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How You Buy Insurance Says a Lot About Your Ability to Scale Your Business

In all my years of experience in helping successful entrepreneurs and their leadership teams buy and manage their employee benefits and business insurance, I’ve seen a common pattern repeatedly played out. While I admit that I don’t have scientific data to prove it, this is what I’ve learned from exclusively serving entrepreneurs in this area for over 15 years. 

I’ve noticed a distinction in the way people buy insurance, which has proven to be a good indicator of how quickly, and more often than not, how big they’re going to grow their business.  

It’s a distinction that’s always been there but really came to light after I’ve read Dan Sullivan and Ben Hardy’s book entitled “Who Not How”. (Sullivan, D. Hardy, B. (2020) Who Not How: The Formula to Achieve Bigger Goals Through Accelerating Teamwork

Clients generally fit into one of two categories when they buy insurance. Let’s call them the “How” Entrepreneur and the “Who” Entrepreneur.   

The “How” Entrepreneur 

The “How” entrepreneur has a “management” (or for some, micromanagement) mindset. This client has trouble trusting people and goes to great lengths to make sure they aren’t being taken advantage of even when there is no evidence that they are being so afflicted. They tend to focus exclusively on the price and view insurance, which protects their business and most productive team members, purely as an expense.  

They generally talk to a LOT of independent brokers and let them all quote their business. Throughout the process, they generally spend hours sitting through all the different “sales” presentations. I call it “sales” presentations because the brokers involved have little chance to learn about the client or their business.  

The “How” entrepreneur sets up the rules of the game and the agent learns very little or nothing about the business. They fail to be strategic or understand the subtle nuances between the agents they hire, or how they can deliver value. They ultimately get confused because they talked to so many people and can’t remember the nuances discussed between the offerings and quotes.  

What’s the end result when people can’t tell the difference between 2, 3, or 23 different commodity quotes? They buy on price.  

This sadly reinforces the cheapest price strategy and fails to consider whether the agent with the lowest price had the capabilities to truly support them, and whether or not there is adequate coverage in the details of the policy for their business. 

So how does this connect with the ability to scale quickly?  

Based on my experience, the “How” entrepreneurs, when it comes to insurance, are the same “How” entrepreneurs who struggle delegating tasks. Most importantly, they struggle in building a championship team to collaborate and support their vision of growing their business. They have a tendency to micromanage people just like they try to micromanage the insurance process. They often fail to focus on the right priorities that will actually grow their business and often see their employees as an expense rather than an investment, which prevents them from getting that next level of talent that can take their business to the next level.  

Eventually, if these individuals are able to force growth in spite of their “How” nature and manage to scale the business, they often succumb to burnout, sell the business before it reaches its full potential, or retire earlier. Candidly, this is because their “How” nature exhausts them over time. 

Contrast that with the “Who” entrepreneur… 

The Who Entrepreneur 

The “Who” entrepreneur is more concerned about “Who” is on their team, which agent or independent broker has the Core Values alignment as well as the relevant experience and capabilities to understand and help align their insurance strategy with their long-term vision.  

The “Who” entrepreneur cares about financial stewardship, but they see the entire process through the lens of being an investment they want to maximize the financial return on (ROI) rather than an expense to be minimized. If you didn’t pick this up, then read this twice because the nuance is subtle and significant. 

The “Who” entrepreneur focuses on what they value, and invests in having the right people on their team. On the surface, they may occasionally pay a little bit more, but they often get rewarded with exponential results over time because they aligned themselves and extended their team with insurance professionals who understand their vision, are aligned with their core values, have the experience and capabilities to anticipate problems, proactively reduce or eliminate dangers and capture efficiency opportunities that come up as the business grows. 

Our most successful and ambitious clients tend to buy insurance the “Who” way. Those businesses who focus on the “Who” or the right people, with the right expertise, just see their companies grow more. They know which tasks to delegate and have a good sense of what their priorities are. Collaboration is important to them and they listen to ideas as well as take feedback. Their mindset makes them better at building a championship team who helps scale their business.   

There may not be science behind this, but there are definitely observations and thoughts here. What do you think? Worth having a study conducted? Maybe we can get our government to throw some money at it? ?  

For my agent and industry friends who love this article…don’t celebrate just yet. My next blog talks about how we contribute to the problem!