As a business owner and entrepreneur, I’m often asked what prompted me to start my own company. The answer is pretty easy in my case; it was out of sheer necessity. In 2002 not long after the events of 9/11 happened, the insurance industry was in a panic and the parent company of the firm I worked for went bankrupt. We got sucked down with the mother ship! I had only been in the United States for a little over two years and my contacts were limited to the agents I had met and a few other industry contacts.
I was faced with a choice: work for an alphabet house or start something on my own from scratch. I had always dreamed of having my own business and the opportunity was staring me in the face. Besides, I was way too outspoken to be a rock star in a Fortune 500 environment of red tape and politics! So once I committed to starting my own company, I jumped right in. I bought myself a fancy new car to look the part…and then found out I was about to become a father. Talk about extra motivation (and pressure)!
Motivation…no revenue and a baby on the way. Needless to say, there was plenty there! So off I went into the world in search of submissions. I would visit agents’ offices all day and then the anticipation would build during the ride to my home office. Would there be any faxed submissions waiting for me (yes, I’m that old)? Any email submissions? Ecstasy if there were and disappointment when there were none. But, I eventually got to a point where the fax machine ran all day long and emails kept pouring in. As they say, the rest is history. Well in this case, not so much – this is when it gets really interesting.
We started gaining significant traction and writing business regularly. The top line grew to the point that we even began paying ourselves a modest paycheck. Expenses grew as we hired people and everything got more complicated as we added carriers. More agencies. More carriers. Agency bill. Direct bill. Different billing terms. Different commission rates. Big deals. Small deals. And everything in between. All of this created issues — but we were still growing and growing quickly. We were excited and having a blast writing deals! We slowly paid ourselves more so we could pay the bills at home (baby literally needed new shoes). The only problem was that the company wasn’t making any money. We found small problems and corrected them. Exciting stuff like the local office supply company keeping us stocked up for a decade at all times! But that was peanuts. So we chalked it up to timing of collections and continually hiring new staff to handle the growth. Eventually we’d make a buck…right?
Wrong. Five years in and we started to lose money. Real money. We could not figure out what the problem was. Our agents were being paid on time. Our carriers were being paid on time. We didn’t owe anyone anything. We continued to pay ourselves a little more over the years but nowhere near what we had earned in our prior careers. What were we doing wrong? Our carriers thought we were killing it. Our agency base was loyal and they kept sending more and more business. We didn’t do extravagant trips. No company Cadillac’s. Modest office space. Competitive commissions. All of our reports from our bookkeeper said we were doing all the right things.
Then bingo! Our bookkeeper. Our trusted bookkeeper. She was a grandmother. She had worked on and off with one of the partners for over 20 years. She helped us set up our systems, policies and procedures (insert red flag here). You just never know – a home shopping network addiction can be a dangerous thing. As one agent said when he found out: ‘that sure is a lot of Snuggies!’ Over the course of six years, from day one, our trusted bookkeeper, a grandmother and devout Christian, stole every penny of profit and our seed capital. Nearly one million dollars!
For a guy with a CPA (well Canadian Chartered Accountant to be exact) that was a gut punch. How could we have missed this? Idiot! Talk about a shot to the ego. After several drinks, a few hangovers, and more cussing than an Andrew Dice Clay bit, we put the police’s case together, not to mention the Crime insurer (always buy more coverage than you think you need – we ALL trust our bookkeepers or they wouldn’t be in that position) we managed to put our egos in our pockets and keep moving forward. Instant success! Imagine that, get rid of the fox in the hen house and things come together. Idiots!
Fortunately, the story continued for us. Our bookkeeper was smart enough to know she had to keep the carriers and agents paid or her gig would be up. Thankfully we didn’t owe anyone money, except Uncle Sam of course. Since sending our bookkeeper to jail (three years in a military penitentiary for women if you’re curious), we have managed to acquire two companies and quintupled our written premiums over five years.
Success is never a straight line. In fact, it looks more like the path of that house fly you can’t swat at 3am! But it’s all worth it in the end, and we are ultimately all a work in progress, no matter how successful we think we are. The point of the journey is not to arrive; it’s all about the ride, and the lessons that life teaches us along the way.
– Bruce Peddle, Managing Partner