You Can’t Run a Business Without Insurance

If you don’t think insurance is important enough to protect yourself, consider it as a marketing ploy. Either way, regardless of how you look at it you can’t run a business without insurance. There are too many variables if you don’t have downside protection. That’s how we use it. I tell people it’s like hedging bets when you gamble in Vegas. You always want to have a downside limit to how much you can lose. If you have your life invested in your business and no insurance, your losses have the potential to be more than 100% of your investment. How can it be more than 100%? Simply because of your liability exposure and the fact that you are personally liable for your business activities.

Prove Me Wrong

Wait a minute, how can I be personally liable? Can’t I just incorporate my business? Well, if you incorporate the business and follow all the rules regarding corporate law, then no you shouldn’t be on the hook for everything. My problem with this is if you aren’t smart enough to properly insure your business then there is no way you will take the time to incorporate or setup some personal asset protection. If you prove me wrong on this, good for you. I just don’t see it happening.

You Can’t Run a Business Without Insurance

I used to tell people that you can’t run a business without insurance simply because they all understood how important it was. So, when I added how horrified I was to learn just how many shops in our area didn’t carry enough or even any insurance, my customers responded with the same shocked expressions. I wasn’t exaggerating either. In fact, my customers were usually the people who told me about this before I investigated it myself.

Look at it this way. If you do something stupid on an epic level, like not properly insuring your business, then you deserve to be called out on it by your competitors. Do you think I’m the only guy that thinks you can’t run a business without insurance? I’m not. Believe me. Your competitors will find out and burn you with that information. You might be a great person, but business is business. You’ve heard the expression, “it’s not personal, it’s just business.” Yep, that’s all it is.

Explain to Them WHY It’s a Big Deal

On the flipside of this, if you spend the money on insurance then pat yourself on the back and promote it. You should really push that fact with your customers. They won’t think it’s a big deal until you explain to them WHY it’s a big deal. Most of your customers can’t imagine doing anything without insurance. Most people assume you can’t run a business without insurance, so they don’t even bother to ask. We really pushed the fact that we are insured in all our advertising and marketing. It’s up to you to educate your customers. It’s important so you might as well make your customers aware of it so they ask your competitors for proof before going to them.

Now what do you think the rest of our market did when their customers started asking them to see “proof of insurance” and “certificates of insurance”? They went and bought insurance. They might not have been happy about it and probably called me a few choice names in the process, but they did it. And that helped all the detail shops in our local region.

I Never Looked at My Competitors as Enemies

Keep in mind here that I never looked at my competitors as enemies. I liked most of the guys in our business. Some were jerks and just didn’t like us because we were more successful than them. That’s life. Even those guys I just figured they would eventually figure out that I’m not such a bad guy and come around.

Don’t Be an Asshole

At any of my businesses one of my personal rules that my employees enjoyed calling me out on when I wasn’t following my own rules was “Don’t be an asshole.” When we were too busy to handle particular jobs, I had a small number of shops that I regularly referred work to. They in turn would send us larger projects that they couldn’t handle. For example, most of the other shops in my area didn’t do paint chip repair or bumper scratch repair jobs. So, they would refer those jobs over to us. When these other shops referred work to us I did two things:

  1. First, I always cut them in on the deal and gave them a commission for referring the work our way. In business you have two options every day. It’s the age old story of “The Guy” and “The Asshole”. You can either be “THE Guy” aka the expert that makes good deals for everybody, helps newbie competitors starting out, happens to be your competitor but you still call him to ask hard questions because he always knows the answer and you trust him because he’s THE guy. Or you can be “that guy” that nobody trusts and literally everybody thinks the world would be a better place if you got run over by a bus. Aka “the Asshole”. It’s your choice. I can tell you from experience that I started out as a hyper-competitive asshole and quickly learned that I enjoyed being “THE Guy” a ton better as I got wiser over the years.
  2. Secondly, once we completed our part of the job, I always sent the completed car back to the other shop so they could do the detailing part. This was just good business. The other shops loved sending work our way because all of us benefitted. You’ve heard of win-win. I believe in it 100%. Whatever you want to call it, karma, paying it forward, it’s all the same theory. Take care of people that help you and it always comes back to you. Or put simply, “Don’t be an asshole”.

