Hartford Business Journal

www.HartfordBusiness.com April 25, 2016 • Hartford Business Journal 21 BIZ BOOKS Tips to avoid the startup failure trap "T he Wisdom of Titans: Secrets of Success from Entrepreneurs Who Rose to the Top" by Wil- liam J. Ferguson (bibliomotion, $27.95). Even knowing that the odds of success are against them, over 500,000 entrepre- neurs start businesses each year. If small business owners want to beat the odds, they should heed the advice of 11 who made it big. Here are key takeaways: J.W. Marriott, Jr. (Mar- riott International) — "Fig- ure it out; hang in there." Building a business requires the ability to solve problems. You need a team to solve them because you don't know what you don't know. Don't micromanage; give people room to grow their skills and the company will grow, too. William Sanders (LaSalle Partners) — "Become a student of the industry you're in." Know where you're going and what needs to be done to get there. You can only do that if your strategy remains relevant to the times. Keep success in perspective because consumers are fickle; you have to find ways to add value to the products/services you provide. Paul J. Diaz (Kindred Healthcare) — "Mea- sure your progress at every step." Tracking progress creates "a framework for achieve- ment and accountability." Tracking includes ensuring people have the resources to do their jobs. It also helps when strategy needs to be tweaked by identifying red flags early on. While Diaz focuses on data, he manages by "walking around" because it gives him a sense of what it takes to get the jobs done in the trenches. John Robbins (American Residential Mortgage) — "Be mindful of the shadow you cast." Leadership and integ- rity are partners — especial- ly in times of crisis. There's no room for cutting corners on ethics and quality. If the leader doesn't do what's right, he/she can't expect the employees to take the high road, too. Robbins walks the talk at the industry- level, too. Writing in the Mortgage Banking Magazine in 2005, he spoke of the financial train wreck that was coming because of subprime mortgages. Eleven success stories with one common thread: There is no "I" in entrepreneur. Each acknowledges the support they received from family, employees, mentors and stakeholders. • • • "Macro Thinking — The Last Busi- ness Book You'll Ever Need" by Eric P. Kaufman (CreateSpace, $24.99). Four areas drive every business: products/ services, users (i.e. current customers and prospects) planning and the team. As busi- nesses grow, their cultures invariably develop a need for more specialization (i.e. compart- mentalized activities), which supposedly increases both efficiency and effectiveness. In reality, shifting focus from the four drivers to operating processes leads management away from a culture of constantly question- ing "what drives the four drivers" to one of managing a growing bureaucracy. Think about that in light of this ques- tion: What happens when a company begins losing money? Its first efforts to stem losses involve cutting operating costs, not finding ways to increase sales. Comparatively speak- ing, it's easier to cut costs than find ways to increase sales. The cost cutting fur- ther reduces the company's resources — particularly its intellectual capital (i.e. downsized staff, over- worked remaining staff, increased turnover), which means its ability to identify get- back-in-the-game ideas dwindles. To stem losses, a company needs to again see the big picture by reexamining the four drivers that made it grow. That process starts with revalidating your products/services. This involves both current and former cus- tomers. Customers have choices. If they're choosing or not choosing you, find out why. Meet with them. Ask about their perception of your product/service's ongoing utility, quality and value. When you find criticism, treat it as an opportunity to fix what's gone awry. When customers know their advice helped find a solution, they see their input as one of your busi- ness drivers. Organize your plan and team around processes that deliver what the customers want. Key takeaway: A "think like a startup" culture always ensures the four drivers don't get lost in transition to organi- zational processes. n Jim Pawlak is a nationally syndicated book reviewer. Jim Pawlak OTHER VOICES Expanded homeowners insurance proposal harmful to consumers By Eric J. George T he state legislature's Insurance & Real Estate Committee recently proposed a bill that would require anyone who insures a home to purchase a policy with a costly and nationally unprecedented cov- erage mandate. House Bill 5522 (An Act Concerning Homeowners Insur- ance Policies and Cov- erage for the Peril of Collapse) is intended to address the "crum- bling foundations" problem reportedly affecting a limited number of homes and buildings in northeastern Connecticut. Although it is certainly understand- able that some legislators wish to move quickly to address this problem, HB 5522 would likely do harm to consumers across the state while providing no relief to the affected homeowners. The controversial bill narrowly passed out of committee by a vote of 10-9. Many of the legislators who voted against the bill expressed concern about the detrimen- tal impact it would have on the market for homeowners insurance for all Connecticut consumers. The Connecticut Department of Insurance, the state agency tasked with pro- tecting consumers of insurance, warned that the bill would threaten both the affordability and the availability of homeowners insur- ance in Connecticut. The legislature should reject this harmful concept. Based on news accounts, the foundations of affected homes are crumbling or deteriorat- ing prematurely. The Department of Consumer Protection has hired a civil engineer to deter- mine the cause of the deterioration and how many homeowners are impacted. Any public policy reaction should be placed on hold until the full cause and scope of the problem can be determined. But no matter what, the bill passed by the committee is not the right solution. HB 5522 would require every homeown- ers insurance policy issued in Connecticut to pay for almost any type of damage that could occur to a home. It would even require insurance policies to cover "defective mate- rials or construction methods." In essence, it would convert homeowners insurance into a home warranty. Under HB 5522, consumers of home- owners insurance across the state would be forced to purchase policies with this expensive new mandate — assuming such policies were even obtainable. According to the Department of Insurance, the bill could impact not just the affordability but also the "future availability" of homeowners insur- ance in Connecticut. The proponents of HB 5522 falsely claim that the bill would provide relief to affected homeowners. But the new mandate is pro- spective, and the legislature cannot retroac- tively change existing contracts. Perversely, HB 5522 could be particularly harmful to the very region affected by the crumbling foundations problem. In testimony submitted to the Insurance & Real Estate Committee, the Department of Insurance explained that if the bill were to become law, "carriers would need to increase rates in the regions affected by the faulty foundations by reflecting the claims costs of those losses in future pricing. As a result, all homeowners in the territories impacted by this issue — regardless of the status of their foundations — could face significantly higher premiums in the years to come." Hopefully, the state's investigation will yield answers to this very serious problem. But affected homeowners deserve better than the false hope offered by HB 5522, and all consumers deserve the freedom to purchase insurance without costly govern- ment mandates. Legislators should reject such a harmful concept. n Eric J. George is the president of the Insurance Association of Connecticut, the Connecticut trade association representing homeowners insurance carriers in the state. Eric J. George ▶ ▶ Keep success in perspective because consumers are fickle; you have to find ways to add value to the products/services you provide.

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