How Do I Overcome the Challenges of Building My Own Startup?

Alright, welcome back. This is Gene Marks again. Steve Jones, thank you so much for joining me once again. We’ve had a few conversations already. Steve is the Chief Marketing Officer Small Commercial at The Hartford, and we’re talking startups. So let’s get into it. Steve, just so you know, for our audience to know this, you deal with hundreds, thousands small businesses. Is that a …

Steve: Sure. There’s a million small businesses.

Gene: A million.

Steve: And I personally deal with each one of them.

Gene: Yeah, that’s right. And you’re very, very busy doing all of that, and we … Now, of those million small businesses that you deal with on a daily basis, I’m assuming that you’ve ran into one or two of them that have been startups. First of all, is a startup too small to get insurance?

Steve: No. And-

Gene: Why did I expect you to say that?

Steve: No, definitely not. And that’s actually a really great question. There’s a lot of layers inside of that and part of it is, it depends who is starting up the business, at what point they’re going to think of insurance at all. And in many cases, the startup wasn’t like, “Today I’m going to start a business.” It was something that grew and it was something they started doing and maybe it was what we might call a side hustle and maybe they didn’t need insurance, but it’s grown and now they’re formalizing it. That’s different than the person who’s, for a long time, been raising capital and looking at properties and really thinking about what the model’s going to be. And then one day it isn’t and the next day it is. Those are different circumstances and both require different kinds of insurance, but nothing is really too small. And one of the mistakes that a lot of business owners make is that they think they don’t need it or can’t afford it.

And insurance is one of those things that it’s kind of a bummer to learn you did need right after the fact. But it is a process that you can do. You can do it and find out about it and get the right coverage for yourself. And for startups especially, you’re already kind of taking a leap. You’re already taking a risk and you ought to be thinking about the ways, “If this is a dream of mine that I want to continue, what are the things that I can control to ensure that that happens?” And part of that’s your own intelligence and your own hard work. And part of that is the trappings that go around it, like insurance.

Gene: You deciding to do business or provide insurance to a startup is a risk for you. So you want the business to succeed as much as the business owner wants them to succeed, right? I mean you guys are both in it. You’re taking that risk. So have you ever … you must … do you turn down business from startups? And if you have, I mean, what type of startup for you … you’ve been doing this 20 years, do you think to yourself like, “Oh man, this does not look like a great one.”

Steve: There’s insurance out there, really, for any business. And most insurance companies kind of have to decide, “What can we effectively cover and write so that we stay in business so we can keep covering and writing for our customers?” Every insurance company’s got to make a choice on some things that they can and can’t write. There are some things, like we will go to an extreme to say, “We’re not going to insure a dynamite manufacturer.” This is the kind of startup that we would probably avoid, but most businesses, and this is one of those things where you have experts for almost every part of your business and an agent is one of those. And they exist to find the right company for you. So if it’s a type of business that, for whatever reason, The Hartford won’t write, they exist to find a place for you to get covered and you will find insurance for your business. It’s just a question of working with the right people.

Gene: Got it. When you walk into some companies are there … when you meet or you’re introduced to somebody starting up a business or they come with a startup idea, what is your … how do you determine yourself after doing this for as long as you have that this is a good one or not a good one?

Steve: Well, it’s funny because we have risk engineers and they’re the kind of folks who-

Gene: I want that job.

Steve: Right. [crosstalk] But they are the kind of people who work with, especially, our larger businesses and they’ll go in and tell you, “Do this, don’t do that. Change this, change that,” to make your business safer. But I think of this story: there’s a restaurant not too far from here. It’s a great place. I won’t say the name because …

Gene: Because why should you? They’re a great place.

Steve: They’re a great place. Yes. Good point. Because I’m always trying to get room at this place. You’re right.

Gene: Right. Everybody stay away from this place.

Steve: For that reason.

But they have a stairway down into their restaurant and there’s then a second step down and they’ve actually turned that potentially dangerous situation into kind of what they’re known for. And they even sell t-shirts that basically say, “Watch our step.” And they’ve embraced this idea and it’s a way for them to actually limit incidents.

