Winning Strategies

Quick-hit strategies for a tough economy

A return to a back-to-basics philosophy can spur success

By Larry Linne

Few of us have experienced an economy like the present one. Many people—business owners especially—are increasingly anxious about retaining profitability when business is down.

Current economic conditions remind me of my football past. In many ways, the insurance business and football have a lot in common. For example, both require people to do a few things very well by focusing on the most important aspects of the game. Typically, that requires getting back to the basics.

When I was a rookie with the New England Patriots, Head Coach Raymond Berry spent 15 minutes of my first team meeting showing us how to hold a football. I couldn’t believe it! After participating in sports for so many years and reaching this level of success, why was I (and about 100 other top players) being told how to hold a football? Of course, Berry’s message was the importance of focusing on the basics as well as discipline if we wanted to win a Super Bowl.

In the last few years, a surprising number of businesses have closed their doors, including international corporations. Whether you are the CEO of a large company or the principal of an independent insurance agency, Berry’s philosophy applies to you. To win, we must get back to the basics. Here are some of those basics that any agency can focus on in tough economic times:

• Feed the tigers. Usually a few people in an organization generate the greatest return. They’re the ones who sell the most and produce the greatest profits. In tough times, it’s important to “feed” these people if you know them to be your biggest profit centers. In other words, whether they’re producers or managers, give them the resources and support they need to be successful. They’re the ones who will get you through the current slump.

• Forget the past. Just because you’ve had a great past doesn’t guarantee that you’ll be in business tomorrow, as our present economy illustrates. We have to focus on what we’re doing right now and what we’re going to do in the future that will differentiate us from the competition, bring value to our clients and make us profitable.

• Clarify your vision. It’s time to throw out the vision statements and inspirational posters because people don’t attach to that. These days, you have to rally your people around something worth following. Otherwise, why would they want to stay with you? What will motivate them to be successful?

People will attach to another kind of vision—something they can see. Create bullet points that show what your agency will look like a year from now and three to five years from now. If your employees were to close their eyes, what would they see about your business? What do you want them to see?

• Manage to a margin. You didn’t get in business to make banks, producers and insurance companies wealthy. If you’re an owner, you deserve to make a profit. Therefore, you have to make your profit a non-negotiable item. Sacrifice in other areas until you’re profitable.

For example, if you’re not making money, then don’t sponsor that annual golf tournament, buy nonessential equipment or expand your staff. Become profitable first, then you can spend money. But don’t start with those “extra” expenses and put profits last. You wouldn’t stop paying your rent, would you? Then don’t stop paying yourself.

• Kill non-ROI expenses. This relates to my previous point about managing to a margin. Get rid of all unprofitable events, ineffective marketing and non-charitable donations, to name a few. To do so, you must carefully evaluate every aspect of your business. Nothing is sacred! Look at everything and ask yourself, “Is this giving me a return on my investment or is it bringing value to our clients?” If it’s breaking even or losing money, get rid of it.

• Use the bad economy as your external excuse. Independent agencies and banks are major targets for those looking for donations. Typical requests come in the form of support for golf tournaments and social events that don’t bring your business value and are not really generating good will in the community. Use the economy as your excuse. In some cases, you may even want to explain how the economy has affected your business and, therefore, your decision not to donate at this time. Show fiscal discipline. Most people not only will understand, they’ll respect you for it.

• Don’t use the economy as an internal excuse. As a leader, you don’t want to walk around with a long face, telling your employees how bad the economy is, how much the agency is struggling, and so on. Language drives culture. If your language is negative regarding the economy and business, your employees will act on that negativity. “Oh poor us” becomes a reality that prompts employees to become lethargic, make bad decisions, be less motivated, make excuses and do less to assist your clients.

Conversely, see how your staff responds when you give them a pep talk. Tell them that there are always winners in any economy and that your agency chooses to be a winner! Emphasize the positive things in the marketplace and the internal and external opportunities that exist. Be upbeat and you’ll motivate your staff. Even if your external message acknowledges the bad economy, your internal message should be, “Let’s take advantage of this! Let’s capitalize on the opportunities!” Don’t be a naysayer.

• Conserve cash and buy low. In a tough economy, you don’t want to be living on credit. You want to call in your receivables, pay off debt and be positioned to buy smart. What might you want to buy? A bad economy and its accompanying layoffs mean that there is great talent available in the marketplace. If you have the cash, you might be able to get some exceptional new hires or acquire other businesses—at a better price. Just don’t put yourself in a credit or debt position. Start now by conserving cash and building your reserves so you can take advantage of opportunities as they arise.

• Set goals. One of the greatest and most consistent failures we see in this business is the lack of goals. You must have clarity to know what you’re working toward. Any time you’re in a difficult economic environment, the discipline of working toward something specific will keep you focused, make you purposeful and increase your chances of success.

If, on the other hand, you take the random approach and just show up every day to see what happens, you might as well be running a marathon without knowing the route or the location of the finish line. It’s only when you know where you’re headed that you can establish the best path to get there.

Sitkins International recently completed a survey of the top producers in our industry, including our own clients. We talked to 26 producers who were well above $1 million in annual production, and all of them had clear goals. The producers who were less successful set ambiguous goals on a sporadic basis and weren’t hitting the highest numbers.

It’s an end-in-mind mentality. If you look at the end of this year, what is it that you want to accomplish? Don’t just say you’re going to work hard and hope for the best. When you see what you’re working toward, you’ll get there. But it has to be tangible.

• Increase discipline. Once you’ve set your goals, you must be disciplined in order to achieve them. You must have a plan and remain focused. Many people use planning execution models that provide a step-by-step guide to reaching goals. It starts with establishing priorities and creating daily and weekly schedules. These are just a few of the execution items you must address if you hope to succeed in a challenging economy.

• Give more. We’re blessed in this business because there are so many opportunities for profitability. At the same time, because the number of people in need continues to increase, we also have the opportunity to make a difference in the world through charitable donations. Keep in mind that this is not the same as giving to self-serving, non-charitable organizations. While they have their place, I believe there are more pressing needs right now.

To me, giving to charity is non-optional. It’s a social responsibility that is of the utmost importance. If you do things for others, it comes back and pays you back, personally and professionally. Look for opportunities to give back to those in need. Cut out the non-charitable donations, but continue giving to people in real need.

• Get in shape. Stop your moaning and groaning! You need more energy, a sharper mind and more oxygen to the brain to feel good about yourself and be confident. All of that comes from better nutrition and better health. A healthier person is going to be sharper and in a better position to win the game, especially in a tough economic environment like we face today.

• Have fun! Work is not your life. It may consume a lot of it, but it’s not what living is all about. You have to look for opportunities to create a fun environment for yourself, your employees and your organization. Otherwise, you’ll have a hard time retaining your best people. Take time to play and discover new ways to enjoy life, whatever it takes. I think you’ll find that it’s well worth the effort!

We all will face some big challenges in 2009 and beyond. Our industry will survive, but will your business be around? Will you take advantage of these times? Positive execution in these areas will help you have a year to be proud of in 2009.