You started your own insurance agency to be your own boss, to do the job right, and to help people. And, you expected a better income as the owner of an insurance agency as opposed to being an employee. You may work with State Farm, Allstate, or another company and just sell their products. Or, you may be an independent insurance agent providing a range of products and services from a wide variety of insurance carriers. Either way, you would like to see the financial rewards for you work in a healthy insurance agency owner salary that is higher than the insurance agent salary you used to bring home. And, you would like to see you insurance agency owner income include a routine profit. Here are three steps toward better insurance agency profitability.
The formula for profit in any business is to increase the amount of business you do at a good rate of return and keep costs under control. Many insurance agencies have lots of clients but that does not necessarily ensure your insurance agency’s profitability. You need business that is profitable and you need to control costs. That requires solid bookkeeping.
The first of our three steps toward better insurance agency profitability is outsourcing your bookkeeping. Keeping the books in an insurance agency is more than just tallying up the numbers and peeking at the bottom line to see if you made any money this month. Rather it is about giving you a clear idea of your cash flow, finding the hidden costs that are robbing you of profits, and helping you decide which parts of your business are driving your profits and which parts of your business are merely soaking up your valuable time and resources. At Exigo Business Solutions in the Kansas City area, we know that when you outsource your bookkeeping it can pay for itself in cost savings, more profitable business decisions, and a disciplined approach to your finances.
As the top accounting firm in the Kansas City area, we help many small businesses (including insurance agencies) make better sense of their business and make more profitable decisions regarding their finances. When we “do your books” we provide custom reports to show where the strengths and weaknesses of your business are. When necessary, we use “business intelligence” software like Microsoft Power BI to dig deeper into your finances and find optimal solutions to nagging business problems.
Use your bookkeeping to improve your business and your profits and not just to get ready for paying taxes.
The second of our three steps toward better insurance agency profitability is a change in how you do your books. Insurance agents are “take charge” people. They know their business, know their clients, and choose the right insurance policies the match the precise needs of the folks they serve. Then there comes the issue of profitability and insurance agency owners have to worry about profit. This does not have to be the case!
At Exigo Business Solutions we teach our insurance agency clients how to use the Profit First method of keeping their books and instilling discipline in their finances. Profit First falls into the category of things in life where making a few simple changes can result in huge benefits.
The change the Profit First makes is in changing the bank balance method of tallying up the books.
Income minus expenses equals profits is how it has always been. But, with Profit First, we use this.
Income minus profit equals expenses!
This system uses the same numbers to start with. It allocates money twice a month to profit, taxes, operating expenses, and owner’s pay. This disciplined approach guarantees a routine profit. It puts money in separate bank accounts for the insurance agency owner’s salary and insurance agency profit. And, it puts expenses in their proper place. The proper place for expenses in the bookkeeping formula is that of an item that you can control and not something that controls your insurance agency profits.
When you use Profit First in your insurance agency business, you will use those custom reports and business intelligence solutions from your outsourced bookkeeping to make the necessary decisions to reduce expenses, improve budgeting, manage cash flow, and routinely take a profit. Contact us at your convenience for more information about how Profit First can work for your business.
You may have a lot of business at your insurance agency and you may wish you had more. The third of our three steps toward better insurance agency profits is effective internet marketing.
The important term here is SEO: It has to do with having a website, your presence on social media, and getting found in a simple local search. A potential client may “Google” a term such as “insurance agency Kansas City area,” or more specifically, “insurance agent Country Club Plaza.” You want to be at the top of the list of their search results. Read our article, What Is SEO and Why Does Your Website Need It?
This is another area where little changes can make big differences. “Local SEO” has to do with getting listed on searches in your area which is what an insurance agency wants. This involves getting listed on Google Maps which tons of people use when searching for things they need. And, it has to do with being on the “Google Widget” that lists three businesses when you are looking for “insurance agent Kansas City.”
You should have good content on your website as well as having all of the information needed to contact you. And, you need to have your site SEO optimized to improve your chances of being on the first page of a good search. If you would like help in this matter, contact us today.
At Exigo Business Solutions, optimizing our clients’ profits is not only our business but our passion as well. We use bookkeeping as a tool to find the facts and make the changes necessary for better profits for your business. Contact us and schedule your first profit maximizer session today.