August 7, 2019

Ensure Your Insurance Agency Profitability

Insurance Agency
Ronald B. Allen

As an insurance agency, you help insure homes, automobiles, business assets, life, and health. But, who insures the insurance agency? While you are connecting a client to the right insurer, advising the right degree of coverage, and helping protect folks against catastrophic loss, how are you protecting your own business? At Exigo Business Solutions we work, like you do, to help our clients grow their businesses and establish business procedures that result in profits starting with the first money to come in the door. How is that? We train our clients to use a system called Profit First that turns standard bank balance bookkeeping on its head and results in better budgeting, control of cash flow, and profits. This is how your insurance agency can ensure your own profitability while you help other insure their assets, health, and lives.

Profit First

So, just what is Profit First and how does it help you maximize profits right off the bat? The Profit First method is a way of looking at your finances in such a way as to find actionable information and fix problems. Human nature is such that businesses tend to have issues with budgeting and cash flow management due to an effect called Parkinson’s Law. This is the tendency for workers to take up all of the time allowed in order to complete any given task. And, its corollary is that any budgeted project will tend to use up all money that was allocated before the task is completed.

Unfortunately, the usual response by the owner of a small business is to take on too many tasks using the rationale that if you want a job done right you have to do it yourself! And when the owner of the insurance agency or any other small business becomes exhausted by trying to handle every detail, he or she simply gives up and extends the time limits for jobs and increases their budgets. And, of course, there go the profits!

When you use the Profit First method you attack the problems of Parkinson’s Law at the source. You start by changing from bank balance bookkeeping method the Profit First approach.

So, you no longer do Income minus Expenses = Profit. You do Income minus Profit = Expenses. And, you set up a bank account into which you allocate profits on the tenth and twenty-fifth of every month.

Since the old adage that money does not grow on trees is true, how is it that you are not making a profit now and then by simply changing the bookkeeping formula you will bank a profit twice a month?

When we at Exigo Business Solutions teach you how to use Profit First, we also encourage you to use effective bookkeeping software such as QuickBooks and offer our QuickBooks ProAdvisor Services. With the best bookkeeping system for a small business, an insurance agency can ensure its own profitability by generating insightful and actionable reports. How does this work?

Making the Changes That Guarantee Success and Profits

When the insurance agency or any small business has insightful and actionable reports in hand, the days of “doing the job yourself” and “giving up” are gone. Profit First businesses take their profit up front on the tenth and twenty-fifth. They use insightful accounting tools to see the problems in their businesses and with improved budgeting and cash flow management, free up more and more money that was previously wasted in labor and expenses due to the effect of Parkinson’s Law.

The cure for the ills inflicted by Parkinson’s Law is to pay strict attention to the financial details of your business and make necessary changes. When there is only so much money to spend to run the business, then there have to be cuts in various budgets. Then, when Parkinson’s Law reasserts itself, there will be less money in a given budget to be spent and less time allowed for employees to dawdle on a project until the last minute. With better budgeting, the insurance agency or any small business can take better control of expenses. Then, the owner will have enough time to devote to specific issues that require his or her attention without being exhausted or giving up.

When your insurance agency devotes itself to helping people insure their lives, health, and property, you need to work with the Profit First experts at Exigo Business Solutions to protect your business and your profits. For more information about Profit First contact us today.

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