Internal Controls

A few years ago someone close to me was having a lot of issues with a problematic employee.  This employee had gotten really difficult to deal with and become really unpleasant.  My friend resolved to have the unpleasant fix-it-or-go conversation when his employee blurted out, “I’ve been stealing from you for years”.  Now he knew where the attitude problem came from.  Stress from stealing.

But the problem was bigger than attitude obviously.  As he dug in with a hired CPA he discovered that the amount stolen from him was huge, and the covering of tracks by his employee very clever. The thefts didn’t bankrupt his business, but they did hurt it severely.  As it turned out, much of the thefts could have been prevented with some fairly simple internal controls.

Small businesses have trouble with segregation of duties.  Often they only have one bookkeeper who may perform those duties as one job of many.  Certainly most small companies don’t have multiple people in accounting.  So, they fail to segregate.

Here are some basics.  You need to segregate who agrees to buy things from the person who pays for them.  And you need to segregate who balances the check book from who writes the checks.  If this means the business owner has to be one of those people, or a part-time out-sourced service has to be used, that’s better than being stolen blind like my friend.

Another basic that gets ignored often is requiring people who deal with your money to take at least one full week off a year.  That means a total of nine days.  Being gone that long allows things to show up.  Not everything will, but it makes the job of covering tracks harder.

There are other prudent business practices everyone ought to engage in, but most do not.  Those who don’t are just an employee personal problem away from serious financial harm.  It’s worth asking your outside CPA for counsel on.


Ginsu Knives

I can remember watching TV commercials as a kid featuring Ron Popeil and his amazing kitchen gadgets, and commercials for Ginsu knives with fascination.  Not only were the products amazing they also seemed a bit unbelievable.  They did so many things for so little money.

Of course other people were suspicious too and that was why these products always offered “free gifts”.  The free items were there to enhance the already incredible value.  But they were also there for an even more important reason: risk reversal.

One of the problems all marketers face is how to get potential customers to take the risk to buy the products they are selling.  People don’t want to waste their money and they are skeptical.  One of the smart marketers deal with this is to reverse the perceived risk by not only offering money back guarantees but actually making people better off, even if they don’t like their purchase, with items of value they get to keep.  Thus, “if you don’t like it return it for a full refund – but keep the knives as our gift” tag line of all those early TV commercials.

This is powerful!  The question is how can insurance agency owners make use of it?  After all rebating premium, or giving gifts worth very much, is usually against the law.

One way to do this is to develop a basket of services, or inexpensive goods, that you provide to new customers that come with every new account.  Even if the customer is unhappy later they get to keep those things.  I’ve seen this work as a real value add in agencies.  You don’t have to spend a lot of money to put things like iTunes gift cards, electronic devices, vouchers for restaurant meals and similar things in your basket.  Promote its value and let people know that even if they try your agency and don’t like the experience they can “keep the knives”.

There are lots of ways to reverse risk, and it’s still an important psychological marketing tool even to today’s sophisticated consumers.  What ways can you think of to reverse risk?

Giving It Away, Two  


ideas-twoIn my last post, I talked about the reluctance of many to share, contrasting it with what a mindset of abundance can do for those willing to share.  My thesis was that giving things away, instead of always trying to see how much you can get for them, can lead to greater prosperity.  In this post, I’d like to tell you about one of the ways I am putting my money where my mouth is.

I decided to start a new company because (what else!) I saw a need.  The need was for our member agencies to be able to make more money on some of the business they write.  As I worked on the pro forma I was conservative in my estimates but projected a 35% annual growth rate for the business.  In reviewing my numbers with our CFO, he pointed out that if we could get to our 5 year revenue estimate in the first year we’d make a lot more cumulative profit over that period.  Duh!

I was challenged.  How could we grow the revenue that fast?

My thinking centered on how we could make this new company’s product absolutely irresistible to those who use it and sell its services.  After a lot of thought, and tinkering, I decided to create an industry best compensation program and, in addition to that, give half of the net profits to those who use and sell the product.  That would let me cover our costs, make a reasonable return on capital and be irresistible in the bargain.  It would let us become true joint venture partners with our customers and sellers without their needing to make any investment or take on any risk.

So, that’s what we’ve done.  In the first three weeks since we launched, we’ve booked 300% more revenue than my original forecast!  And we’ve arrived about where I thought we’d be at the end of year 5!  In addition to that, we’ve only marketed to about one third of our prospect base – so we have every reason to expect our first year numbers to blow our wildest dreams away.