Gene: Right.

Steve: Because they’re actually now known for watch our step. To me, I … every time I go in there I kind of get an insurance chuckle, which doesn’t happen very often, but I do every time I walk into that one.

Gene: Your wife has had a few businesses you mentioned before? Successful? Failures?

Steve: Yeah. I think most, what I call serial entrepreneurs, more successes than failures, but enough failures to kind of compel the next success and her business now is very, very successful. She’s in a private practice for psychology. It’s very successful. What I’ve been able to watch her do, and I feel like I’m Gorillas in the Mist … Do not tell my wife I just called her a gorilla. But you’re in this position to sort of watch in the wild how somebody goes about their business, all of the things that surround it, and it’s fascinating learning experience. And she has become expert on things that she certainly, she went and got her PhD in psychology, I doubt she took a single business course, but she’s become an expert in so many things. She’s still very good, outstanding at her craft, and now she is this powerful sort of businesswoman also. Really fascinating to watch how that’s happened, but really only happened because she’s had successes, but she’s had some things that did not work, but like a lot of business owners, there’s really two or three different kinds of business owners that I see a lot of.

There are those who are in it just as sort of a side, just a little extra cash. Maybe it’s something I like to do, but I’m in a position that I can make some extra cash, but I kind of got a full time job too. Then there are the two types that have, it’s my full time occupation, and some of them are coasters. They’re doing it. It allows some schedule flexibility. They don’t not beholden to anyone. They like doing what they’re doing, but they aren’t looking to conquer the world.

Gene: Right.

Steve: Then there’s the third type that is, “I want to be on every street corner.”

Gene: Right.

Steve: And “I cannot rest on this one single idea,” and my wife is somewhere in between those two. And the single habit that has made her most successful is perseverance. And I think if in our listening audience, some of you are shedding a tear over that because that word to me is really powerful and important when it comes to small business owners. Perseverance. There’s not a single day that’s the same and there’s not a single day that doesn’t come with something that you’ve got to conquer in one way and it’s on you to do it.

Gene: So my wife is starting up a business. She’s quitting her job of 20 years, starting up her business this summer. You’ve obviously been going through this. Any advice for couples where one is a startup entrepreneur and the other is actually in the real world with a real job?

Steve: Right. Two things: There is so much benefit to it. So my wife who owns her own business and she is on the clock 24/7, but she has some flexibility, and there’s great power in that flexibility and allows me to be here as I need to to be here. That, lean absolutely into that and take advantage and recognize the two roles, if that’s how it sort of works out for you. The second thing for couples is when she’s home, she’s still working. And that’s probably true for you. Now listen, it’s true for me. I’m logged on, I’m doing stuff for work. I’m doing things, but she’s in a different mindset than I am. I’m closing out emails. I might be working on a presentation or something. She’s still in full business mode, and you have to recognize, respect, and allow that. We even created space for her in our house so that she … it used to be a den that I used for the most part, but it’s her office now and I didn’t do that kicking and screaming. She needs that space to be able to work and that is her space and you got to recognize that they’re always on.

Gene: Yeah. Yeah. Now if she was here today-

Steve: Oh boy, is she? She’s not going coming through that door, is she?

Gene: Well, I was actually going to say, the more I talk to you, the more I’m like, “Maybe we might want to get her on the phone,” but if she was here today, what would she … how would she answer this question? What mistakes has she made that she wouldn’t want to repeat again? And you can use her as an example. But then also again, like I said earlier, you’ve dealt with a lot of startup companies. What do you see these people making mistakes?

Steve: A lot of startups, and my wife has made these same mistakes, especially early. They get very excited. This isn’t true for all startups, but my wife certainly fell into this persona. Very excited about the things that express their business. “I have a website. I have a social handle. I have business cards. I have pens and cups to giveaway. I have pictures of my office. I know how I’m going to decorate my office.”

Gene: It’s like they’re romanticized by the idea of being an entrepreneur, right?

