Insurance agencies face a number of obstacles. Many obstacles are the same from year to year; however, current economic conditions make growth even more contentious. In addition, uncertainty with our government and economy can give new business owners heartburn.
Small businesses aren’t likely to get much encouragement from the economy in the near future. The economy is expected to grow by no more than 3 percent in 2013, according to the Federal Reserve. Small businesses are still the engine of the U.S. economy, and entrepreneurs still constitute the vast majority of employers in the US. There are a few common issues we have found that face every new business and we wanted to share these with you. You will notice we left healthcare off the list. While healthcare is a big concern, most small businesses (fewer than 50 employees) will not be required to offer healthcare to employees. Check with your agent for specifics.
- Cash flow; never forget cash is king- If capital expenditures or expenses are draining your cash, you won’t be in business long. Make sure you store as much cash as possible and be adequately capitalized. Look to professionals for help whenever you can. Your team should include a good attorney, accountant, and insurance agent.
- Failure to outsource- Many business owners think they can do it all. The reality is you should focus on what you do best, generate revenue, handle client relationships, and manage operations. Outsourcing services like payroll, accounting, and HR should be considered.
- Skilled and professional workers- It really doesn’t matter what business you’re in, finding the right people is the most important and difficult job for a new business.
- Poor marketing plan- One of the most important elements of a successful business plan is a well-researched marketing plan. A clear marketing strategy is a necessity for any business. Marketing informs prospective clients what products you sell and how you sell them. Word of mouth is great, but it doesn’t constitute a marketing plan. Your marketing plan will help create your brand. A yellow page listing is not considered marketing in 2013.
- Technology- There isn’t any question that technology can help you grow and manage your new business. From client management to social media, technology needs to be a central part of every business.
Things are never easy for a small-business owner. No matter how hard you try, there are always problems to solve and fires to put out. At least you can take comfort in knowing you’re not alone. Now get out there and win the day!
We are a Texas based M&A Acquisition and Advisory practice focused on the Independent P&C Insurance Market. Whether you are looking to retire, seeking perpetuation planning or simply exploring options, let’s talk.
Our parent company, Davidson Stewart Morelock, has been an independent P&C agency since 2008, with our principals offering over 50 years combined experience in the insurance industry. We have successfully worked with a number of agencies creating mutually beneficial solutions for owners, partners and buyers.