I’ll be the first to admit that the results we are seeing far exceed what I expected.  But I did expect something remarkable to happen.  Sharing opens up the possibility that the part that you keep can be much bigger than what you would have had if you had kept the whole thing.  In my experience the same thing happens when you share ideas as well as profits – they multiply – and you’re richer for having donated your wisdom to others.

To some this probably sounds crazy.  But I’d like to challenge you to think about what you have that you can give away, or share with others.  What are the possible positive outcomes for your business?  I believe they are virtually unlimited.

Taking the Long View


Do you have any problems in your business right now?  Of course, you do.  There are always problems!  I was talking about that this afternoon with a very experienced consultant who has worked with a lot of business owners over her career.  And as we talked about this it occurred to me that those who become truly successful as business people tend to overlook their problems.

On the contrary, I’ve noticed that many people seem to go from one problem to the next.  Often solving one thing brilliantly before moving on to another.  But as they go they are constantly focused on problems.  Often they are frustrated and sometimes, it seems, perpetually so.

Others seem to almost glide past the temporary difficulties of life, and business, in an almost glib or cavalier fashion.  Serious people may even look at them with a certain disdain for their seeming carelessness.  Yet, these people seem to do very well.

I think the difference is vision.

Some seem to focus only what is right in front of them and when that is troublesome what they see is trouble.  Others have focused their attention on the future, and while potholes appear in their path, they don’t focus on those rather keeping their gaze far out in front.

The difference is a bit like landing an airplane.  When you first begin to learn to fly, and land, an airplane you are taught to focus your eyes at the far end of the runway and not the part closest to you.  This is the key to a successful and smooth landing.  When you forget that and look where you’re landing you tend to bounce, skitter and slide.

Like landing an airplane, keeping the long view in sight is important to running a business well.  It is what keeps the little bumps that are normal from becoming the focus.  There are always bumps but they will be smaller, and less impactful, if you are looking at the future instead of the present.

When you find yourself beset with trouble, and it seems that your days are filled with problems, try looking down the runway to the end and see if things just don’t go a whole lot smoother.

Giving it Away


I’ve had two conversations recently, about the same topic, that are bothering me.  In the first a new friend in our industry observed that sales people in general, and insurance people don’t like to share.  And by that, he meant share ideas.  In the other, a colleague wondered why I don’t sell some of my ideas to others and instead give them away.

The first conversation was bothersome because I recognize that my friend is right.  In fact, I frequently encounter agency owners who view everything they do as a secret, that if others copied, they would lose opportunity or business.

The second conversation is a concern because it implies that not being greedy, or not always seeking to profit from my ideas, is foolish, short sighted or somehow contributes to a smaller degree of success.

For the last couple of years, I’ve read and listened to Peter Diamandis, the author of “Abundance: The Future is Better Than You Think” and the developer of the Abundance 360 conference. One of the things Peter talks about is the demonetization of products and ideas.  The other is how truly abundant almost everything of value in the world is.

Peter’s teaching, along with my own personal philosophy of casting bread on the water has caused me to share increasingly those things that others might call “trade secrets” or some other appellation of value.  My thinking, as it has evolved, is that there is more business available to me than I can ever possibly garner and what little I know of is probably already known anyway – so what is the harm in sharing? I also have discovered that the more I am willing to share, the more I am shared with.

In fact, while it isn’t the primary motivator for me, I’ve had the interesting experience that the more I give away the more I receive.  I’ve written before about Adam Grant’s book “Give and Take: Why Helping Others Drives Our Success” and about how powerful, in terms of human interaction, relationship and ultimate achievement giving is.  In contrast, my own personal observation is selfishness is often the root of failure.

Selfishness and greed are born of a mindset of scarcity Diamandis tells us.  And these characteristics repel while generosity and giving attract according to Grant.

As a practical matter, I cannot possibly sell every prospect in my market nor could I take care of them if I did.  If sharing with others means they can, so what?  But what if sharing opens me to the gifts of others?  In my experience, it has and that has led, in business, financial and satisfaction terms to more success than I ever dreamed of.

So, who is the fool?  The one who shares or the one who secrets away?  We all get to make this distinction ourselves, and in our own business the decision.

Tuition for Something Else

diceI recently read an article by a well-known business leader who listed seven things which he believes separates highly effective, successful people from ordinary ones.  One of those seven things was a willingness to risk failure.

