How is insurance different from gambling?

Think about it. You promise to pay someone (usually an insurance company) some cash (a ‘premium’, payable in instalments) related to some ‘event’ which may or may not occur in the future. If that event occurs, you suffer some loss and the insurance company compensates you for that loss. If the event doesn’t occur, the insurance company gets to keep your cash.

How is this different from placing a bet on the name of a newborn member of the royal family? Or next week’s weather? The difference is that, when buying insurance, there must be the risk of some ‘loss’ – what lawyers call an ‘insurable interest’. That loss can have serious consequences and is something you want to avoid. (No, the heartbreak of seeing your local team lose does not constitute a ‘loss’ for these purposes!)

Your business faces a whole host of risks which can have devastating effects. Understanding and managing the risks is important but achieving the right balance can be tricky. Some businesses neglect to buy insurance with catastrophic consequences and others are ‘over-insured’ resulting in waste.

Tips for managing your insurances

You may want to take advice on your approach to insurance and here are some quick tips:

1. Think broadly about your risks: Could your customers experience harm? Or the general public? Or your directors or shareholders? Or your employees or vendors? What about your facilities or assets? You may need insurance as a matter of statutory compliance or because it is required by contract or constitution. You should thoroughly review your needs.

2. Get expert advice: No two businesses have identical insurance needs. Insurance contracts can be complex, and an expert can ensure you are properly protected. Choose your expert wisely since they tend to specialise by industry or by the kind of coverage.

3. Shopping around: There are usually many providers of similar insurance policies, often competing on price. Always consider a selection before deciding.

4. It’s not only about price: For complex policies, especially in business, there may be specific items you want to insure against. Be diligent about reviewing the entire contract and pay attention to different charges, types and levels of cover, ‘cooling off’ periods and how excesses are calculated.

5. Already have insurance? You can drive prices down by taking a cheaper quote to your existing provider. They may be willing to beat or match your quote immediately or when you need to renew.

6. Consider different ways to buy: You may have an insurance broker or financial advisor who should be proactive in assessing your needs and coverage. Banks might offer this service and there are numerous comparison sites which help you evaluate online insurers. Each channel has advantages and disadvantages, but it is usually best to work with someone who really understands your business and goals.

7. Answer the insurer’s questions accurately: Sounds obvious, but many claims are unsuccessful due to errors or a lack of proper documentation.

Ready to consider your insurance coverage? The starting point is to assess your business goals and the main risks you should protect against. Your accountants are uniquely positioned to support you and then ensure you access the right coverage from the best possible providers.

Please get in touch if you would like to discuss this.

By all means, have an occasional bet when the opportunity arises – but don’t leave your business future to chance!

What Do Customers Really Want From Your Business

If one of your customers is at an industry lunch talking with other business owners, will your customer say anything about your business? Will it be positive or negative, or will they say nothing at all? They might be comparing your business with similar businesses that people are talking about too.

You should always know what your customers are thinking and talking about your business. It’s a given that they are thinking about your business, your products and services, and their experience they receive as a customer.

Where there could be a missing link between what you think your customers think of your business is ‘perceived indifference’. This is where customers believe you don’t care about them or don’t value their patronage, making them more likely to leave or turn to your competitors. I’m sure you care about each one of your customers, but the way customers perceive your business can be the difference between them staying or leaving.

Finding Your Areas of Perceived Indifference

You are looking to understand what those customers love, hate, or frustrate them in doing business with you. This could be way in which you answer the phones, raise your bills, deliver the product or the service to your customer. Whatever it is, it’s important that you find out.

The best way to find out is to simply ask. Your customers have the answers; the problem is that nobody asks them. We have found that working with our clients, when they go to their customers and ask them, their customers are very open and prepared to help you.

By finding out what your customers really want from your business, you can make adjustments to exceed those expectations and gain a loyal following. These are the advocates who would willingly speak up about your business to others.

There are different ways for finding out perceived indifference in your business.

One-on-one with your customers
You are asking your customers personally whether over email, the phone or face. You will get in-depth responses and customer experiences, but it takes more time to collect responses, and you may be subject to customer biases on the importance of a certain business area.

Survey of multiple customers
You can deliver a short questionnaire to a group or all of your customers to get their feedback. This way you reach a larger group of customers more quickly, and can see trends in their responses on the same areas. This approach can be very insightful with minimal effort from the business owner.

Customer advisory board
This is a round table environment where you get ten to twelve of your customers together in a room and work through prepared questions or areas of the business. Your customers will appreciate they are being listened to, and will be open to providing you feedback, which could be the crucial element to you ensuring your customer attention is where it needs to be.

Some of our clients find it more effective to have an independent facilitator in the above approaches. This is a third party who can run and control those surveys or round tables, remain neutral to all customer feedback, and then aggregating the responses and recommendations into a report.

This is a sort of work that we are experienced in and enjoy doing. If you feel that we could play the role of that independent facilitator to help you better understand your customers, please reach and get in touch and we can have a conversation with you about how we might be able to work together.