Action Step 10.3 (cover page)
The Kevin McHutchison Agency
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“We’ll help you protect what you love most!”
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Insert your logo
BUSINESS PLAN
Business Plan Prepared By
Kevin McHutchison
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Agency Owner
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The Kevin McHutchison Agency
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951 Haddonfield Avenue, 2nd Floor
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Cherry Hill, NJ, 08002
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856.716.0824
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http://farmersagent.com/kmchutchisonhttp://farmersagent.com/kmchutchison
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Date Prepared
Enter month and year
August 2012
Table of Contents
Action Step 10.3 (table of contents)
The page numbers on the table of contents are inserted automatically but need to be updated as you add to your plan. Click on the page number, or select all page numbers, and press F9 to update. Updating the Table of Contents will eliminate the hidden links to the Action Steps and any formatting you have added. After you update the TOC automatically, you may want to format the type so it looks as you prefer.
Executive Summary 1
Management and Organization Plan 3
Legal Form of Business 3
Management Team 3
Board of Directors/Advisory Board 3
Recruitment and Selection of Employees 3
Compensation and Ownership 3
Employee Reward and Incentive Plan 4
Communication 4
Infrastructure 4
Product / Service Plan 5
Purpose of Product/Service 5
Features and Benefits 5
Stage of Development 6
Product/Service Limitations 6
Product/Service Liability 6
Related Products/Services and Spin-Offs 6
Trademarks, Patents, Copyrights, Licenses, Royalties 6
Governmental Approvals 7
Marketing Plan 8
Industry Profile 8
Current Size 8
Growth Potential 8
Industry Trends 8
Other Characteristics 9
Distribution Channels 9
Competitive Analysis 10
Direct Competition 10
Indirect Competition 10
Future Competition 10
Competitive Analysis 10
Market Analysis 11
Target Market Profile 11
Customer Profile 11
Future Markets 12
Pricing 13
Pricing Strategy 13
Price List 13
Pricing Policies 13
Market Penetration 14
Company Image 14
Customer Service 14
Location 14
Direct Sales Force 14
Sales Representatives 15
Licensing or Distributors 15
Advertising and Promotion 15
Publicity 15
Telemarketing/Direct Mail 15
Internet 15
Trade Shows 16
Market Penetration Effectiveness 16
Financial Plan 17
Start-Up Costs 17
Sales Projections 17
Income Projections 17
Cash Requirements 18
Sources of Financing 18
Exit Strategy 18
Projected Financial Statements 20
- Monthly Cash Flow Report (for three years) 20
- Year-End Income Statement 23
- Year-End Balance Sheet 24
- Ratio Analysis 25
References 26
Insert each part of the Appendix that will be included, than type page numbers for each.
The Kevin McHutchison Agency (Insert your own business name in the copyright line)
Executive Summary
Action Step 10.2 Executive Summary Questions
Venture Description
The Kevin McHutchison Agency is exclusively sells Farmers Insurance Group products to the New Jersey Market. Our Agency is committed to providing the best quality insurance solutions and customer service to the residents New Jersey. We are here to serve the community we live in and aid our neighbors in protecting what means the most to them.
Our customers are the most important part of our organization. We strive to provide the highest level of customer service and help our customers protect their assets and also to help educate them on the benefits of being properly insured.
The company is currently in its startup phase and will be progressing to the initial operations stage within the next two quarters as the marketing plans begin to bear fruit and the organization is formed. Because our products are so new to the state it will take some time for the customer base to become familiar with our brand but I am confident they will find that our products are much more tailored to the needs of our customers then the competition they have become used to buying from.
Management and Organization Plan
The management for the first year as well as the organization is mainly made up of the owner Kevin McHutchison. The agency has at its disposal a regional sales manager, and life and commercial specialists to call on for management and sales related advice if need be, but mainly it is just up to the sole proprietor to make the company grow. The owner Kevin McHutchison is a soon to be graduate of the Kaplan University MBA program and has ample experience in the small business field so he has the right skills such as time management and organization to make this venture successful.