In our business we talk about failing a lot.  We do this because I believe that if you don’t risk failing you can’t make progress.  You can’t push your own envelope.  In fact, I tell team members that if they never fail, they aren’t doing the work I expect them to.

Among other things, failure is a wonderful teacher.  We don’t just learn what not to do when we fail, we also learn how to do things better.  A few years ago I decided that we should try an experiment and see if we could teach two complete insurance neophytes how to be successful agency owners.  This was way beyond our company’s skill set and my team was dead set against it.  I understood their reservations, admitted that we would likely fail, but also believed we’d learn a lot that would help us with the core of our business: developing successful agencies.

We put a lot of effort into teaching these two people and mentoring them.  Today, a bit over two years later, one of them is out of the business and the other one is still struggling.  Clearly, this wasn’t a runaway success on its face. But, there is much more to the story.  What we learned from the process has been invaluable in the teaching, training and mentoring of several dozen new agency owners since then.  Our “failure” taught us a great deal that has been very useful.

In business, experimenting, taking risks and facing potential failure pays tuition for an education in something besides the experiment.  We’re paying tuition for something else.  Looked at in this way, the routine of taking risks becomes in some ways easier, or more normal.  Certainly it helps us see the value of doing it.  As business leaders, if we wish to be really effective, this risk-taking skill is incredibly valuable.


Why You Must Have Video

video-iphoneWebsites have come a long way in just the last two years.  Two years ago, content was king.  No new content meant no one cared, and two years ago, the buzz was all about mobile.  Now, if you’re not mobile, you’re simply not relevant.

Today, websites without video are just not very effective compared to those with.

Insurance agencies may feel a bit overwhelmed with what is needed to keep up with all of this.  After all, we’re insurance people not internet marketers!  Or are we?  The truth lies somewhere in the middle.  The fact is that almost all commerce, including insurance purchases, takes place either directly on the web or is influenced by it.

So, like it or not, keeping up with what consumers expect in their web experiences isn’t an option, at least for today’s winners.

With that said, are there some best practices for video that can be adopted by anyone?  Yes, to begin with, web videos should be short.  The stats seem to indicate that past 30 seconds you begin to steadily lose viewership, although interestingly people will currently watch videos longer on their mobile devices.  Go figure.

Of course, videos need to be interesting.  That can be a challenge if you only think of insurance in policy terms.  But think about Progressive’s, State Farm’s, and Farmer’s ads on TV.  They manage to convey a message, with humor, in 30 seconds.  You can do the same thing with web video if you flex your creative muscles.  Or, you can put some of the videos your carriers have created on your site.  That saves time, money, and creative brain cells and leverages their brands with yours.

Make it personal.  This goes a bit against the last paragraph but where local agencies have a real opportunity is to personalize their offerings.  This is especially valuable when you share the video beyond your site into your social media posting.  You’re posting on social media, right?

Be topical.  What makes videoes go viral isn’t production values, its interest.

Turn it over frequently.  Change things up every few weeks.  Anything on your site that is a year old is, well, old.

Being a 21st century marketer is challenging, but so was being a 19th century marketer.  Try things.  Fail.  Get better.  But try.  Video is where it’s at in website marketing for now.  Who knows what will be hot and required in another two years.  Virtual reality anyone?




As consumers continue to move online for virtually all their shopping needs, it has been stated countless times how critical it is for an insurance agency to have a website.  By now, there are few agents who can possibly survive without one.  Chances are, you have a website up and running – but have you rebuilt it in the last 24 months or so?

If you have not, you may want to take a look at your competitors, so as to understand whether or not your website is keeping up with them.  Better yet, take a look at those you frequent and ask yourself if your website is as engaging and easy to use.

Are you using video at all?  Estimates show consumers spend 88% more time on sites with video.  What is more, video increases organic search engine traffic over 150% and 300% more monthly website visitors.  Video doesn’t have to be difficult to produce.  In fact, at OAA, we have even used our iPhones to create compelling and engaging videos.  Start with something, watch your analytics to see what improvements you get, and go from there.

Get rid of as much text as you can.  We are all so busy and distracted; truthfully, we don’t want to read a lot on websites.  It is wise to go through your website and get ruthless with words.  Consider replacing words with image.

Optimize for mobile.  About 25% of Americans only access the web on mobile devices.  If one out of four of your prospects and customers have to scroll around your pages trying to read itty- bitty type, they’re not coming back!