So yes, I’ve always been a tough competitor. The thing is I don’t do anything that everybody in our industry shouldn’t already be doing.

Here are a few more ways that I’ve promoted my businesses by emphasizing things that everybody should be doing:

  • The question I would ask everybody is this, why would you want to mess with a small, local shop that may or may not have insurance coverage?
  • Got some guy undercutting you by working out of his garage? I don’t consider them “competitors”. They’re just guys with a hobby trying to take money out of the pocket of the professionals. You need to blast those guy into oblivion. There’s nothing worse than fly-by-nights. I routinely asked my customers and even placed ads asking the question, “Why would you want to deal with a fly-by-night car washer masquerading as an “auto detailer” operating out of his house. Have you checked his insurance? He most likely uses his own personal homeowner’s insurance to “protect” the cars he’s working on? Does he even have a business license?” 99% of the time the answer is no. I’ve run into guys that have a separate garage on their property and they run actual businesses out of it. That’s not who I’m talking about here. We all know who I’m talking about because we’ve all run into them. I tell my customers “oh that guy, yeah he cleans cars as a hobby, he’s not insured or anything, why anybody would leave an expensive car with him is anybody’s guess”. Act indifferent, your customers will come around to your side soon enough.
  • Whenever I found out that one of my competitors was paying teenagers under the table, I jumped on that like a rabid dog. You should do the same. This behavior makes every auto detailer look like a crappy fly-by-night operation. When competitors approached me to complain that I was saying things, I would ask them why they thought it was ok to do that. They usually said something ridiculous like “everybody’s doing it”. Yeah? Um, no. I never paid people under the table. Especially part timers or teenagers. Run your business like a professional. If you can’t bark with the big dogs, then you need to get off the porch and come back when you can.
  • I always promoted the fact that we maintained full time and trained employees, not summer help.
  • I also make sure my employees understand that we are all on a team of valued members working in a smoothly running operation. This made them excited about their jobs and they broadcasted it everywhere telling the world how much more professional “their shop” is versus others.
  • One thing that really gets our employee’s excited is the fact that we offer them employee benefits including health insurance.  You may think that it’s expensive, but figure out how much it costs you each time an employee that you have spent months or years training, just walks out the door for better wages or benefits. Once again this all falls back to the auto detailing business best practices which includes improving the working environment for your employees and making a more inclusive work culture.
  • One of the other ways that I promote how much more professional we are is to use examples of bad shop practices in my area. The best one is telling everybody about the shop in our area that didn’t have the correct garage keepers liability insurance when their shop burnt down with 9 vehicles inside.  Big lawsuits, irate customers, and bankruptcy for the shop owner.  Simply spending a few bucks more for the correct insurance would have saved him a lot more than money. Everybody thinks “that can’t happen to me”, until it does.

You Are a Professional, Act Like One

You are a professional, act like one. Don’t get angry or let people see when you’re upset. Competitors don’t have to be enemies. Just do a good job, help people out and most importantly “Don’t Be an Asshole”. And remember one of my primary rules with anything is you can’t run a business without insurance. Don’t try it. It makes you look unprofessional and the risk is far greater than the few bucks you save today by not having it.

We hope you enjoyed this “how to” tip sheet. Access more tips, training, and insight by subscribing to the E-Newsletter. We are also very active on Facebook, Twitter, and Google+.

Suggested Pages to Check Out

Detail Shop Liability Insurance Page with Info on Garage Keepers Liability Coverage

1099 Contractors and Other Detail Shop Tax Issues

Go Back To Home Auto Detailing Step-by-Step Page