Archive for March 2009
One area small business owners often neglect is the periodic review of their business insurance coverage. These are the policies that cover business operations and human & capital assets. I recommend a detailed review every 2-3 years or after a significant event, i.e. sale of a division, acquisition of another company or division, layoffs or an industry-wide change. The review usually uncovers both potential savings and areas where coverage is thin. Any significant gaps in coverage that might be costly can be phased in in some cases.
A few key points to keep in mind when conducting an insurance review:
- It is imperative you be honest with the broker. If you aren’t you risk less than adequate coverage in the event you suffer a loss.
- Invite the insurance company’s loss prevention specialist to review your physical plant. They can point out ways to make the work environment safe, minimizing risk with practical suggestions that don’t require additional coverage often times.
- Invite the appropriate department managers to participate. The information will be more accurate and they develop an understanding of how to protect against loss.
- Work with a broker that understands your business and your industry. I don’t recommend a family member or the agency down the street that does any and all types of businesses. If in doubt get referrals from your industry trade group or even your competitors.
- Ask the broker to suggest ways you can save on premiums. Sometimes changes in deductibles and limits make a big difference.
- Ask the broker to present the results of the review and any changes in coverage to you, members of your management team and your board or advisory board if you have one. They are better at presenting this complex information.
- Read all the fine print to know what is excluded. If in doubt, don’t pay the premium until you are satisfied (but don’t lapse the coverage either!).
Final thoughts: it never pays to go without coverage. If you suffer a loss it could wind up costing your company more than the premium in downtime, loss of life, key data etc. It also doesn’t pay to switch brokers and insurance companies often in search of lower premiums. Longevity can work to your advantage when you do have to process claims.
In the current economy we are making it up as we go to some extent. Geoff Colvin in a recent Fortune article titled How to Manage Your Business in a Recession shared ten recommendations. Two of the recommendations were what I consider new thinking. Suggestions I had not seen in the many articles that have appeared since early last fall.
One recommendation was “Communicate like crazy, balancing realism and optimism.” He talks about easing the anxiety of employees, vendors, customers etc. by communicating. While you may not have the answers it’s still good to share your thinking but you must be honest.
Another recommendation was “Your customers face new problems, so give them new solutions.” Past economic downturns have seen innovations emerge, the fluorescent light bulb and post-it notes are two I recall. What new problems are your customers facing that you can solve and then capitalize on? What innovations can you launch and test to position your business strongly for the recovery?
The other eight recommendations are all good, but like I said, we’ve seen them many times. I still suggest your read the article in its entirety. When you rewrite your script for managing your business let us know.
Note: Entrepreneur Magazine in the February 2009 issue included a list of “the most innovative ideas that have emerged during times of economic duress.” It’s an interesting read, check it out.
This is Part Two of a year-long series on establishing an advisory board. For Part One check see the February 3rd post.
One of the steps I take my clients through when we set up their advisory board is assessing the gaps or weaknesses in their senior management team. For many, like me, they are the entire senior management team. Despite having paid staff they still find the experience and talent gaps large in certain areas.
My skill set is accounting, finance and operations. Sure I dabble in the areas of marketing and sales, HR and benefits and a few others but it’s not where where I excel. My previous business was a commodity of sorts…start-up CEOs knew they needed a part-CFO even if they weren’t sure what it was a CFO did (more on the need for better financial intelligence at another time). Selling is very easy when you’re a necessity.
Now it’s all about building a brand around business coaching & consulting, advisory board facilitation and developing financial intelligence in business owners. I chose to bring in a team of advisors that I had seen in action, had the pleasure to work with and respected. I chose people who excel at business development, marketing and sales and understand what it takes to sell a professional service.
Our agreement requests that they serve for a year which is four virtual meetings, be available from time to time for calls and to respond to email. Because we are well known to each other, the last two requests are easily fulfilled all the way around. For my part I agree to promote their businesses, be prepared for the virtual meetings, get material to them for reading in sufficient time and respect their time. At the end of the year we will all reevaluate how and whether we continue.
I should add that I now understand my clients’ anxiety better as I prepare for our first meeting and distribute materials documenting my business vision and what it is I need help with.
Look for future posts where I profile each advisor and their business.