I remember ten years ago, when we thought websites were just brochures in cyberspace we could print once and forget.  Then a few years ago, new and fresh content regularly became important. We learned that in order to be effective, regular attention must be paid to them.  Also a few years ago, we realized that we needed to create websites from scratch every two or three years.  In the same period, we learned that we needed to link them to all the online social media outlets.  Now, they need video, less writing, and mobile optimization.

I don’t know what’s next, but I do know it will come fast and that keeping up is even more important to attract and retain today’s increasingly demanding consumers.

Get To!


One of the coaches I have at Strategic Coach is Lee Brawer.  Lee is a very philosophic guy and also a deep thinker.  I so appreciate the insight that he brings to business and to life as it has been a great stimulant to my own thinking about how to grow a company over the last several years.

A pillar of the OAA way is gratitude.  Lee has been instrumental in helping me think about what it means to be grateful “in” something and not just “for” something.  Recently, our Vice President of Corporate Communications LeAnn Sanderson was asked to speak about the reasons OAA has grown nearly 300 per cent in four years.  I asked her what she thought and she said “I think it’s our culture of gratitude and celebration”.   Of course she’s right.  Thank you Lee, we are grateful for your guidance in this!

Recently I was interview a candidate to head a new business we are developing and she said something incredibly profound to me.  This young lady had just spent a year battling cancer in a very real struggle for survival.  She said what she’s learned is to be grateful and to think about the things she “gets to” do instead of those that she “has to” do.   I was immediately alert and attentive because this is something I’ve heard Lee say a number of times.  The difference was the power of this candidate’s story that drove home the impact of the words.

All of us are incredibly blessed with opportunity.  Sometimes we just don’t see it.  Thinking about “getting to” instead of “having to” and even actually changing the way we talk about things to reflect this change of expression is incredibly powerful and leads to victory and success in so many ways.  It is certainly true in the life of our business, and the life of this young lady.  Try this little change of expression and see if it helps you see opportunity instead of problems!

I know you’re wondering how the interview went.  She starts Tuesday!


Cash Flow



I am lucky to be able to spend time around other entrepreneurs, which is both inspiring and a reality check.  Recently, I was visiting with a group of talented, ambitious business owners at a dinner when the subject of managing cash flow came up.  The reality check for all of us, who are in a wide variety of businesses and business development phases, was that we all have experienced cash flow management issues throughout our careers.  The inspiring part was seeing how gutsy, determined business builders always seem to come through.

In thinking about my own story, as a serial entrepreneur with a number of businesses over several decades, I realized that I can’t really remember when managing cash flow wasn’t important and sometimes critical.  I’ve learned a few things along the way, and I thought I’d share them here.

  1. There will always be a cash crisis. There always is at some point.  Know it, believe it, and plan for it.  That all helps when the crisis comes.
  2. Get prepared. Having a Plan B and C really helps.  For me, part of planning is a great banking relationship.  I have found setting up lines of credit when you don’t need it is pretty easy.  Keeping your banker informed of your progress is appreciated.  Remembering that bankers make money only when they lend is useful and borrowing even when you don’t need to builds a relationship.  Always ask for more than you need.
  3. Pay the business first. One of my partners taught me this many years ago.  Set a “required” profit level and pay the business at least that much in profits before paying yourself.  This creates discipline and it builds working capital against the day you need it.
  4. Don’t squander money in good times. Just look at what oil and gas companies do when oil is $100 a barrel.  Never do that!
  5. Always remember profits and cash aren’t the same thing.
  6. Don’t make business decisions for tax reasons. You get to pay the tax eventually, and later may really not be better.  Make good decisions because they make business sense, not tax sense.
  7. When you borrow, try to borrow against assets not cash flow. You get better terms.
  8. Conserve cash. Make it a habit.  Pay bills in time – just.  Rent instead of buy when cash is needed for operations.  Don’t take money out of the business just to put it in your personal account.  Keep it where you can use it.
  9. Collect your receivables on time all the time not just when cash is tight. Then, it probably won’t get that way.  Don’t be your customer’s banker or you’ll need one, and his terms won’t be as generous as yours.
  10. Don’t sit on inventory. If you’re getting fewer turns than you should, slash your prices, get cash, and get it invested in something you can make money on.

If you’re in business, you’ll have a cash crunch sooner or later.  When you do, here is my last tip:  don’t give up!  Sometimes things can be desperately bleak, but they can and do turn around.  Are you an entrepreneur?  Then, managing cash flow is just part of the never ending daily flow.