If you don't know where you are going, you won't know when you have arrived at your destination. You may well get hopelessly lost or just keep going round in circles. This is why most people plan their journeys in advance.
A similar situation applies to insurance brokers. The insurance market is more complex than ever. Competition, niche segments, marketing options,
e-commerce, communications and financial and resource pressures all combine to make planning essential. Brokers cannot be all things to all people and must choose what activities to focus on.
The trend towards delegation and less hierarchical structures means there should now be stronger emphasis on formal planning and control.
Complex and unpredictable business environments make accurate budgeting more difficult and therefore more essential. A business plan covering short to medium-term issues with the three-year horizon is therefore essential for forward thinking brokers. This should be updated every year and reviewed quarterly at board level.
A business plan should have at least the following sections. Many of these may need to be divided into the separate lines of business or business units operated by the broker:
- an executive summary
- a brief business background and the sources of success to date
- the market and how it operates
- the competition
- the aims and market position of the business
- strengths, weaknesses, opportunities and threats and related solutions,
- tactics and strategies
- existing client strategies and tactics
- new business development, marketing strategy and tactics
- IT strategy
- HR strategy
- financial projections, budgets and targets
- staff and human talent management
- key performance indicators.
It is also important that investment plans are fully set out, funded and understood. This will cover such things as mergers and acquisitions, marketing, IT and staff development. A plan has to allow for investment for the future if the business is to thrive and prosper.
It is helpful if individual business sectors within a brokerage, develop their own business plan and these are then merged into a broader corporate plan.
It is vital that the agreed plans are clearly and openly communicated to all members of staff. They must buy into the plan and have a common vision as to what the company intends to achieve.
Finally, there is not a great deal of use producing a plan, and then putting it away in a drawer to gather dust until the year is up. It is important that progress on the plan is regularly reviewed and forecasts are either confirmed or amended according to progress.
Everyone who contributes to the plan must be made accountable for the results and provide updates as to how performance is going.
Monitoring of key performance indicators is vital as a way of ensuring the business is on the right road to arrive at the correct destination at the scheduled line.
This article is taken from the CGU's Business Intelligence report, The Cutting Edge. Copies are available from your local CGU branch.