As we inch closer to the time when the pandemic is a thing of the past, there remain many pandemic-related unknowns. One question you may have considered is whether your insurance policy might cover pandemic-related losses you may have suffered under a coverage called “business disruption” or business interruption” insurance. The answer, of course, depends on the policy language, but sadly most of these policies only pay forinterruptions that are based on physical damage to your business’ property.

This once-in-a-lifetime event made me question whether my insurance policies cover the risks I think they cover and whether I should be concerned about other uninsured risks? Like most business owners, I have, at best, a rudimentary understanding of what I’m buying when it comes to insurance. Do you understand your insurance policies and what they do for your business, or are you subject to the whims of the carriers when it’s time to renew them? Are you confident you have the right coverage to protect your business and the wealth you’ve accumulated? If, like me, you’ve been feeling uneasy about your answers to these questions, my friend Joe Berg and his team at Lockton can help you gain peace of mind.

Joe shared with me that the insurance marketplace is particularly challenging right now. It starts with the way insurance companies have traditionally made money – not by “earning” part of the premiums, but by investing premium dollars into the open market. Since interest rates have been low for many years, there’s not as much revenue generated from leveraging premiums.

Natural disaster losses are also at all-time highs. For example, in Colorado hail-related roof replacements are occurring at five-year intervals or less, a much shorter period than was the norm. Claims payments can exceed the premiums carriers have collected, so carriers raise premiums for new policies and renewals, eliminate or reduce coverage, and even refuse to renew policies. In particular, insurance companies have introduced new wind and hail damage deductibles that are tied to the property value to replace traditional fixed-dollar deductibles.

Both of these factors, low interest rates and high claims, have combined to put unusual pressure on insurance companies to raise premiums. In some extreme cases, insurance carriers have simply abandoned specific industry verticals. Joe noted that there may now be only two carriers offering a particular policy where there once were twenty or more competitors. The natural consequence of this reduced competition is higher premiums.

Multi-family apartment building hazard insurance premiums are one example of these market forces, having tripled this year alone. This asset class experiences both frequency and severity of claims and owners need to be proactive in risk management. Joe has worked with his apartment owner clients to adopt and enforce operational policies, such as prohibiting tenants from using candles in their apartments or grills on the balconies, to reduce the number of claims. Joe says his job “is to help the client mitigate risk and make the property or business more insurable and as attractive as possible to the carriers, and by doing this increase competition for the client’s premium dollar among the carriers.”

Joe stressed that his work takes time – it takes 2-4 months to put together a solid renewal application. Having a long-term, multi-year relationship with a client is good for both the client and for Joe because a long-term relationship allows the team to gain the intimate knowledge needed to plan for future renewals and recommend adjustments to reduce and manage risk. For example, insurance is more expensive when a company doesn’t have a strong safety culture and record. Improving the company’s safety culture and record can take years. Joe and his team take a pro-active approach to helping clients understand exposure and risk tolerance and taking steps to reduce and manage risk. This pro-active approach helps keep insurance costs down.

In one case, Joe helped a construction company lower its worker’s compensation insurance premiums as well as bring in more business by improving their “experience modifier” (EMod). Every company has an EMod, which the insurance companies use to rate them based on trailing losses or injuries. A company’s EMod can even disqualify the company from performing certain kinds of work. By taking a long-term view and being pro-active, the team actively engaged with the client to transform their safety program over a three-year period and improve the client’s EMod. As a result, the client increased its overall business by a third while reducing worker’s compensation costs by 33%.

When the unfortunate event happens and it’s time to make a claim, Joe and his team at Lockton offer claims advocates who help their clients navigate the claim process. These advocates are industry and claims experts, and this expertise helps them estimate cost or value of the claim. They help the client by advocating on client’s behalf with the carrier to pay the claim promptly and in the amount the client should expect.

For example, Joe and his team recently worked with an IT company that was forced out of its building for a period of more than a year. The client didn’t own the building, and there were lots of complicated variables including a deductible that applied for the first 4 days during which the business couldn’t operate. Joe helped the client strategize how and when to make the claim, which involved an analysis of value of the claim and the impact the claim might have on the client’s renewal application.

