A lot of agency owners reach out to me and they say, “How are other agencies doing?” And what they’re really asking is, “How am I doing compared to other agencies?”
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- Hey everybody, Drew McLellan here from Agency Management Institute, this week, coming to you yet again from the beautiful Pacific Beach and the awesome hotel, TOWER23. You know, a lot of agency owners reach out to me and they say, "How are other agencies doing?" And what they're really asking is, "How am I doing compared to other agencies, in the midst of all of this COVID craziness?" And I'll tell you what. Despite what the news tells you, despite what the trade pubs say, despite all of the layoffs that the big holding-company-sized agencies are going through, most small to mid-sized agencies are holding their own really well. Many of you sort of took it in the teeth in March and April. Your clients either went away or they paused, and you certainly had a soft second quarter. But even if your AGI is lower than what it was last year, what you wisely have done is made very smart decisions around staffing, you've used your PPP funds well, you got out there and aggressively sold, and most of you are in a very good position. So amongst the 250 or 300 agencies that we serve every year and whose financials we see, here's what's happening right now. About 25% of you, your AGI, your adjusted gross income, - so, gross billings minus cost of goods, leaves you AGI, which is the money you get to spend on your agency - 25% of you, your AGI is higher than it was in 2019. You're having a great year, and in some of them, are actually headed towards a record-breaking year. And then the lion's share of you are going to be about flat for the year; maybe about 5% up, 5% down, but pretty much where you were at at the end of 2019. And then a smaller percentage of you are still experiencing a lower AGI or maybe even 25% to 40% reduction in your AGI. So while your agency may be smaller, what you have also wisely done is managed your expenses to that smaller revenue. So, while your AGI may be smaller, most of you have managed your business well, and that means you're staying in the black, that your profit is still in a positive number. So, I have some agencies, again, 25% or so, that are in the 20% or higher; they're in the double digits. I have the lion's share of you are in single digits or encroaching double digits. And I have very few agencies in the AMI world who are actually in the red, and we're working very hard to get them in the black before the year end. And that should be your goal. Your goal should be, in terms of profitability, you need to be in the black. I don't care if it's 1%; you need to be in the black by the end of the year. I want you to have a solid foundation to use as a kickoff platform for 2021. So don't let the news, don't let the trade pubs, tell you that every agency is in dire straits, because it's just not true. Many of you are managing your business brilliantly. And even if you've lost clients, even if you've had a reduction of revenue, you are managing to that wisely, and your agency is financially healthy. If you're not there and you would like some help in getting there, then shoot me an email, and we'll get you on a call and we'll try and help you figure that out. But for the most of you, celebrate the fact that despite what the news says, you're running your business wisely and well, and you are well teed up for 2021. Okay? I'll see you next week.