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Family Owned Financial Services Company
Case Studies

Family Owned Financial Services Company

By November 18, 2012November 18th, 2019No Comments

Case Study No. CS050711

Advisor: Doron York

The Company: A 70-year-old family-owned insurance agency & financial service company in Dearborn, Michigan.

THE CHALLENGES

After a successful transition to the second generation, the agency was contemplating its transition to the third generation and faced the following challenges:

  1. Revenue in the property/casualty line of business was stagnating, losing approximately 4% per year.

  2. Revenue from the life department was subsidizing the business.

  3. Total agency profit, without contingencies, was predicted to be a $50K loss.

  4. Compensation expense was high for a company of this size.

  5. There was a high degree of frustration and tension among the partners.

  6. The workplace was not a pleasant place to work.

  7. There was no collaboration, strategic action plan or cross-selling occurring in the company.

  8. Customer satisfaction was at an all-time low.

  9. The managing partners were not aligned on the future development of the business. The Breakthrough Target

THE PREDICTABLE FUTURE

Without intervention and/or reinvention, the business would have continued as follows:

  1. The partners would struggle to create and develop an effective transition plan with the alignment of all the partners

  2. The agency would continue to lose money

  3. The life department would continue to subsidize the business

  4. Most likely, the younger generation would pursue other career opportunities and the company would be sold or closed down within 5 years

  5. The family legacy would be goneThe breakthrough targets were as follows:

  • .Breakthrough in the ability to generate revenue

  • Increases the firm market share

  • Creation of a viable operating model

  • Divers the firm value proposition

  • Creation of a bold future for the company

THE BREAKTHROUGH TARGETS

The breakthrough targets were as follows:

  1. To effectively transition the management of the business to the third generation

  2. To redesign the business and create a 5-year strategic plan, identifying new business and market opportunities

  3. To invent an inspiring and invigorating future for all parties

  4. To increase revenue, reduce operating expenses and have the company be profitable by year-end

  5. To create a pleasant and fun workplace

  6. To develop an exit strategy for the senior partner’s Results

THE RESULTS

After a year of coaching, the business achieved the following results:

  1. Completed a comprehensive and effective transition of the company to the third generation

  2. Redesigned and remodeled the entire office with a new, inspiring physical space and a complete overhaul of technology

  3. Created a new operations management model

  4. Updated the company’s by-laws, and redistributed ownership of the stock

  5. Shifted the management decision-making process from family-driven objectives to one based on business objectives, with specific accountability and ownership

  6. Instituted a new financial decision process model

  7. Drastically reduced operating expenses and redesigned the partner’s compensation plan.

  8. Completed a 3-5 year strategic business plan with specific growth targets and financial accountability

  9. Aligned the partners on the strategic direction of the company

  10. Increased company revenue by 9%

  11. For the first time in many years, the company generated a surplus at year-end

THE R.O.C

Based on the year-end financials, the breakthroughs coaching generated 4X times R.O.I.