For Joe, it’s all about understanding the client and the client’s business so he can represent the client in the best way with the carrier. He is an advocate for the business owner both during the application process and after the policy is issued – including helping the client make sure they received everything they bargained for.

Because most of us don’t know beans about insurance, helping the client know that they’re getting what they’ve paid for is a big part of what differentiates Joe and his team. Joe offers what he calls “Insurance and Risk Management 101,” an explanation of the policy, coverage, and exclusions. “There’s no way around it, you have to have insurance and it’s expensive,” Joe says, “so you should have a working idea of what you’re buying.” One of Joe’s clients shared that the client had purchased insurance and renewed the policy three times with a prior agent but had never gotten an explanation of what the client was buying. The client also expressed relief that, finally, someone cared enough to explain the details of the policy for which the client was paying over $500,000 per year.

Joe describes what he does as protecting the client’s legacy. “If you suffer one incident with a construction vehicle, that single event can take you down,” he says. “You can safety train to prevent accidents, but bad things still happen. Our job is to anticipate the worst-case scenarios and then plan against the likelihood and scope of claims from there. We tailor the coverage, exclusions, limits, and deductibles to fit the business and allow it to keep operating successfully”

One of Joe’s favorite projects was working with Sphero, a Star Wars vendor, around the time the newest installment of the series was being released. With the corresponding release of a BB-8 drone toy, the company experienced large returns and the growth. This extreme growth – revenue increased exponentially within a matter of months – triggered a premium audit of their legacy policy. Joe and his team saw this coming, helped Sphero anticipate and prepare for the audit, and softened what would otherwise have been a massive premium adjustment.

Joe advised, if he were engaging an agent, that the first thing he would look for is someone who is dependable and who does what they say they will do. “Back up what you promise,” he says of the ideal agent. “Everyone can say they have the ‘magic elixir,’ but you have to be able to follow through.” The best agents aim for long-term relationships by following through on what they offer.

You may think, like I once did, that working with a big agency like Lockton costs more. I was surprised to learn that insurance brokers are paid the same commission for the policies they sell. The commission is regulated by a state agency. Joe shared that working with a smaller agency may cost you more in the long run.  If the agency fails to provide services that compare with those Lockton offers, your premium will probably be higher and you’ll probably experience more claims. “So you’re going to get better service from us for the same premium,” says Joe. If this sounds like something you’d like to learn more about, or if you have questions for Joe, please reach out to me. I’d be honored to connect you.

In these pages I’ve talked about experienced professionals who help with aspects of running, growing, and selling businesses. And there are many other people offering to guide you to the best ways to use business capital. But where does the money come from? If you’re borrowing, how can you make sure you’re getting a safe, stable loan that meets your needs and suits your unique circumstances?

Guess what! I know a guy. Meet my friend Greg Sheldon with BOK Financial. Greg’s favorite part of his job is helping clients achieve stretch goals – whether that be buying a building or a competing company, opening another location or consolidating operations, or reaching a particular milestone, such as topping $100 million in revenue.

We’ve all heard stories about the frustration, even exasperation, some people have experienced in a lending relationship. Sometimes the experience stems from turnover, lack of experience, or lending guideline or policy changes. Many times, these bad outcomes could have been mitigated or avoided by someone experienced in guiding clients through the lending process. “The banker,” Greg says, “should understand the bank’s credit appetite and credit policy, know who makes the lending decision and what latitude they may possess to get a loan approved. This is acquired through experience.”

Some large banks approach lending by dumping loan application data into a work queue and randomly assigning the application to a loan officer who processes the application based on an algorithm set within the bank’s credit matrix. Even if the borrower participates in any of this process, there is usually not a lot of room for deviation.

One way to avoid a “one size fits all” approach involves getting to know both the bank and the banker. Ask them for examples of when they’ve made loans similar to the loan you may be seeking. If a banker isn’t capable of giving you the specifics of the bank’s credit policies, it’s a red flag.

Greg tries to look at the borrower’s unique situation and apply his experience of more than 35 years to craft a loan that suits the needs of the client and the business. Greg starts his process with an interview designed to help him to get to know the client and to help the client to get to know the bank. Greg next builds a risk profile, based on “lots of math and a little bit of data,” to determine whether and how the loan might work. Greg also relies on past performance and experience-based projections to make sure the borrower will be able to manage the loan, both in the near-term and where the borrower plans to go in the future. This may include establishing the metrics of near- and mid-term success that will enable the bank to continue to support the client. Using this long-term perspective, Greg works with the client to create a lending plan that helps the client accomplish their goals.

