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It’s an Investment, Not a Cost

By Tim Kolacz

When you buy a building, what are you really doing? Are you buying it for the value it gives your company? Is it for the, hopefully, increase in its value over the coming years so that you can sell it at a profit? Or are you buying it so that your company has a stable place to be for several years, giving you the peace of mind that you will not need to move until you have outgrown it?

When you buy a building, you buy it because you are investing in your future.

The building represents you and what you want the company to project to your clients. You design it or remodel it to suit your needs. You are able to make a bigger warehouse to store more day-to-day goods. You upgrade the electrical and internet cabling to make it more user friendly for the staff to be more productive. To sell more stuff. You give yourself an office so that you can have meetings, discussions and a work area to strategize about selling more stuff. You make it your own.

When you think of costs, what comes to mind? Cost of goods sold? Inventory, supplies, office chairs, paper, pens, desks, computers. Not always; these are items that you need to run your business. I need to have a computer so that I can create a spreadsheet so that I can print it out and then deliver it to the client and he can sign my PO and I can get to work.

When you think of insurance, what do you think?

That’s my third biggest cost and it’s killing my bottom line! I never use my insurance and they always charge me more and then when I do have a claim, I have a $2500 deductible and they just eat all my money and I never get it back. Right?

Or do you think of it this way: my insurance is an investment in my future, for if there is a big giant monster claim that I can’t write a check for, I will be able to stay in business and keep my lifestyle and keep my employees employed.

When talking about insurance, I always try to put it in the right perspective. It is a cost of doing business. It is not always used; sometimes not for years. Sometimes, it’s not ever used. Yet you’ve paid hundreds of thousands of dollars into the carriers’ pockets and for what? A nice binder of paper with a whole bunch of words that is mostly unreadable. Or is your insurance program delivered and explained to you in detail what it really means.

I was speaking with a client this morning and he related the following story to me. An employee was going to work in a company work truck and came around a bend and plowed into another vehicle. The other vehicle was full, 10 people including the driver. The client had a $1,000,000 auto policy and a $10,000,000 umbrella policy sitting over the auto policy. All ten of the people in the vehicle that was hit, died. The carrier reviewed the accident, determined that that driver of the work truck was liable, and wrote a check for $10,000,000 to cover the cost of the accident. This is because the owner of the business had a discussion with their broker and told him that he needed to stay in business if a catastrophic accident occurred. The business owner is still in business.

He looked at his insurance program not as a true cost, but as an investment, like a building. Like better software, like a better employee that you pay more in salary to in order for them to come to your company to become more productive. To sell more stuff tomorrow.

Tim Kolacz is an Account Executive with HUB international Insurance Services and can be reached at (951) 779-8730 or [email protected]

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