance implications of Internet trading?
- Am I giving my clients the correct advice or am I open to competition?
- Is my own Internet strategy compatible with that of my client?

5. Increased employment/investment
26% of firms expect to increase employment with only 14% expecting this to reduce. The number of firms expecting to invest has improved.

Questions
- Will the retention of my employees be under pressure and do I need to review salaries?
- Will there be opportunities for extra covers such as advanced profits, construction risks etc.
- What are my capabilities here?

6. Performance varies between sectors
Manufacturing growth is still static. The star performers are transport and communication, hotels, leisure, business services and construction. Retail and wholesale, whilst growing, are less confident about the future.

Questions
- Am I over-exposed to the manufacturing sector?
- What is my knowledge of the growth sectors?
- Do I need to refocus on customer segments?
- Are these changes happening locally?
- Do I need to change if I am to remain a success?

7. Regional variations
London and the Thames Valley are the highest growth areas, followed by the South West and East. The South East is the lowest.

Questions
- Is my business strong in the right regions?
- Do I need to think about expansion or a presence in the growth areas?
- Should I plan for a realignment of resources?

There is little doubt that the increasing business confidence improves brokers' prospects and could provide real opportunities for organic growth and may create a climate for carrying increased premiums. This scenario can improve bottom line profits dramatically.

The message must be read voraciously, digest and think laterally on how information affects your business.

- Consultant Tony Cornell can be e-mailed at tony.cornell@talk21.com .