A recent blog post at Both Sides of the Table on common mistakes made by startup companies triggered some thoughts based on our experience in specialty insurance (see here). The author is in the tech business, so some items on the list do not apply to insurance. A couple of the most interesting:
- Moonlight responsibly (or Plan Responsibly) – This is particularly important in the insurance business. Not so much in terms of the ownership of intellectual property, but certainly in terms of the ownership of customer relationships and any non-compete agreements.
- Founding Members – the post says 2 at most. Not what we would say (see below).
What we see:
- Adding too many founders – The development of a business starts with strategy and then works its way through multiple iterations of business plans and financial projections. Along the way, things change. Having a large team with areas of expertise can create problems with a team, and the result can be fitting the plan to the team. Start the strategy with a core team, which may be one person, build the plan and projections, and add expertise as needed, not before.
- A lack of focus on breakeven – We have seen significant focus in the planning process on huge revenue numbers residing in spreadsheets. What is more important is figuring out how to make actual sales fast enough to get to breakeven (see below).
- No proof that it can sell – Can they show that the product will sell? This is typically answered with a lot of assumptions, and no real life testing.
eSpecialty Insurance is your specialty insurance expert. We have developed a streamlined marketplace to provide multiple proposals from a range of competitive insurers, along with expertise to help you evaluate your exposures and choose the best combination of comprehensive coverage and price. We look forward to working with you.