Greg emphasizes that a banker must be a good listener, ask lots of questions, and shouldn’t be afraid to have a hard conversation if the borrower’s numbers don’t work or if the bank doesn’t offer the right product. “I don’t like to tell people ‘no’,” he says, “but sometimes because of industry limitations, stretch on cash flow, or inflexible terms needed for the specific situation, it’s better to set realistic expectations at an early stage rather than allow the process to continue only to result in the loan being declined.”

Clients describe Greg as experienced and reliable, noting that “Greg gets it done” and “If Greg says he can do it, he’ll deliver.” In one example in which the client’s existing banker wasn’t delivering as needed, Greg helped create a relationship offering better solutions to address the client’s problems without creating any down time that the client would typically experience in a similar changeover.

Greg has helped more than a few clients with long-term business strategies, such as developing a growth plan and strategy that required only a single banking relationship. In many cases, Greg’s clients who reached their goals may not have enjoyed the same results with other bankers. In one case, Greg’s client was designing a flagship building and by the time they reached Greg, had interviewed 10 other bankers. Even with the complications of a large loan request, multiple cash flow streams, and several affiliated companies, Greg delivered the $25 million loan and the client began construction. The resulting new building allowed the client to consolidate all its affiliated employees under one roof.

Greg says he particularly likes taking on complex projects, especially if other bankers are likely to pass. I guess Greg likes to accomplish things that others can’t or won’t do.  If you might be looking for a banking relationship, Greg suggests looking for someone with experience and who enjoys rapport within their bank. Ask how long have they been in the industry and how long at their bank. Ask who makes the lending decisions and how often the banker talks with the decision-makers. What metrics will the bank require for a favorable outcome? And most importantly, what are some recent examples of similar loans the bank and banker have made?

Greg’s ideal client is a growing business with $25 to $50 million in revenue and whose owners want active input from their banker about borrowing and managing cash. If you might like to meet Greg, please contact me. I’d be honored to connect you.

We’ve all endured the effects of the pandemic, which has made planning even more unpredictable than “normal,” if there ever was such a state. Decisions that, under “normal” circumstances, seemed big and scary now seem enormous and petrifying. Planning for a significant life change might now feel impossible.

Wouldn’t it be a relief to know someone who describes his work as “providing peace of mind, clarity, and answering the ‘what if’ questions?” This is how my friend Jon Moore of EP Wealth Advisors describes helping people accumulate, preserve, and protect wealth.

Have you struggled to evaluate the long-term impact of a big decision? For example, have you agonized over whether to sell real estate? Whether to sell your business? Invest in a friend’s venture? And once you’ve endured this pain and made a decision, then what? More agonizing over how it might affect your wealth or your retirement!

Jon and his team use their processes and state-of-the-art tools to help clients painlessly and logically consider and make these kinds of decisions. They start with a “discovery” meeting to discuss the client’s the big questions and the client’s finances, assets, goals, hopes, and dreams. Jon’s team uses the answers and their tools to process simulations. They discuss these simulations with the client in a follow-up meeting held for the sole purpose of asking if the relationship is a good fit for the client. It’s only after everyone agrees that the fit is a good one that Jon asks the client to do the paperwork and Jon’s team begins the deep dive process that will result in the client’s financial plan.

The deep dive helps the client consider and answer difficult questions like:

• If I used some liquid assets to pay off my mortgage, what would that look like?
• Can I handle the consequences of investing in this venture if it completely fails?
• What’s the most powerful use of my money right now?

Jon discusses with his business owner clients their business’ purpose, and the response he frequently hears is “to grow the business.” Nothing wrong with that because that’s what a business owner is supposed to do, right? But when Jon asks the client what goal growing their business will serve, most clients can’t state a goal. To help clients identify and give substance to their goals, Jon looks for clues in the ways the client spends their time, the things they enjoy, and the people and things about which they’re passionate. Discussing these clues with the client often leads to a discussion about hopes and dreams. Many clients are reluctant to engage in this kind of discussion. However, Jon encourages an open and honest discussion about the client’s hopes and dreams, sharing his philosophy, “Your job is to dream. My job is to help make your dream a reality.”