Steve: Day two of most startups, they’re like, “I have my website. Look how awesome it is.” “Do you have any customers?” “No, but I have a weapon website.” That getting sucked into the things that are fun about launching your business. It’s like planning a party. “It’s going to be purple. We’re going to have balloons and this is going to be the theme.” Getting sucked into that without thinking about everything else about your business. “What is my bookkeeping system going to be? What is my insurance going to be? How can I afford the property I’ve gotten? Where am I going to be? How am I going to generate customers? How am I going to keep customers? How am I going to pay my people? How am I going to keep my people?” That’s the stuff that isn’t exactly fun, but it’s really, really important. So if you’re ordering business cards, pens, and balloons too much, you’ve got to stop yourself and focus on the things that aren’t quite as fun.

Gene: Got it. What is the importance of capital in starting up your business and where did your wife get her capital?

Steve: This is a great question. So here’s … this is a little bit of a tangent, but related. A lot of people wait too long to do their startup because they’re trying to create this liquidity first, and they’re trying to be sure they are perfectly positioned. Now there is, listen, that’s a good way to be sort of disciplined about it. Not just dive right in, but don’t do so much of that that you aren’t actually launching the business. These days, most business owners self fund their startup, especially at this sort of size that we’re kind of talking about here. They are self funding, they’re using credit cards, they’re using their own personal savings. And listen, sometimes that’s just the way it’s got to be and it certainly puts a little bit of pressure on how your business is going to perform. There are numerous ways that you can get funding and there are a lot of sort of small business lending specialists that can help with that.

Now, depending on the kind of business that you’re starting, a lot of times you can get it going with more limited capital. There’s a lot of e-businesses that don’t have the same overhead. And the second you start saying, “I’ve got to have a place of business,” that changes the financial equation. Or “I have to buy inventory and sell it.” That changes the capital equation. Or “I need this much and this kind of technology.” It changes your capital equation.

There are a lot of places to go to find it, but I’ll still say, just to circle back to this, most people are funding it themselves. Most people are using their own savings. Most people are using credit cards. In the case of my wife, when she first struck out to start her own business, she worked what really amounts to three jobs. She had her job inside of a hospital. She knew she wanted to strike out on her own. She didn’t quit her job and hang a shingle. She kept that job and did it 50 hours a week. We also had a newborn so she was … that was another job. And then nights and weekends, she was starting her private practice. That story, heroic as it feels to me, and I have a ton of regard for my wife and for the folks who do that, is not unusual. That is how people strike out on their own these days.

Gene: That’s what I did.

Steve: And that’s what she did and I don’t think she took any business lending. She did take business lending later when she was expanding and that’s worked out great for her. She took some lending for that, but we used some of our own money and she was conscious of that and earned it all back, and then some.

Gene: How about, does she have any … and again, I know we’re picking on her but-

Steve: Let’s do it. She’s not here.

Gene: Yeah, she can’t even defend herself. She … other than you, and who wouldn’t want to rely on you as a mentor or an advisor, but is there … does she have other mentors or advisors that help in her business and who are they?

Steve: She, early on, would listen to me more about sort of marketing things, because that’s where my expertise was and she’s got that well under control, and she understands her social and SEO and … The biggest source of mentoring for her, and this is true of a lot of the small business owners that I talk to, are other small business owners. And sometimes it is, regardless of the trade that they’re in, there are just some truths and commonalities and similar struggles that every business owner has that make it easier. And I find them to be the most generous and thoughtful advice givers there are. They legitimately don’t want people to make the same mistakes that they made.

Gene: It’s true.

Steve: And she has … for her, she’s got a Facebook forum for her particular kind of business that is probably the biggest source of discussion and inspiration for her, and to the point where she’s made relationships with folks there. She mentors people and she gets great advice. Those resources are out there and you just got to find them. You can’t replace that advice from someone who’s doing what you’re doing .

Gene: Yeah, I’ve found Facebook groups, LinkedIn groups, listening to the community, Small Biz Ahead, and I mean there’s … you want to find other like-minded business owners. I think you find that although what people do, they think they’re special in what they do and to an extent they are. They do specialize in stuff, but 90% of running a business is pretty much the same regardless of what the business is. And it’s good to share that.