Marketing Plan
Our market is at the moment over saturated with competition. The customer base we are selling our products to already have similar insurance products through our major competitors State Farm, Allstate, Geico, and Progressive. What they may not have however is a personal agent who is attentive to their needs and is there for them personally in the event of a claim.
Some of the competitions strengths include well-known brands, established store fronts, early entrance into the market. Their weaknesses however are overpriced products, non-differentiation among customers, more time in the market to accrue negative customer feedback, and lack of personalized attention from their agents.
Our strategy for being a new entrant into the market is community penetration through local events, personal marketing on the agents side with networking groups, national commercials which are highly entertaining including a catchy jingle, as well as putting the Farmers logo just about everywhere a customer looks such as billboards and buildings. Since we are late entrants to the market we have a lot of ground to make up in the way of branding.
Financial Plan
What will it cost to start this business? What are the projections for sales and net profit? How much cash will be needed to start and operate this business? What sources of financing have been, and will be, sought? How much money has been contributed by the entrepreneur? What is your exit strategy?
To begin this business it will cost about $1500 per month in expenses. The beginning sales projects for the first year are $47,500 followed by a jump to $72,600 in the second year. The only funding that will be sought by the owner will be a subsidy supplement in slower months to match our sales goals which is interest free and provided to any full time agents of Farmers. Other than the optional subsidy that our agency can utilize additional funding will come from reinvestment of sales income which would otherwise be at the disposal of the owner.
Management and Organization Plan
Action Step 7.1 Management and Organization Questions
Legal Form of Business
What legal form has been selected? What are the major reasons for this selection? What is the state of incorporation (corporations) or organization (LLCs)? In which states will it be necessary to be authorized to do business? Some legal forms allow for special elections for tax purposes. What, if any, tax treatment elections will you request?
For this venture the Kevin McHutchison Agency will be functioning under the legal form of a sole-proprietorship. This form was chosen due to its flexibility and tax benefits for the owner. This also alleviates any liability to just the owner who is the main beneficiary of the company, (Perez, 2012, About.com).
Management Team
What is the contribution of the entrepreneur? Who are the key management team members, and what are their job descriptions and prior experiences? What offices or titles, such as president or chief financial officer, will each hold? What experience and qualifications are desired for future management positions? When and how will these be filled?
During the first initial year and mostly like a few years to follow the management team is solely the entrepreneur. In the years to come as more staff is added into the organization I will elect new managers from the Producers and CSRs.
Advisory Board
Who are the board of directors or advisory board members? Include names, compensation, and any ownership in the company. What are their qualifications related to the business?
Again the first year will be low on staff so there will be no need for a board of directors but down the line as the organization grows I will bring in any large investors, as well as key staff members to act as our board.
Recruitment and Selection of Employees
What is your plan to find and hire self-motivated people for your business? What are the required qualifications, the duties to be performed, and the interview and hiring guidelines to be followed?
When the time comes to recruit new staff I plan on bringing in skilled employees that I know from personal experience. These individuals will have proven their worth in their careers and because I am already familiar with their work I will know exactly that I am getting when I hire them. For positions that are outside of the realm of our connections I will recruit mainly college graduates with a 4 year degree for positions in which sales are required, and for CSR’s I will require a basic 2 year degree or adequate work experience to compensate for the lack of degree. I am turning no one away, but I do want to set a high standard for achievement in our agency.
Compensation and Ownership
What is the compensation package for the entrepreneur and other key management team members? What are their salaries, benefits, and bonuses? What portion of the business is owned by the entrepreneur and management team?
The entrepreneur will have a better than average compensation package meaning full benefits and the ability to utilize profits as I see fit. As management staff begins to come into the ranks they will also be eligible for benefits as well as bonuses according to sales goal achievement. Business ownership will always remain with the entrepreneur and his family.
