Successful Agencies Measure Things

Posted on 7/14/2010 by Everett

Now more than ever, you should be looking for ways to improve your agency’s performance.  A subtle, but powerful, first step is to begin to really get your hands around key metrics of your current operation.  Remember, having detailed knowledge of something is evidence that you care about it.

Whether it’s a valuation, merger or acquisition, or perpetuation planning, almost every one of our assignments begins with the gathering of data.  In this process, I’ve noticed some recurring themes:

    1.      Successful agencies have owners/executives/managers who set goals and measure things.

    2.      Almost every time we see neat financial statements and are able to get questions answered quickly, we see good performance.

    3.      Almost every time we see cluttered financial statements and are not able to get questions answered quickly, we see sub-par performance.

    4.      Successful agencies that measure things don’t let their management system dictate the data they can or can’t get their hands on.  Instead, they figure out what they want and then see if their system can give it to them.  If their system can’t, they figure out how to get it themselves.

By the way, we sort of don’t care what you’re measuring and I say “sort of” because we definitely have an opinion on the operating dials you should keep your eye on (for example, profit from your core operation, meaning before contingent commissions and other miscellaneous non-operating income).  As long as you’re getting good data, we’re confident you’ll make good decisions and, with that, begin to create the agency you envision. - EWS