Steve: That’s true.

Gene: Yeah. It’s good to share that advice. One final question, when it comes to starting up a business, how important is change? There is the … Alexis or Hannah sent us the CEO and the founder of Reddit, he … him and I did a speaking thing together and he always was telling the story of how when he started Reddit, which is a big, it’s a very popular website, news website and community and forum websites-

Steve: It’s the front door to the Internet.

Gene: It is the front door. It’s fantastic. And he said that when they initially started up Reddit, it’s changed and evolved significantly from when they originally started up. And he said the reason why it’s become successful is because they were open to that change. Has your wife’s business changed a lot? Do you consider herself open to that change? How important do you think that is to somebody starting a company?

Steve: So, again, I’m just confirming she’s not here, because I’m about to say something that strikes right to her personality. But I think this is true of a lot of people. I think my wife would have a hard time operating in a big corporation because she wants to get it done and she wants to get it done her way and she values stability. When change came to her, the things that she has the most trouble dealing with her business are the things that are out of her control. Something with her landlord or her property, something in the personal life of her employees. Those are the things she can’t control, so she does seek to exert influence over all aspects of her business to keep it going, which especially early, made it hard for her to think about changing. The exact opposite is true now and I’m certain there are a lot of small business owners listening who get this.

She had her business set up one way and it was really just her. It was her own private practice. Now she has created a group practice, and which means her business has grown. She has given up a lot of the control and there’s a lot more chaos in the system because it’s bigger, but here’s the important thing: Even when she started that group practice, she had initially started with classifying her employees as 1099s, independent contractors, who quickly learned, “I need to classify them as W2s. Full employees.” The difference between a 1099 is they’re an independent contractor and they sort of are self-employed themselves. Right. And a W2 worker is what you think of as a normal employee. And for a lot of reasons she needed to switch. And it was a critical reason. Legal reasons, tax reasons. She needed to be sure she was switching. And it was the most difficult, technically difficult thing I’ve ever seen somebody have to do to switch their whole business and the economics of it. But she did it because she’s kind of a bad ass. I think I can say that. And serious about making her business work. It was a major change that, 15 years ago, might have crippled her but it didn’t because she’s now been through and had to face a lot of changes like that

Gene: I think to succeed, you’ve got to be prepared to do that. So that basically means that the business that she’s running now is really not … it has changed a lot since when she first started it up and that’s why it still is. One final question. So Steve at, you’re very happy here at The Hartford. You’ve been working here for, we said 60, 70 years. Just kidding. 20 years. No intention of leaving. You’re going to retire here happily, I’m sure. However, if you were to leave The Hartford, and you wanted to start up your own, but you’ve seen all these businesses all over the place, what business would you start up?

Steve: I’m going to break my own rules, but I-

Gene: It better not be in the insurance industry.

Steve: No, I would not, I would absolutely not do that because I know too much. But the thing that I’d most like to do is write. So I would love to just go out and be a writer. That would be my favorite thing, but I’m not going to declare that. I’m actually going to say what I would really like to do is, in this model, is getting tougher. A bookstore coffee shop would be my favorite job in the world.

Gene: Wow. Awesome.

Steve: Would love to have it just to sip coffee and read and hang out with people all day. Put the music that I want on.

Gene: You do realize how hard that is, right?

Steve: It’s incredibly hard, which is why I’ve been at The Hartford.

Gene: And you realize, you don’t make any money doing that unless you have like 10 of them, right?

Steve: Right.

Gene: Okay.

Steve: This is why-

Gene: Not to shoot-

Steve: … breaking all my rules, but it’s also why I’m still at The Hartford. It’s the one thing I want to do. I’m not sure it would be terribly biased.

Gene: That’s great though. That is great. Well, Steve, it’s great. Thank you for all your great advice. I think you’ve definitely help people that are starting up businesses, giving them some insight in what they should be doing and thinking about. Thank you for listening as well. So this is Gene Marks. You’ve been listening to The Hartford’s Small Biz Ahead podcast. We will be back for another episode shortly. Thank you. And have a good day.

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