Insurance and Other Lessons from Business Failure

What you’re about to read is the hardest thing that I ever had to put to paper regarding my business career. Candidly, I needed to muster quite a bit of courage to write this, as it speaks to a life chapter that was extremely difficult, replete with sleepless nights and the stress of managing a business with 50 employees and their families’ livelihoods hanging in the balance. 

Fortunately, I found a great deal of inspiration from the work of Brené Brown, author of the Power of Vulnerability. One of her quotes sums up my experience: “I want to be in the arena. I want to be brave with my life. And when we make the choice to dare greatly, we sign up to get our asses kicked. We can choose courage, or we can choose comfort, but we cannot choose both. Not at the same time.”  

So, yes, I got my butt kicked but I also found new purpose and growth in navigating some very difficult business challenges and, now that I’m an advisor with CCIG, am resolved to now help other entrepreneurs as they labor to find the best ways to support their employees, clients and our economy.

There were plenty of highlights in my journey as an entrepreneur but the one that upset the order of things took place on July 5, 2019.

My business partner and I were 10 months into the acquisition of an automotive hail-repair company. We had purchased the company toward the end of the 2018 hail season and embarked on the normal post-acquisition transition plans. 

It was a bumpy ride as we battled to generate off-season revenue in a highly seasonal business. The off-season was a grind but at the end of May 2019, our revenue challenges seemingly came to an end as we benefited from stormy weather that set the company up for a record month in June. This was a relief, and, in a flash, the battles of a long off-season became a distant memory.

As we entered July, however, we experienced a second storm. This one happened to hit our facility, where 232 customers’ cars were parked.

The impact to the business was staggering: a $1.2 million claim between property damage and business interruption. 

I was forced to make an emergency capital infusion in the business using my entire life savings while we went through the claims process.

After six long months, our insurance provider sent us a $400,000 settlement check, far short of what we needed because we did not have the appropriate insurance coverage to properly address one of the key risks that we faced as a company: the impact of a hail storm on cars in our custody.

Despite all that we had gone through, not to mention COVID-19, we hung on, eagerly awaited the end of the pandemic lockdown and the beginning of our busy season. We rebuilt our sales team hiring some amazing people who had lost employment during the pandemic. We secured a significant number of high-profile commercial fleet clients and we were ready to put the challenges behind us as we approached hail season.

Incredibly, hail season never came in 2020. For the first time in eight years, the Denver metro area saw  not a single significant hail event all season long. 

We were forced to travel out of state to generate revenue. Our team went above and beyond, living away from their families in Wyoming. In the end, however, overcoming the two black swan events we had experienced proved too much.    

We wound down the business and, after intense soul-searching, I resolved to find a way to make this the most positive experience of my professional journey.

This was my crucible, where the lessons learned would benefit not only myself but other entrepreneurs who fight the battle every day to provide for their employees and create thriving businesses.   

And so now, I have embarked on my next chapter, serving entrepreneurs in their commercial insurance needs.

In the gauntlet of acquiring a business (seller negotiations, legal documentation, due diligence, etc.), it was clear we did not give adequate attention to our risk management program.  

Through this, I learned a valuable lesson that insurance does not matter… until it really does.

In my earlier life in banking and in the private equity world, leveraging a company demands a clear-eyed understanding of  all the potential risks. Coming up short in this process—much like a failed analysis of an insurance risk management program—can have devastating consequences.     

In spite of my difficult journey, and perhaps because of it, I truly love the entrepreneurial journey and the M&A world perhaps even more now than ever. My plan, my resolve moving forward, is to do all I can to serve those driven by private capital to grow and scale their businesses. 

Needless to say, I am thrilled to join a team that shares my passion for serving the needs of entrepreneurs and privately run businesses that are the backbone of our economy. 

I also am truly thankful for my faith in God, the support of my amazing wife, Ann, and my family, my business partner Chris, our former employees, my dear friend and coach, Jan Rutherford, and the support of other entrepreneurs who helped me through this chapter.  

Allow me to end with a quote from one of my heroes, Pope John Paul II, who witnessed the horrors of the Nazis and Communism in Poland and ultimately leveraged those experiences to aid in the dismantling of the Soviet Union with President Ronald Reagan as his ally:

“I plead with you -- never, ever give up on hope, never doubt, never tire, and never become discouraged. Be not afraid.”