What if we told you that companies with written business plans have 100% higher profits, on average, than other companies? So says a survey conducted by Arthur Andersen’s Enterprise Group in conjunction with National Small Business United, a Washington, D.C. trade group. Yet only 28% of the companies surveyed had written strategic business plans.

A recent IIAA Best Practices Study cites business planning as a key component to the success of agencies regardless of size. Smaller agencies (less than $500,000 in revenues) admit that planning isn’t one of their core strengths. But according to the Best Practices Study the top agencies do engage in annual business planning, although often using a fairly informal, simplified approach. However, the larger the agency, the greater the recognition that "success without a well developed plan is virtually unthinkable." Some companies won’t even consider a new agency appointment unless there’s a business planning process in place.

If you view planning as a waste of time, compare operating your business with climbing a mountain. When climbers set out, they never know for sure what to expect. The weather can change suddenly. Equipment can break or be lost. Climbers fall and injure themselves. Planning for potential problems allows climbers to deal with setbacks and still reach their objective. On the other hand, not planning can be disastrous.

The more carefully you plan, the more likely you’ll anticipate problems that might interfere with your objectives. Sure, there are a lot of things you can’t control. But a well-written, well-executed strategic plan can mean the difference between reacting to what the future might hold and designing your own future.

Business plans can be simple or complex. The key is to remember that planning is a process, not a one-time event. Some of the other Business Planning Best Practices cited in the 2001 Best Practices Study include incorporating feedback from all levels of the agency, communicating the plan throughout the organization, including key carrier partners in the planning process, and using third-party plan facilitators.

Working with successful agencies, we’ve developed a four-phase process for turning your vision into reality.

PHASE I — ASSESSMENT

Having a clear picture of who you are, where you are, and how you got there is a critical first step in any planning process.

Start with the agency’s history. This gives a sense of perspective and sets the tone for moving from the past to the future.

Think strategically about why the agency is in business. Understanding who you are will help you focus on the most important areas. Give some thought to who you are and what you want to be. Develop a mission statement that conveys this vision. What’s your purpose, or vision, for the organization? The mission should represent the vision of company leadership. Potential items to include in a mission statement include:

• Who are your customers?
• What do you stand for?
• Where do you want to go as a business organization?
• What do you do best?
• Where have you been (historical analysis) and where do you want to go (mission)?

Share your mission with everyone your business touches: your clients, your companies, and your employees.

Create a baseline to measure progress by performing an objective evaluation of your current situation. A good way to assess your business is to compare your results with industry averages. But be sure you understand why your results might be better — or worse — than average. More importantly, make sure your baseline allows you to compare yourself with yourself. Be sure to analyze quality as well as quantity. Measure your "SWOT": strengths, weaknesses, opportunities, and threats.

Strengths are those items that you rely on to compete and succeed.

Weaknesses mean trouble for your agency, if not today then in the future. Ideally, you want to eliminate weaknesses. Find ways to compensate for them as you develop your plan.

Opportunities are the realistic options you can exploit or capitalize on that are consistent with your agency’s culture, mission, and financial and human resources.

Threats are the outside forces or events that could harm your business substantially. Develop strategies and find ways to tackle them or to turn them into opportunities.

Look at every area of your agency: people, facilities, markets, technology, profitability, productivity, and marketing territory. Examine such environmental factors as the economy and legislative climate. Solicit input from your employees, your customers, and your companies. Use formal or informal surveys.

PHASE II — DEVELOPMENT

Identify your critical success factors. Many plans fail because they attempt to address too many issues. Before you get too far into the development of goals and strategies, be sure you know what’s really important. Focus on those key items that are imperative to fulfilling your vision or mission. Select the three to five that are the most important to achieving your mission. This almost invariably leads to success.

Examples of possible critical success factors:

• Growth
• Financial management
• Quality customer service
• Communications
• Carrier relationships
• Perpetuation
• Employee development
• Technology utilization

Develop key goals that support the mission and drive the plan by identifying your agency’s overall targets. Set goals to capitalize on strengths and opportunities or to overcome threats and weaknesses. Make them broad enough to resist substantial modification from year to year. For example:

Grow in both commission income and number of accounts at a rate that exceeds the industry average by at least 5%.

Align your plan with the needs of your major stakeholders. Successful plans meet the needs of the business and everyone with whom it comes into contact. Before you finalize your plan you’ll want to make sure it meets the needs of your major stakeholders, including customers, employees, companies, and key vendors.

PHASE III — IMPLEMENTATION

Develop a detailed game plan. A game plan usually has two stages: objectives and action steps. Objectives clearly state what you want to accomplish. Make them specific, measurable, and include a time limit. Each objective should have one or more Action Steps that describe the individual tasks necessary to meet the objective. They should include the people responsible, the time frame, and a clear description of the tasks. Following is a sample:

Game Plan: Grow in both commission income and number of accounts at a rate that exceeds the industry average by at least 5%.

Objective 1: Increase Commercial Lines clients by 25 new customers by the end of the year.

Action steps:

• Jim will work with our carriers to identify two new target markets by the end of the first quarter.

• Pat will prepare a marketing program for these target markets and contact 100 new prospects by the end of the second quarter.

• Each of the three Commercial Lines producers will prepare 60 new submissions by December 1, which will result in 25 new customers by the end of the first year.

PHASE IV — MONITORING

Monitoring — systematic tracking of the plan’s progress — helps you keep the plan on track. Identify and monitor critical portions of each stage of the planning process. Establish follow-up methods to ensure that your plan remains a living, viable document. Review your short-range and long-range plan on a regular basis.

Remember: Determine what to measure; identify where and how to obtain the information; analyze results; and make any necessary adjustments.

Step 2: Develop your plan. Involve your employees; they have valuable input and will be critical for implementation. Take managers and key employees off site to provide the right environment to focus on past accomplishments and future goals. Be sure your plan includes the detailed objectives and action plans that will help you achieve your goals.

Step 3: Implement your plan. Communicate your plan to everyone so they can be an active part of it. The more your whole organization is involved in implementation, the greater the chance for success.

Step 4: Monitor progress. Periodically review the progress you’ve made in reaching your objectives. And share the results! Adjust your plan as needed, building on successes and making changes when what you’re doing isn’t working as well as you’d hoped.

KISS! Keep It Simple — at least to start. If this is your first time, or even if you’ve been planning for years, consider using an independent facilitator to help you with the assessment and an off-site meeting to pull your plan together. That’s what the best of the Best Practices agencies do.