It's hard to believe we've reached the end of yet another year - it seems like 2010 began just a couple of months ago. And what a year it has been.
Just think of all the political, economic, social and business changes that we have witnessed. As we approach the end of 2010, many astute benefit advisers are thinking about what they achieved this year and the personal and organizational goals they want to set for 2011.
So where do you go from here? What can you do differently to improve results and to make adjustments to respond to changes in a very dynamic - and recently tumultuous - marketplace?
During this holiday season, we also have so much to be thankful for. For many of us, this is a time to give thanks and to reflect on what we have done and what we can do better in our personal lives as well as in our business practice. It's a good time for soul-searching.
So while you have some time to reflect upon your life and professional ambitions, think about the quality of your business relationships. As you begin to contemplate your goals for 2011, think about how you will add greater value to your relationships and how you will differentiate your practice.
Focus on understanding your clients' business issues first, and the appropriate benefits solutions will logically follow.
For example, consider developing benefits strategic plans for each client. Develop your interaction with clients to become much more consultative. Seek to instill this approach in your firm's corporate culture. And by all means, focus your energies on becoming a trusted adviser.
As we approach the end of 2010, it seems appropriate to reflect upon the following questions:
* What is the condition of your business?
* What role, if any, do you want to play in your business during 2011-2013?
* What is it that you personally want to achieve over the next three years?
* What are your financial goals?
* How will you achieve them in light of the impact of health care reform?
* How can you optimize the value of your business asset?
* Will you be managing your business at the end of this decade?
* Is it time to begin thinking about your personal exit strategy?
These are important questions. Try to be honest with yourself as you answer them.
A logical place to start is with a review of your business plan. A good number of you are thinking to yourself, "I don't have one." You just haven't had the time to get around to it, even though you have been in business all this time.
The rationale for developing a written business plan for your practice should be obvious. We have written several times in this column over the last four years that a written business plan provides a roadmap for your business and can guide your day-to-day tactical and operational decisions. The discipline of writing a plan forces you to put a stake in the ground and make some definitive decisions about the future direction of your practice and how it will compete in the marketplace. You wouldn't drive cross-country without a roadmap or GPS, would you? Then why manage your practice without a plan?
For those of you who do have a written business plan, does it include a contingency plan for managing change? This will be critical to your success going forward. The marketplace is full of opportunity for those who are prepared. You need to be thinking broadly and strategically about how your business will not only survive, but thrive. Remember: luck is the intersection point of preparation and opportunity. So sit down with key members of your team and get started.
If you need some help, just contact us - we have written dozens of business plans over the years. The important thing is to commit to the process and devote the time that is required to make it a success. This time of year is perfect for this type of business initiative.
On the other hand, some of you are well beyond this point in life, and you are just trying to figure out what to do next with your business to protect your assets, and to do what is right for your clients and employees. Frequently, we are asked about the easiest and most effective ways that business owners can optimize the value of their businesses. We realize that you may not be ready to sell your agency, brokerage, consultancy, or TPA business today. But perhaps you and your partners are at a point where you are having discussions about when might be the appropriate time to exit the business. Well, the time to prepare for that day is now.
Why consider selling or merging your business? There are many reasons to consider a sale or merger with another complementary or synergistic business, including:
* strengthening the management team
* broadening the product set
* achieving operational efficiencies
* qualifying for more lucrative carrier contracts
* opening new markets
* perpetuating one or both of the businesses
* acquiring new skills and expertise
* increasing the top-line revenue potential
* improving profitability
* enhancing technology capabilities
* adding sales channels
* providing an exit strategy for the owners
For example, if your business currently offers employer-paid benefits and you see that your firm is passing up a huge opportunity by not offering voluntary benefits, perhaps merging with a firm that specializes in these product lines would make sense.
Don't be afraid to "think outside the box" when it comes to considering potential merger candidates. Today's competitor or vendor partner may be tomorrow's ideal merger candidate. Think strategically about what will benefit your clients and customers most in the future.
Evaluating potential partners
The process of evaluating potential merger candidates is largely about finding business partners that have complementary or synergistic business practices, wherein both businesses benefit from not having to build a new practice with all the attendant time and expense associated with the creation of a new business entity. In an ideal world, the end result will be 1 + 1 = 3, or even 5.
Perhaps you have been partnering with a local firm or you have done joint case work with friendly competitor. Having a solid working knowledge of the interested party is essential.
Hopefully your management styles, personal goals, business ethics and a whole host of personal attributes are compatible. Is the chemistry good between the principals? It's hard to achieve greater success when you don't care for the person you will be working with most of your waking hours.
It is absolutely essential to make certain that the interests of the parties are aligned. What is the vision for the merged business? Who will lead? Who will follow? And who will simply leave? It's important to get all the strategic and tactical issues out on the table and fully discussed.
A professional business adviser versed in consulting and mergers can facilitate these discussions. There needs to be consensus on what will be your roadmap for success. After all, if you don't know where you are going, any road will take you there.
As you can see, balancing the emotional and psychic needs of the principals with the managerial and leadership needs of the businesses requires an artful solution. Clearly this is not a science. But keeping all parties focused on the strategic and financial benefits to be gained from a merger can make all the difference in the world.
And remember, this is a process - one that perhaps you and your colleagues are not all that familiar with, but a process nonetheless. You don't sell your home that often either, but you can recognize that there are steps in the process that must occur in some logical order. So think strategically, plan tactically and merge for financial success. Call us with any questions or for guidance.
We hope you have a wonderful holiday season filled with family time and happy, celebratory memories with your friends and colleagues. It's been a challenging year, and we are looking forward to a terrific 2011.
Happy holidays and best wishes for a healthy and prosperous New Year!
Kwicien is a managing partner at Baltimore-based Daymark Advisors. He can be reached at firstname.lastname@example.org.
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