When someone talks about insurance, you probably think of something you buy from an agent or broker that provides you with financial protection from theft, damage, liability, etc.
There are other concepts of insurance though. Webster provides this alternate definition of insurance:
a means of guaranteeing protection or safety
It is this definition I want to use to frame this month’s topic. A business that operates with processes and clearly defined organizational structure and is supported by relevant operating systems is insured against many of the problems and pains of managing, growing and sustaining a business. A scalable, sustainable, profitable business is insurance against failure and decline.
This premise is also predicated on the proper culture of the team. Organizing people and responsibilities isn’t enough; to provide adequate insurance, the team must be accountable to the structure, processes and the system.
Individually, each member of the team will require discipline, allowing them to maintain a regime of the proper practice and execution of the processes or parts of processes they are responsible for based on their role in the organizational structure.
Collectively they have to be empowered to make decisions and operate within the organization’s goals and guardrails. This means they require education on the goals and access to the information they will need so that they can make data-informed decisions. Depending on their position, they might require access to relevant data, including financial data like actual costs, gross margins, and estimate/budget vs. actual performance. In this example, then, they will require education about financial reporting and concepts.
Accountability can’t exist without discipline and empowerment. Results don’t come without accountability and proper action.
Scalable, sustainable, profitable businesses can weather significant storms better than those with little to no definition or team structure. Those storms could be a literal snowstorm or a surprise event like Covid. Businesses that are prepared can adapt and evolve from the point of their standard as conditions change. This is insurance that provides you with a continual return on investment, not just one when you use it because of an insured event.
David Gallagher is principal for Spiritus Business Advisors. He has over 25 years of experience as a senior service-oriented leader on all aspects of property service. Contact him at david@spiritusba.com.