Eureka is a word most of us spend our lives chasing. We brainstorm, we research, we stab in the dark; all the while hoping for that one eureka moment. That time when everything lines up and we we’re on to a winner.
Insurance agencies are always looking for the next great insurance strategy. Producers monitor trends in insurance, politics and business. They assess the market and look for opportunities. Every so often a producer will hit on a great idea. Unfortunately a great idea isn’t always the same thing as a great strategy.
Finding Great Ideas
Let’s imagine you’re the owner of a fairly successful agency. You’ve hit a glass ceiling in terms of revenue, but you feel you have the potential for a lot more growth. All you need is an idea. Then you spot something. A number of industry factors have come together and opened a potential opportunity for a new line in your location.
This opportunity could be hugely profitable, but it will take a lot of time and a lot of investment to achieve. You need to bring in new producers with more expertise in the line. The market demand that you expect will take two or three years to build, so you have a little time. However, you’ll have to start investing now.
You make the investment, you bring in three new producers and start planning for your profitable future. It will probably take two years for the demand to grow and another couple of years before you break even on the investment. If the demand grows the way you want it to you should return to your current profitability level after another year. Then, six or seven years from now, you’ll really start to reap the dividends of your great idea.
There’s a ‘But’ Coming…
The thing is, you’re fifty-nine years old. You had planned to retire at sixty-five. You should be starting to see profit just as you’re getting ready to retire. The potential in this idea is far greater than that. If only you were five years younger, you could make a huge profit on this idea.
It’s still a good idea, you could stay in the business longer, maybe retire at seventy. That way you can get more out of the sale. Would that really be worth five years of your retirement?
This is just one example of a great insurance strategy that just wouldn’t suit a particular agency. Age isn’t the only factor that can turn a great idea into a really bad insurance strategy. Risk, revenue, market conditions and staffing can all have the same effect. Make sure you don’t leave one of these factors out when you come up with your next great insurance strategy.
