"Roger" owns an employee benefit consulting firm in the Northeast with $1.2 million annual revenue. He was quite blunt in an email to me about his options as he considers the new industry landscape and 2014 looming. He's talked with Gallagher, Digital and Brown & Brown, but doesn't like the idea of sacrificing his independence. At 58, he's not ready to quit, although he knows several agency principals a few years older who are looking frantically for the exit.

"If I don't sell or retire, I'm just not sure what to do," Roger wrote. "I know in broad outlines some of the changes I need to make - consultative selling and wellness programs, for instance - but damned if I know what the specifics look like. And fee-based comp scares me to death. I do know that if we don't change to adapt to the new health care reforms I'm not sure we'll survive."

Roger's situation is fairly typical and his fear certainly is not misplaced. I've written previously that M&A firm MarshBerry projects that 28.6% of all benefits agencies with less than $2.5 million in annual revenues will cease to exist within several years. That's two of every seven agencies gone. So, it's likely that disaster does loom for many small to mid-sized agencies. But, as an agency leader, health care reform isn't Roger's problem. PPACA is just the catalyst forcing agencies to change the way they do business.


Where the problem lies

The problem isn't health care reform. It is your business model - a 20th century business model born in the 1960s.If you want to preserve your business, income and independence while positioning your agency to capitalize on the coming opportunities for explosive growth, you must act boldly and leave the status quo business model in the rear view mirror.

Many agency leaders do understand they must adopt a new business model, a business model for the post-reform era, for the 21st century. But what does that look like? What's your new business model architecture? Unfortunately, we've discovered that most agency leaders have difficulty answering this simple but critical question.

One option is in my book, "DO OR DIE: Reinventing Your Benefits Agency for Post-Reform Success," which lays out a step-by-step plan for agency leaders based on the 21st Century Agency business model. The four-step reinvention plan addresses Portfolio, Marketing/Prospecting, Selling, and Operations & Sales Management.

But whether you adopt the 21st Century Agency business model or some alternative, you must - and I repeat, must - begin now to implement a new, comprehensive business model that will allow you to survive and thrive in the coming years. The winners in the coming agency shakeout will have done more than just make a haphazard stab at implementing a couple of new strategies.

As Jack Kwicien has written in this magazine, as an agency "you likely have to change your marketing, sales and client engagement approach, as well as your business model."

So, I'll tell you what I told Roger: To preserve your firm, your income and your independence and to position your business for explosive growth, you must move aggressively to reinvent your agency on a solid 21st century business model.

For agency leaders, it's do or die. I can't make it any more clear.

Griswold, is an authority on voluntary benefits and consultative selling. His firm, Bottom Line Solutions, consults with agencies across the country. He can be reached at (615) 656-5974, nelson@InsuranceBottom Line.com or through InsuranceBottom Line.com.

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