What does turning the dream into reality look like? Jon described helping a client who wanted to retire ten years earlier than the target date in his existing financial plan. This business owner confided to Jon that he felt completely stressed out and didn’t think he could continue running his business for one more day – much less for ten more years. Jon and his team helped the client identify, consider, and analyze lots of alternatives to the existing plan, and by helping the client conceive and consider new ideas Jon helped the client retire immediately. Without Jon’s help, the client may never have considered selling his house and business and living in comfortable retirement in another country (one with a warm, tropical climate).

The runway available for most client’s financial plans to take flight is much longer. In another, more typical example of how Jon and his team help their clients, the client historically dedicated all her assets to her business. This practice led to a second mortgage on the client’s house, loads of other debt, and no liquid assets of any kind – not even a savings account. Working with Jon’s team, this client changed their behavior, which meant drawing money out of the business to eliminate debt and accumulate liquid assets. With her new financial plan that Jon’s team helped create, this client could realistically plan to sell her business after only two years because the proceeds of the sale that she would need to fund her retirement dreams were only half of those targeted in the old financial plan. Jon shared that this client cried when she could see a realistic, feasible path forward to her retirement dreams.

Jon joked (even though he is as nice as any person you’ll ever meet) that he’s been told, “You’re not happy unless someone in your office is crying.” The client’s emotional reactions are a sign of the very personal burdens they carry that, in some cases, they have not shared with even their spouse or family. The outward expression of these burdens and the emotion a client feels by being presented with a realistic path to relief from these burdens is very cathartic. Peace of mind, clarity, and answers to “what if” questions is a powerful approach to financial planning.

Jon stresses the importance of keeping personal finances in order. Don’t allow the confusing workings of the up and down stock market or other investment alternatives prevent you from building wealth. If you own a business, focusing on building personal wealth will make the process of exiting your business easier. You’ll have more options available if you’re not under pressure to attract a high sales price to fund your retirement plans. On the other side of that coin, knowing that a complete business failure, say from a once-in-a-lifetime event like a pandemic, won’t wipe out your retirement plans is also a pleasant by-product.

Jon’s planning takes the client’s entire wealth picture into account, including debt, real estate, business assets, retirement accounts, life insurance, and everything else the client might own, inherit, or owe. However, Jon’s fee is based only on the liquid assets directly under his firm’s management.

When it comes to engaging a professional like himself, Jon suggests looking for competence, experience, shared values, and mutual trust. Even though “EP Wealth Advisors” is the #1 Google result for the search terms “financial planning for small businesses,” most of Jon’s clients are introduced by personal referral.

Jon shared that he is passionate about helping small business owners who are growing their businesses or getting ready to sell and clients who are great at accumulating wealth and assets but who might not know the best ways to invest or spend them. These clients typically are asking, “Have I hit my number?” and “Do I have enough to live comfortably and provide for my family?”

If you think getting to know Jon might help with your personal wealth journey your business, please reach out to me. I’d be honored to connect you.

If you’re like me, you’ve heard all you need to hear about mask-wearing and social distancing and are ready to get on with business. For the savvy business owner, this might be the perfect time to engage a valuation expert (sound of needle scratching record!). If you’re not planning to immediately exercise your rights under a buy-sell agreement, make gifts to your descendants or to charity, reward high-performers with incentive packages, take out a new loan, sue for divorce, break up your partnership, defend an audit, or sell your business why would you need a valuation – especially now?

What if, along with an objective look at what your business might be worth to an outside buyer, the exercise helped you make better decisions? What if the exercise helped you support and strengthen the areas where your business is weak and better capitalize on its strengths?

My friend Shina Culberson, owner of Quist Valuation, points out “It’s not just the numbers. There are a lot of qualitative, intangible aspects, like employee retention, culture, and communication, that drive value.” How are decisions made? Who gets a say? Shina and the Quist team ask these and lots of other questions to understand their client’s business. By analyzing the answers with the client, Shina helps business owners learn not only how a valuation is performed, but also what factors third parties will use to measure value. Shina explains the relationship between the mechanics of the business’ operations and objective, saleable value.