Employee Reward and Incentive Plan
What system for employee rewards and incentives will be in effect? What is the incentive plan? Include special recognition awards, lump sum awards, bonuses, stock options, profit sharing, deferred compensation, commissions, team work, and flexible hours.
Employees’ hours would be based on the schedule that the agency would be open and that is Monday through Friday 9AM-5PM, and Saturday 9AM-1PM. Producers could utilize the office on Saturday during those hours but are not required to come into work on that day. CSR’s will alternate working on Saturdays. They will also be compensated with competitive pay and optional benefits for full time employees. Bonuses will also be given according to them meeting certain milestones and goals each quarter.
Communication
How will you communicate your business values and expectations? What system will you use to assure clarity of communication throughout your business?
Our values will be communicated on each webpage we have as well as in our office for our customers to see. We will also be a true testament to our values and we will portray that to our customers with every point of contact. When I meet with clients I make sure they understand why we are meeting and the intentions I have for our appointment. There are never gray areas when it comes to customer interaction.
Infrastructure
Who are the key advisers? Include names and compensation of accountants, lawyers, bankers, and consultants. What expertise will they provide? Include strategic alliances, computer technology, management, marketing, and specialists in product or service issues.
The agency’s key advisors are the trainers at the University of Farmers in Cherry Hill, Stu Hantman, Anne Forde-Kruppa, and Karen Minner, New Jersey, the sales manager, Adam Kerr, and the specialists, Art Coyle and Mike Haderer, that are at our disposal for the beginning few years of being open. An advisor that would require compensation is our accountant Joan Halter who charges me $150 per filing. Direct mailing and internet marketing will be mainly handled by the service called AMP for $350 a month. This service allows for direct mail to be sent to prospective customers in our area as well as website hosting and updates.
Product / Service Plan
Action Step 4.1 Product/Service Questions
Purpose of Product/Service
The products that our agency will be offering are Farmers Insurance Group products such as Auto, Home, Life, and Commercial insurance. The Farmers line of products provides affordable and ample coverage to protect our customers from liability responsibilities in terms of monetary compensation in the event of an accident. These products are essential to wealth protection so that if an accident occurs the customer is restored back to the point they started at before the accident financially. While higher liability and property limits may seem like a luxury our agency helps our customers to understand that our products are essential and needed to help them protect what they love most.
Features and Benefits
The features that the Farmers Products offer are:
• Liability protection for bodily injury
• Liability protection for Personal Property
• Personal Injury protection (Covers Libel and Slander)
• Personal property including dwelling replacement
• Collision and Comprehensive coverage for autos
• Death benefits
The benefits of these products include:
• Protection of assets such as homes, pensions, 401k's, investments, and future earnings which can be up to 25% of someone’s annual earnings.
• Peace of mind for income continuation in the event of a family member's death.
• Funeral expense proceeds
• Protection for others in the event of a customer's negligence
• Insurance can put the customer back to where they were before the loss.
Stage of Development
The Farmers lines of products are currently in the maturity and innovation stages. For most of the products they are set and the only aspect that gets adjusted annually is rates based on a myriad of actuarial factors. The products in the innovation stage are our commercial and our life insurance products which are undergoing changes that will make them more competitive and attractive on the market in our state.
Product/Service Limitations
Our products have few limitations. For our customers some of the potential limitations may be higher premiums than the average or state minimum companies. Also the homeowner’s products are not writable within 5 miles of the coastline or other major bodies of water such as lakes.
Product/Service Liability
Our products themselves do not have any liability as they are intangible, however our insurance services carry a certain amount of liability exposure which is why every agent has to carry Errors and Omissions insurance. This protects the agents for any issues that can arise during the consultative sales process such as selling the customer less coverage than they actually needed and if they got into an accident and had an issue with their coverage limits not being the right level for them.