There is no algorithm, no precise science to running a business. The numbers have to work for a business to survive, but it’s just as much about humans – your staff, suppliers and, most importantly, customers and clients.
Nowadays it’s also about regulation, systems, software and the internet, and it is at the junction of those two groups – the human and the non-human – that, to a great extent, profitability and ultimately whether a business succeeds or fails is decided.
As the means of buying and maintaining insurance has become more widely available on the internet, so our customers that not so long ago would have picked up the phone or dropped into a high street branch have chosen to take their business online. Most have found themselves regularly using price comparison websites (aggregators) to scan the market for the best price which, in turn, has shifted control of the customer experience away from individual businesses to a few huge companies that now dominate the online insurance space. This has already happened across many personal lines products, and is about to be mirrored in the commercial lines space and many insurance brokers and agencies have found their business models changing, and continuing to change in a very short time period.
Maybe you’ve been able to take advantage of customers moving online and have kept pace with change. Maybe you’ve been able to do so more by luck than judgement, or maybe you made some good decisions early on that set you up to handle the changes coming down the line.
Recognising what you do
Even if you have, what are you doing now to continue to handle declining margins and dwindling customer loyalty? Are you being creative with your human and non-human resources in order to prosper from the inevitable changes that will continue for the next 10 years and beyond? Have you considered whether the strategy that worked for you for the past 5 years needs change to help you with the next 5? Whether or not you’ve altered your business model, has what you do changed imperceptibly over the years and, if so, have you recognised that change and structured accordingly?
For example, one of the most common (but sometimes invisible) evolutions in insurance businesses over the past 10 years is the high street broker that used to have time face-to-face with their clients so that they could listen to what their clients wanted and put something together accordingly. If, over that period, you have transformed enough to be able to accept business online, including via aggregators, are you still a business that is still structured to spend time face-to-face with its clients, or have you recognised, perhaps somewhat harshly, that actually your business serves more as a reseller now, rather than the primary point of contact and advice? Even if you have, what have you done to structure your business accordingly, and how has your strategy changed to ensure longer-term prosperity?
Think the unthinkable – it works!
Researching, analysing, understanding your business on an on-going basis and then taking action as a result is very often consigned to the “too hard to do” drawer. Again this isn’t about reviewing management accounts or even the end-of-year filings to Companies House or HMRC. When you strive every day just to do the best you can do as a business, distracting your concentration with thoughts of “risking everything to do even better” are uncomfortable, and often unwelcome.
However, allowing yourself to think the unthinkable is very often the best survival tactic and, occasionally, leads to unexpected strategic change that can transform a “surviving” business, into one that moulds to or even leads the market around it and prospers for many years as a result. Even better, very rarely does it require “risking everything” in order to transform a business. However, the longer you perceive change to be too hard to do, the greater the chance that taking action will lead to higher risk as you’ll have to turn over more stones to get the outcome you need.
Likewise if you are considering exit, of whatever nature, taking the time to carry out that self-scrutiny is a vital element of securing either the most profitable outcome for you, or the most sustainable business for whomever takes over the running of the business.
At Arun Bay we can help with that process of research, analysis and acting on change. Having done so on several occasions in the past in previous businesses, we can help you to recognise the signs of needing to drive change, and where those changes should be made in order to suit your longer-term plans.
We can then work creatively with you to plan and deliver those changes, allowing you to get on with running your business in the meantime.