Where is your ScareLine™?

Note from Donna… I developed the idea of a ScareLine after seeing a few too many clients drowning in insurmountable debt. My thoughts were: “How did you let it get this bad, wasn’t there a red light flashing in your head saying stop?” But, a few months ago I was told that this idea of a ScareLine hasn’t been thought of before in my Profit First accountability groups. And today, I think, is a good time to introduce the idea to you all.

The ScareLine™ as a budgetary modification

The Profit First cash flow management system is designed in such a way to purposefully avoid taking on debt. The creator’s mission statement was literally eliminating entrepreneurial poverty. Which means no more paying off your business expenses with personal funds. However, there is one industry that requires upfront debt: Insurance. But don’t be afraid: Profit First still works for insurance as long as you understand ‘The ScareLine™.’

• Because captive insurance agents cannot determine their own pricing, early commissions are generally not enough to cover early operation budgets.

• Without a surplus of funds to market and expand operations, growth is nearly impossible.

• Non-captive insurance agents have the same issue; they need to market like crazy in the beginning, and as you know, marketing is expensive.

• Inheriting or buying a book of business can ease your starting debt accrual, but usually, these sorts of transactions are determined far before you start your own agency.

The ScareLine is a personal measurement of hazardous borrowing. As the owner, you must determine how much debt is too much debt based on your confidence in growing your agency.

A changing industry

The insurance industry is rapidly changing before our eyes. You must take a Profit First approach to overcome the present difficulties.

• Companies are pulling out of regions affected by climate change, such as California and Florida.

• However, there are products and packages that can be sold to consumers in those regions. You must evolve your marketing and business strategy to the entirety of your company’s offerings.

• Government entities are constantly re-regulating the industry. Agents need to know how to adjust their pipeline to make government-approved plans profitable.

With the right approach, accruing debt doesn’t need to end in catastrophic results. By staying mindful of your ScareLine™, and using the Profit First cash management system, increasing your profitability is simple. At Sooter Consulting, we are the experts at adapting the Profit First system for insurance. With over 20 years of experience backed by leaders of the accounting industry, we know how to change your business into an adaptable, scalable, and profit-earning enterprise.

Reach out for a discovery call to get started.