The Quist process, which is the same for each client regardless of size, includes an analysis of processes, systems, communications, employee involvement, and other hard-to-quantify things that may not show up in financial statements. Shina’s goal is to provide useful insight, not just numbers. She and the Quist team strive to give business owners tangible takeaways they can use to improve their businesses. “Many people in finance,” she says, “feel good about themselves when they use jargon and unfamiliar terms that clients might not understand.” Shina likes to work with clients who want to understand valuation methodology and are actively involved in the process. Shina shared, “We’ve enjoyed the best success with clients who want to learn more about their business and actively use that knowledge to improve.”

Shina and her team provide independent, third-party perspective about how a company’s strengths and weaknesses translate into value. Quist doesn’t offer accounting or consulting services. By offering only valuation services, Quist allows its team members to remain independent and objective. Team members can analyze data from the outside looking in, can see where a company has executed on its plans, and can identify challenges needing attention.

The Quist team is always on the client’s side, but in some cases this means that a team member’s role is to play the devil’s advocate. This can help the client understand the scrutiny they’re likely to experience from buyers. The team works hard to help clients prepare for a sales process by anticipating buyer challenges and objections. For example, Shina and her team worked with a client who was interested in selling a business, helped the client understand some weaknesses on which a buyer might focus, and helped the client design and implement processes that supported and strengthened the weak points. The client successfully sold the business for a value with which the client was well pleased.

The Quist team’s feedback is the only outside voice some clients ever hear. These owners need an independent, arm’s-length estimate of value and an analysis of how the different components of the business affect value. For example, a family-owned business whose owners include some that are actively involved in the day-to-day operation and others who are not actively involved relies on Quist’s analysis for much-needed independent measures for fairness and objectivity.

Most of Quist’s engagements are with long-term, repeat clients, and this shared history allows the Quist team to help the client create and update plans and hold the client accountable to perform those plans. Team members also draw on Quist’s knowledge database for useful data to help analyze and plan in situations similar to those where Quist has prior experience. In many cases, the longevity of the client relationship allows Shina and her team to suggest improvements, evaluate their implementation, and follow-up and suggest adjustments as the clients’ needs change. For example, Shina and her team used their intimate knowledge and experience with a client to help craft an action plan for the successful transition of ownership to the upcoming generation. This included an analysis of such questions as, “What are some of the things that need to be shored up to continue to grow?,” “When should the transition process begin?,” and “How long will it take to transfer a client relationship to the new generation?”

In 2018, Quist launched a software platform called Quist Insights that asks clients 100 questions covering multiple categories. The platform analyzes the answers and returns recommendations for improvements. Clients love Quist Insights because it allows for a practical understanding of steps the client can implement and the connection between the effort and the resulting increase in value. “Valuation is technical,” Shina notes. “We augment the numbers so that the client always takes away something practical and actionable.”

Some clients have more than a single person complete the Quist Insights questions to gain varied perspectives about their company. For example, both partners of an architectural firm completed the questions and used their combined answers to assign tactics based on which partner was best suited to accomplish each tactic.

Ideally, clients engage Shina early enough to use the information and analysis Quist provides to improve and add value to their businesses. “For any client,” she says, “opening up the ‘kimono’ of their company is a very vulnerable thing to do.” Often companies are hesitant to offer up their weaknesses and aren’t sure if their strengths are valuable. Getting prospective clients over that hurdle is one of Shina’s main goals and biggest challenges.

If you may be kicking some valuation firm tires, Shina recommends focusing on correct credentialing, years of experience, and depth of expertise. In the world of privately held companies there’s no cut-and-dried answer, so the consultant’s years and depth of experience are especially important. And while you’re finding a good fit, Shina recommends making sure that the company’s operating and shareholder agreements are up to date; that its financial managers are up to the task and using accrual-based accounting; and that you’re using processes to preserve, share, and transfer knowledge.

If this sounds like something that your business might need and you’d like to meet Shina, please reach out to me. I’d be honored to connect you.

Do you ever feel like your computers have minds of their own? Do you sometimes think the machines might outsmart you? Do you or your staff spend lots of effort entering bookkeeping transactions or re-writing nearly identical proposals? Would you have trouble finding the details about a transaction that took place last year, much less six or seven years back? Are the whereabouts or activities of your sales staff a mystery, or do you lack even a clue how to support them? Are you certain that your company’s data is backed-up somewhere? Good, but if you needed to retrieve it would you know where to start? Do you even have time left over to run your business?

