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5 Tips for Keeping Costs Down in Your Insurance Agency

Are overhead costs eating into company profit? These five tips may help you prioritize expenses and identify efficiencies to help your insurance agency pare down costs and boost earnings.

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1. Review all costs.

Start by listing every single overhead cost your business currently pays. Star items that are optional/no longer necessary, too high in price, or could be replaced with a lower cost service. Invite your employees to brainstorm savings ideas or suggest opportunities for efficiency improvement. You probably won't find a magic bullet to slash expenses in half, and that's okay. The greatest cost savings typically come from a series of small savings, rather than a single huge saving, reports Quick Books.

2. Renegotiate third-party contracts.

Does your agency rent equipment or pay retainer fees for contractor services? Review all contract fees and compare against existing market rates. Consider how your agency uses these services. For example, if you rent a large color photocopier, is this equipment really necessary if you've switched to a primarily digital file system? Would it be less expensive to simply scan and file items digitally and outsource larger copier jobs to FedEx? Designate a point person for renegotiating contracts. Don't be afraid to ask for a deal. For example, if payment terms for a contract typically extend over 12 months, ask if you can get a discount for paying in full upfront.

3. Clean out the storeroom and supply cabinet.

Do you have outdated office equipment like old computers or printers taking up space in a company closet or storeroom? If the equipment is in good working order and only a few years old, you may be able to donate it to a local nonprofit and receive a tax deduction. Next, take a look at the office supply cabinet. Are you auto-reordering supplies each month that you don't need or simply don't use? Pare down these orders or cancel them altogether.

4. Harness the power of the freelance economy.

Consider if there are business practices that would benefit from outsourcing or a third-party contract rather than doing the work in-house. If you are spending more on ad-hoc solutions to fill service gaps, bringing a contractor on part-time to address these needs may end up lowering expenses in the long run. This could be true for everything from graphic design needs to legal needs. UpCounsel, for example, is a legal startup providing on-demand legal services for basic business needs like contracts and business formation. UpWork is a freelance clearinghouse for everyone from web developers to accountants. If your needs are ad-hoc rather than ongoing, you may find that working with freelancers can help lower costs and get the job done more efficiently.

5. Shop around.

Banking, accounting and payroll services are essential for basic business functions, but the fees associated with these services can eat into your bottom line. Check your bank statements to understand how much you are paying per month for your business account and compare with other banks in your area. Can you get a better small business account deal through a local credit union? The same goes for accounting and payroll. Seek out providers that cater specifically to small businesses, like Wave, which offers a suite of accounting services with free software and pay-as-you go services.

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