Missteps and Mistakes: 5 of the Scariest Moments of My Insurance Career
I remember 1994 when I was running for the United States Senate. My campaign consultants thought I should publish my tax returns and challenge my opponent to do the same. He had a very checkered business career. I was unenthusiastic about the idea, but thought I should take the advice of the “experts” I was paying.
It was embarrassing. Not because there was anything wrong with my financial records, but because exposing my income made me feel like I was walking down the street naked – which ought to embarrass anyone!
I share this story to demonstrate the point that mistakes can be uncomfortable. But I believe that when you learn from your mistakes, you turn failures into successes. I hope that you may learn something from some of my scariest moments and take heed so that you can avoid that exposed and naked feeling yourself.
Counting My Mistakes
1. A Costly Accounting Blunder. When we put our agency together, we divided management responsibilities. One of mine was to manage our accounting operations. A couple of years after we started, our accountant was out on pregnancy leave and our CPA firm had someone filling in for her. I came into the office early one day to find that person eagerly stop me to say, “I have to speak to you urgently.” She explained that she made a mistake in reconciling our bank accounts and said, as a result, “you are $80,000 overdrawn and your check for the Account Current to XYC Insurance Company is going to bounce.”
A mistake like that could very well have cost us the contract under which half our agency’s business was written. And, I didn’t have $80,000 on hand and didn’t know if my partner could come up with that amount on command. So, we combed through our current account statements and identified payments we could put on hold for that month. This allowed me to write a replacement check to the company that I promptly delivered.
I learned a lesson I’ve never forgotten — manage cash carefully.
2. A Forced Culture Shift. In a different business venture of mine, I bought out a partner after a number of years. To do this, I took on a large debt with scary payments every month. Every day as I went to work at that business, I came to recognize that I hated the culture we’d allowed to take hold in the business. I decided to change it. I went to work to create a new culture based on values I felt strongly about.
Unfortunately, many of my employees didn’t like the changes I was making.
They preferred things as they were. And as I stuck to my guns, they began to leave. Eventually, we had 100% turnover in a short time, which led customers to question if they should stay with us.
It was a tough couple of years for this business. I made a number of mistakes in how I managed my team. But, in the end, we grew over 300%, which validated my original decision.
From this experience, I learned how important business culture based on shared values is, but also that it’s critical to foster collaboration and participation in developing those values rather than dictating them.
3. An Unrecognized Dependency. Early in my career, we developed a customer relationship with a nonprofit organization that owned considerable property in our area. As they grew, our business with them grew as well — until their account represented over 50% of our revenue. When they grew to a certain point and recognized just how much they were paying us, they decided they should do it themselves and cancelled our agreements with 30 days’ notice.
As a young service business without much working capital, bankruptcy loomed rather quickly. We had no choice but to reduce staff immediately and take other actions to lower overhead expenses. I ate a lot of Ramen noodles, and we survived.
In the end, I learned it’s a huge risk to allow a single customer or line of business to be such a large contributor to your revenue that their loss threatens your survival. I often see a corollary to this in insurance agencies that put more than half of their business with one insurance company.
4. A Bad Bet. Dan Sullivan the founder of the Strategic Coach program for entrepreneurs tells his clients to “test your ideas on check writers, not friends and employees.” His point is that although we may have ideas that seem like sure successes to us, they may not be things people will actually pay for.
I learned this lesson the hard way when I saw a friend’s national driver’s club with tens of thousands of members and thought we could build an insurance agency to focus on selling insurance to their members. Instead of following Dan’s dictum, we poured money into creating an agency licensed to do business everywhere, recruited lots of people, invested an incredible amount of money and failed in spectacular fashion.
From this failed investment, I learned to listen more closely and to not make assumptions, and to “test” small as Dan suggests before making big financial bets.
5. A Failure to Listen. I was on the way to a board meeting one day and running late when my assistant told me a key employee needed to speak to me but wouldn’t offer details as to what it was about.
I knew it was trouble and it was. She was quitting. And another key person was, too. They were leaving because of problems and concerns they had with the person I’d hired to run the business.
As I dug into my team and their collaboration and working style, I found problems with employees, culture and customers that I had previously been too distracted to notice.
In the end, we lost several important people, but more importantly, we lost the trust of our team and a good amount of business momentum.
While we eventually regained both, I learned that as the senior leader in an organization you must always pay attention to your environment. You can’t ignore your gut instincts because you are busy or distracted, and you cannot put barriers up that prevent people from telling you about problems that you don’t see.
Moving on From My Mistakes
As I reflect on these avoidable, self-inflicted, near disasters, I’m grateful to have survived them. Often, other business leaders are not as fortunate. I learned lessons that I could have learned in less painful ways, but they are ones I’m not likely to ever forget.
Consider these takeaways:
We all make mistakes, but I hope that the ones I’ve made and recounted here will help you avoid at least a few. You will make a mistake, but when you do, spend the time to draw lessons from it and move forward.