If you’re struggling with similar questions, lucky for you that all is not lost – even though a vaccine isn’t yet widely available. My friend Dan Taylor offers solutions to many of these nagging questions that keep you awake at night. Dan understands that the biggest challenges facing most business owners are things like technology not supporting the needs of the business, lack of processes, and records not being in order. Oh yeah, Dan also lists cyber security as a business owner’s headache that can be solved without adding staff with national security clearances.

Dan describes what he and his team at Collaboration Lab do for clients as “helping them get more of what they want and need out of their technology.” Dan shared with me that his favorite result is seeing his client’s relationship with their technology and IT departments improve. Dan’s passionate about closely matching solutions to the needs and size of the client’s business. He enjoys relieving the pain points owners suffer when running their businesses, such as processes not working or even existing or staff lacking knowledge or training needed to use the systems they have. Clients describe Dan and his team as “focused” and “cost effective”, and they appreciate the unique support and training, which might include video tutorials and custom instruction, that Dan and his team provide.

Dan employs a strategic approach that brings clarity to the process and gives the client peace of mind. He starts with a free consultation to make sure there’s a good fit between his team and the client and that the team and the client are on the same page. Dan’s process includes an inventory of the client’s equipment, policies and procedures, training, and documentation. After analysis, Dan and his team offer a project outline that includes a description of the work and the goals the client expects Dan’s team to achieve with the project.

Even though most of Collaboration Lab’s work is on a project basis, Dan’s perspective is frequently on the client’s long game. By arranging three- to five-year strategies, including annual reviews, Dan helps clients plan for growth and change. Taking into account a client’s five-year goals, Dan can help the client navigate and optimize the IT solutions at critical stages.

Dan also asks lots of questions, like “Is what we’re looking at going to meet all the client’s needs?” “Have we considered that there might already be a purpose-built solution?” “How much will we spend training on a new system compared to the cost of the systems with which we’re already familiar?” Dan uses the answers to these and many other questions to maximize the client’s return on their technology investment.

When Dan was introduced to one client, they were paying for prospect leads and the salespeople would make presentations to the prospects, but if the prospect didn’t commit during the first meeting the company and the salespeople then let the prospects fall off their radar. By bringing in the right CRM system, Dan helped create a sales process that included scheduling, tracking, and follow-up. The company used the new system to close 30% more business. The sales staff appreciated the system’s ability to automatically create a follow-up process. By itself, the CRM system wouldn’t have changed things. The implementation and training Dan’s team provided was the measure of success.

Like most IT consultants, Collaboration Lab helps clients update technology. Dan shared, “At a certain stage most tech people become fixated on having servers on site, backups off site and replacing equipment every 5 years. Nothing changes if everything is working.” Dan looks for opportunities in these well-oiled machines, and often finds savings of time and money with just small equipment or vendor changes. In one case, Dan helped cut the client’s annual IT spend in half by switching to cloud-based servers and negotiating new licensing deals. Oh, and the client enjoyed the benefits of a better solution.

Dan’s successes are not centered on expense reduction. He recently helped a non-profit organization hold its biggest annual fundraiser virtually instead of at a fancy banquet hall. With Dan’s help, the non-profit both cut operating costs in half and, using online giving, set the fund-raising record for the event.

Dan suggests starting the IT consultant search by asking for referrals from people you trust. Check references and solicit feedback from people who have engaged the consultant. Ask the consultant to sit down and make sure you’re the right fit. Finally, look for a consultant who doesn’t markup hardware or software sales. This signals to Dan it’s someone he can trust.

Dan works exclusively through referrals. He confided that his favorite project involves a business problem that hasn’t yet been solved by the client’s technology, but can be. There’s a lot of space for dishonest people to leverage most people’s lack of knowledge of technology, allowing vendors to sell services the client doesn’t need or doesn’t know how to implement. “If you’re looking for commoditization in your IT services,” he says, “I’m not the person you’re looking for. If you’re looking for a relationship and someone you can trust and work with, that’s me.”

If you think building a relationship with Dan will help you and your business, please reach out to me. I’d be honored to connect you.