Businesses owners seek help from risk managers who point out pitfalls, backup options
For more than a decade, Tatiana Garcia-Machuca worked at Top Tier Nutrition in Munster.
About a year ago, the owner decided it was time to move on, giving Garcia-Machuca an opportunity to take over the shop. She had worked for the owner on and off for 13 years.
“It was a full-circle moment taking over,” Garcia-Machuca said.
She had been an English learning language tutor at an elementary school and was looking for a different experience. The shop, which features a variety of protein shakes and bowls, was definitely something different.
“This is something I’ve always wanted to do for years now,” she said. “I was ready for a change, and everything just worked out.”
Last winter, however, something unexpected happened: A customer slipped on ice while walking to the shop. The customer sued Garcia-Machuca’s business.
“It was outside in the parking lot and that’s out of my hands. That’s more of a landlord (responsibility), and with this being part of a strip mall, the property is actually divided,” Garcia-Machuca said. “It’s still in question where exactly everything happened.”
Garcia-Machuca said the incident happened early in the winter season.
“I am always the first one in this strip mall every day; so, when there is bad weather, I’m here early, and I’m shoveling my door, even though I don’t have to,” Garcia-Machuca said. “We have people that plow, but unfortunately, around the time when that customer fell, it was one of the first snowfalls, so you know the plows aren’t really on call on that.”
While the fault wasn’t hers, Garcia-Machuca got an early lesson on the importance of being prepared.
These pitfalls are risks that some business owners don’t anticipate. And that’s where risk managers come in.
Entrepreneurs are risk takers by nature, so talking with an expert in risk management can lead to asking the right questions and mitigating the things that can go wrong, according to the Insurance Information Institute.
Prevention
Roosevelt Haywood III owns Haywood and Fleming Associates in Gary, which sells commercial insurance.
“It’s designed to mitigate risk that businesses will come across,” he said. “For instance, if a company has a fire or some type of accident, some type of situation that causes them to go out of business. Well, that’s the end of the story.”
Haywood said most scenarios aren’t “that drastic.”
“But as I tell my clients, insurance is designed to get you back to where you were before the incident, the accident, the situation,” he said.
Haywood and Fleming Associates was established in 1984 by Haywood, a second-generation insurance professional. He started in the business at an early age, working in his father’s agency, Haywood Insurance, which was in business for 55 years.
Haywood’s firm provides services to government entities such as the City of Gary and the Gary Sanitary District, Gary Community School Corp. and other entities such as Gary Southshore Railcats and small businesses.
“What we do in terms of risk managers is look at the situation. Suppose they didn’t have insurance at all, which is not a good business decision. That’s where risk management comes in,” the 75-year-old Haywood said. “You do those things that minimize or prevent losses from happening.”
Haywood said a situation can eat into a business’s profits if the loss is substantial enough.
“If you can prevent the loss from happening, not only are you saving operational expenses, but you’re saving your insurance for a time that maybe you really need to use it,” Haywood said.
Haywood said risk managers are good for insurance companies too.
“The good thing about risk management, not only is it good for the client, it is good for the insurance company because they like to have a good sense that what they’re insuring is not going to cost them an arm and a leg because they go by numbers,” Haywood said. “If they have enough claims, they’re not going to be profitable.”
Entrepreneurs should understand the importance of having a good lawyer, a good CPA, a good insurance broker and other advisers, he said.
“A good group (of experts) can give you advice on growing and prevailing in your business because someone may be a fantastic cook or baker, but that doesn’t mean that he can run a restaurant or bakery,” Haywood said.
Good advice
Jana Szostek is the director of the Center for Professional Development and the Business Academy at Indiana University Northwest in Gary. She is a professional trainer and business consultant with over 25 years of experience helping businesses and entrepreneurs succeed. She even teaches about risk management in her MBA classes.
“We talk about if someone is harmed or injured when they’re interacting with the business,” Szostek said. “We deal with a lot of people who run businesses out of their homes, and so that brings some pretty significant risks with it.”
