RULES MAP OUT PATH TO SUCCESS
In 1994, Gerald Shtull took out a line of credit from the bank for $50,000. That was when $50,000 was real money. Then he sat down with his wife and explained that this is what the family would use to cover day-to-day expenses including tuition for his children’s schooling, while he got his business up to speed.
“I had three kids going to private school and camps and so on, and I said, ‘you have to give me six months to a year,’” Mr. Shtull says.
He needed to focus all his energy on bringing in clients, and he didn’t want the added pressure of having to make money to put food on the table, he said. After 12 months, he expected to know, one way or another, if the business was going to work.
A veteran businessman, Mr. Shtull had spent 15 years as a senior financial executive in Montreal’s apparel industry, and he — and his family — had grown accustomed to the paycheques that brought.
He put all that aside to start from scratch, building a business selling insurance.
Gerald Shtull & Associates is now a major player in receivables insurance with more than 400 clients across Canada and outstanding policies covering nearly $10-billion in receivables. In his chosen niche serving small to medium-sized businesses, Mr. Shtull reckons he dominates the market.
Becoming successful meant sticking with his business plan, and following a few simple rules. During his stint as a corporate executive, he had a bird’s-eye view of what sorts of things caused business to power ahead and the things that hurt them, and he used that knowledge to develop a few simple rules about how to build a company.
The first one was about setting goals.
“When I started out, I said I want to sell let’s say 50 policies a year, and what happened was that I knew to sell 50 policies I had to speak to 250 people,” Mr. Shtull recalls. “That meant I had to see five people a week, which was unheard of in the industry, that I would see all these people. But to me it wasn’t unrealistic. I didn’t talk to anyone about it, I just knew this is way I had to be successful. You start off with an objective and you do everything you can to meet that objective because you know that’s how to be successful.”
Mr. Shtull’s second rule: Keep a lid on expenses. In the first year, his car was his office. Every morning he’d tear out a page of the Yellow Pages and make cold calls on his cellphone.
“From my experience as a financial officer, I always tried to maintain a low overhead so if I did lose some major client, it wouldn’t affect me,” he said. “If you’re a small company and you keep overhead low, you can survive the ups and downs. The idea is, never overspend.”
As the business matured, Mr. Shtull found he was devoting almost as much time servicing existing clients — helping them through the claims process, sorting out administrative problems and so on — as he was finding new ones. That’s when he brought on a support team, an administrator and clerical staff to handle the back office functions, people he could trust because in the insurance business, what separates one broker from the next is their ability to make sure the client’s needs are taken care of.
Gerald Shtull & Associates now has five brokers, including Mr. Shtull’s sons Michael and Jeffrey. His daughter Amy, a chartered accountant, serves as vicepresident of finance.
Rule No. 3: Keep it simple. No matter how complex the business, as an owner you need to know how you’re doing financially. “You need to have a proper strategy and a proper budget, and you need to simplify everything,” he says. “In my early days I ran the financial end of large company. I had one sheet of paper and knew how much inventory I had, how much went in and how much went out. I believe you have to simplify, you have to know how much you need to break even — that’s the way I’ve always approached it.”
Rule No. 4: Never be too reliant on too few clients. Mr. Shtull’s toughest challenge came about six years after he started. Things had been going well and he’d landed a couple of big accounts that represented half his revenue. Out of the blue, he received word the policies wouldn’t be renewed, a major hit to his bottom line.
Mr. Shtull called Michael back from New York where he was working at another insurance firm. For a next year, the pair went to work and sold 30 new policies, enough to cover just one of the clients they had lost. The following year they sold another 20 policies, making up the remainder.
“I learned my lesson,” Mr. Shtull says. “No one client represents more than 10% of the business. Now, I have a large book of business that is spread around.”
Rule No. 5: Believe in your product and yourself. To an outsider, the idea of receivables insurance might seem arcane, but to a manufacturer, especially smaller ones, getting paid by your customers is often problematic. If your customers are retailers, there’s a risk they’ll go bankrupt and won’t be able to pay, especially in the current economy. Or they might decide they no longer want products they’ve contracted to buy, and if they’re a big player, the unfortunate manufacturer has little recourse but to accept the losses.
What he discovered was once he was able explain to business owners how it worked, there was a good chance they would become customers.