The hard reality is the insurance agency business model is fairly simple. You sell and service with a modest back office infrastructure. The business does not require a great deal of capital and you have the benefit of a relatively robust renewal commission stream although it requires a good service platform. You are subject to external forces beyond your control—your need to persevere through the economic collapse in the midst of a soft property-casualty insurance presented a major challenge. Despite the simple business model, executing the model is your biggest challenge.

What can you do to affect the execution portion of the equation?

Although it may seem unusual, focus initially on the subjective—the motivators and attitudes that frame your activity, the “why you do” rather than the “what you do.”

• Run your agency like a business, with a fundamental focus on the critical measures of business success: growth and profitability. And never let the firm act as an extension of your lifestyle.
• Get tough or perish. Focus on excellence and never tolerate mediocrity. Continually improve process continuously. Aspire to be more than good—be great.
• Build an organization, with clear lines of responsibility and authority, and a staff that understands your mission and vision. Communicate. Not everyone wants to drive the bus, but they certainly want to know where it is going.

With the business drivers in place, focus on two key areas:

1. Build a solid business plan and budget to manage growth and direction of the firm. Understand the adage that if you don't know where you are going, you'll be lost when you get there. You generally should have a limited number of initiatives that are both achievable and challenging. Many firms make the mistake of attempting too much and accomplishing too little. The budget is part road map and part scorecard. Understand the additional adage: If you can't measure it, you can't manage it.
2. Build and maintain a capital base. This is not negotiable. If you don't have a capital base, you will not survive. Working capital equal to 30 days' cash expenses is the bare minimum, with 60 to 90 days preferred. This will provide the cushion to allow you to weather future storms. Equally if not more important, a capital base provides the foundation to take advantage of growth opportunities, whether it's a producer or an acquisition.

Although the above concepts are not the magical elixir to be successful, embracing these ideas will be helpful on the execution side.