In her classes, Szostek goes over hypotheticals in risk avoidance. She also talks about how some business owners don’t seek expert advice.
“There’s just bad advice being given to people who depend on a friend that has a business instead of talking to a professional about their specific business,” Szostek said. “They rely on what their friend told them. Their friend has no idea what they’re talking about, or there are even some organizations that are not necessarily giving the best advice.”
One pitfall Szostek sees is business owners deciding risk insurance coverage is a luxury and only needed once they start making money.
“I don’t know if people ever really feel like they have enough money, but that’s not the way to look at insurance at all. You want to have that protection, and general liability insurance is not crazy expensive,” Szostek said. “There’s really no reason to at least have general liability. Some people need professional liability, some people need auto insurance for their business property, so there’s a lot of different types of coverage.”
She encourages business owners to find an agent they can meet in person.
“Insurance is not an online adventure,” she said. “It’s a face-to-face relationship.”
Much more than insurance
After more than two decades in the insurance industry, Ben Zimmer has learned that his job is about much more than selling policies.
Since entering the profession in December 2002, Zimmer, the founder and CEO of Ethos Insurance & Risk Management, has built a career focused on helping businesses identify risks before they become costly problems.
“I’ve been doing this for almost 23 and a half years,” he said. “All I’ve ever done is bartend in college, then I went straight into insurance.”
A graduate of St. Joseph’s College in Rensselaer, Zimmer’s career began with Farm Bureau Insurance, where he worked from 2003 to 2013. He later joined a Valparaiso agency before opening his own independent insurance agency in December 2017 in Valparaiso.
Unlike agents who represent a single insurance company, independent agents work with multiple carriers to match businesses with policies that best fit their needs.
Today, Zimmer’s focus extends well beyond writing insurance policies. He specializes in risk management for businesses in the construction, agriculture and hospitality industries, helping owners reduce financial exposure through planning, safety practices and operational improvements.
“We first identify what exposures are out there,” he said. “Then we determine whether it’s a risk the business should assume, transfer through insurance or solve through better practices.”
That consultative approach often includes reviewing workplace safety procedures, employee handbooks, hiring practices and operational policies.
For restaurants and hotels, the conversations are especially detailed.
“We talk about food safety, knife safety, burn safety, slip prevention and communication between employees,” Zimmer said. “It’s about walking ahead of risk before something happens.”
Reducing workplace injuries not only protects employees but can also lower workers’ compensation claims and insurance costs, he said.
“A big part of hospitality is staffing,” Zimmer said. “Some of the things that we work and focus on is obviously workplace safety because if your workplace is not safe for your employees, you have a situation where it can be very costly and that could put you out of business.”
Restaurant owners, however, face challenges that insurance alone cannot solve.
Zimmer points to fluctuating food prices and the industry’s ongoing struggle to recruit and retain employees as some of the biggest obstacles facing hospitality businesses today.
Still, he has seen successful operators overcome those challenges by investing in their people.
His agency’s role, he said, is to complement those efforts by helping business owners create safer workplaces and stronger organizational practices.
“A lot of the companies we work with want to get better,” he said. “They want to improve their product, improve opportunities for employees and increase the value of their business.”
The Indiana Department of Insurance provides advice and best practices for small businesses when it comes to insurance needs. The department’s website suggests always learning about an insurance company’s financial condition before buying a policy.
For Garcia-Machuca, she feels blessed to have a circle and community guiding her to become a successful business owner.
“I definitely have somebody to reach out for anything, and that’s definitely a blessing to have that,” Garcia-Machuca said. •
Read more stories from the current issue of Northwest Indiana Business Magazine.
Flexibility for working mother
Heroic values on display
One-stop print shop
Power of collaboration
Childcare challenge
Beyond the prescription pad
New life for dormant buildings
Banks keep branching out
Professional advancement
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