Your insurance agency is only as good as your ability to adapt. You don’t want to be stuck with a business that isn’t serving your customers, or worse yet, one that isn't making enough money to stay open. It's important to have a plan in place so that your business will survive even during hard times. This article will outline some of the best ways to keep your insurance agency recession-proof.
1. Know your numbers
The first step in recession-proofing your agency is knowing your numbers. You need to know where you stand right now, how much cash you have on hand, and what kind of margins you're making for yourself.
As a business owner, it's crucial to be aware of the numbers. If you don't know how much money you're making and spending, it can be hard to make informed decisions about your business.
Specifically, being mindful of the following information and formulating strategies will protect your insurance agency during a recession:
- Your cash flow amount—how much money do you have available to pay expenses?
- Your money reserves—how much money can you pull from savings or investments in case things take a turn for the worse?
- Your course of action if your business decreases significantly—what steps should be taken when fewer customers come through the door or you generate fewer leads?
Recommended Reading: How To Create A Business Budget That Will Keep You Accountable
2. Diversify your business
As a business owner, you should be diversifying your revenue stream. This is especially important during a recession. Diversification means not being dependent on one source of income. For example, if your agency primarily depends on P&C sales, then consider training on how to sell other products such as disability insurance or life insurance. When times get tough, you will appreciate having multiple revenue sources to fall back on as you weather the storm.
Diversifying your insurance agency means making sure that you have more than one product or service offering to help support your bottom line. You should also consider adding new services in addition to products and services already offered by your agency when recessions hit so that clients are still able to do business with you during downturns in their industry or economy at large.
3. Maximize social media
It's time to get serious about using social media as part of your marketing strategy. It's free, easy to use and has no limit on the reach you can achieve.
Here are a few tips for getting started:
- Make sure you have an account for each platform: Facebook, Twitter, Instagram, TikTok, and LinkedIn.
- Use hashtags when posting content about your agency so that others can easily find it.
- Post frequently enough so that people don't forget about you or miss something important when they're looking at their feed.
- Share helpful advice on insurance-related topics to build trust with potential clients.
4. Keep expenses down
In a recessionary environment, the cost of doing business is going to be much higher than it was in a more stable economy. Keeping your insurance agency expenses down is one of the best ways to ensure that you'll be able to weather any economic storm.
Here are some simple ways you can reduce costs:
- Reduce or eliminate travel expenses by taking advantage of technology that allows you to conduct meetings via phone or video conference software.
- Use paperless billing wherever possible when dealing with clients and vendors. This will save on postage costs as well as allow you to cut back on office supplies like envelopes.
- Use email and email newsletters to communicate with customers whenever possible to save money on printing costs while still reaching your ideal audience.
5. Get the right solution for your agency’s finances
We know you have a lot on your plate as an insurance agent. You’re working hard to grow your business, and you need a partner that can help you set goals and meet them. You need a trusted partner that not only provides you with your financials but can also train you on how to use them and gives you the tools to plan and forecast so you can meet your goals.
There are all sorts of accounting and tax solutions out there, but not all of them are going to be right for your insurance agency, or even most agencies. You need a way to manage your agency's finances that is easy-to-use and adaptable to your needs as an insurance agent. The wrong solution will mean spending more time and money than necessary.
Recommended Reading: What Every Insurance Agent Needs to Easily Build a Budget and Forecast
Club Capital Is Here To Help
For the past 5 years, Club Capital has helped insurance agents better manage their agency's finances through best-in-class monthly accounting, CFO, and tax services. Schedule a demo today!