Entrepreneurs protect your most valuable assets

Entrepreneurs do have blind spots. In their rush to build a successful business, they ignore a vital part of the business model. They focus on the revenue and the cost drivers but ignore the risk management part of the model. Why? Entrepreneurs want to scale their enterprises and are oblivious to what could destroy the business. This has implications for sellers of insurance products. 

Tangible assets

We tend to see what is in front of us, but not always--not optically speaking but cognitively. So we would insure buildings, vehicles, stock in trade, cash, etc. While these are important assets, in a knowledge economy, it's the intangibles that really counts. What are the assets that are mainly behind the business's value creation strategy? You might be surprised to know how exposed you are?

Coca Cola's brand name is reputed to be worth more than its bottling plants. Its strong brand name is derived from the knowledge of its marketing people. However, other organizational assets create value in the management of the business. Hyatt's exceptional service is an HR wonder, people who care and act on delighting customers. This is more important than their properties. 

Most insurance agents have no issue with selling property insurance to business owners. But as entrepreneurs have blind spots, so do financial services sellers. The golden nuggets lie elsewhere.

Intangible assets

The driving force behind a small or medium-sized enterprise (SME) is either the founders' sweat capital or the second generation owner-managers hard work. This entrepreneurial spirit is what birthed the firm or grew it. Many SMEs are family businesses, and their collective intelligence at the dinner table drives the opportunity focus of the business. 

Large companies with bureaucratic structures and pigeon-holed managers are more organizationally restrictive than free-range SMEs, who can roam the market for growth opportunities. Ultimately, it is this wealth creation asset that often goes unprotected. 

What is happening inside these entrepreneurs, and how can losing their 'brains' potentially ruin a business. Often in family businesses, the death or critical illness of a family member can not only slow down the enterprise but prevent its transfer to the next generation.

Mindset 

Entrepreneurs think and act differently from managers. They see opportunity where others see doom. They use their creative problem-solving skills and can unlock value, where others see none. They are also resourceful and can do nothing short of magic with what little they have. If they had the resources of larger firms, they would make them more productive. 

If you want to get more insight into this mindset, please sign up for this free mini e-book. 

Entrepreneurs develop a myopic view despite their unique mindset, which sometimes leads to missed opportunities to protect the business from vulnerabilities. 

The insurance opportunities to protect business owners are vast. Keyman insurance is important for death and critical illnesses if a key person cannot continue. When a family member dies, that person's beneficiary can claim part of the business (if the person is an owner). Often the venture cannot pay, or it can severely impact its cash flow if it does. 

Insurance agents need to understand what revenue potential exists with SMEs and family businesses and what makes them vulnerable to risk. This approach can give agents and brokers a significant edge in improving their sales productivity.