Why growth marketing is essential for new and existing businesses
Over 627,000 new businesses open each year. With this large amount of competition in certain markets, it can be hard for companies to stand out.
That is where growth marketing comes into play.
Marketing is the activity, set of processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
Based off this definition, it is apparent that marketing is essential for businesses to stand out amongst the competition. The word “growth” means increase and expansion. One way to grow your business involves learning how to market your product or service to your customers.
Now, how do you put this strategy into action?
Here are some growth hacking tips that we have gathered:
- Implementing content upgrades! These are extensions of one of your content pieces made available for download in exchange for contact information. Some examples include video recordings, resource/tool guides, or checklists. Content upgrades prove to be highly effective in lead generation.
- Send emails from a real person. Rather than sending generic emails, have an actual person from your company with a first and last name send emails out. People are more likely to read or even respond to emails from an actual person versus a computer-generated email.
- Engage in communities such as LinkedIn or Quora. Respond to questions that pertain to your business or to related topics. This can drive people to your website.
These are just a few of the many hacks that can be used to grow and market your business well.
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The impact of COVID-19 on the billion-dollar cruise industry
The cruise industry has grown rapidly over the last decade or so. Before COVID, data from the Cruise Lines International Association showed thirty-two million passengers expected to set sail in 2020. Three hundred ships were projected to be in operation by the end of this year, all between 50 different cruise lines.
There is no doubt that this industry has experienced exponential growth over the past decade or so.
Unfortunately, many countries across the globe have begun to close their borders in response to COVID-19. Back in March, Canada banned all ships carrying more than five hundred people from docking at their ports.
Some countries like Australia, New Zealand, and the United States banned ships arriving from foreign ports. They also directed all foreign flagged ships to leave the country.
If you watched the news a few months ago, you would know that passengers were quarantined and kept at sea for almost a month. They were required to stay in their rooms and not allowed to roam the ship freely.
With cruise lines not being able to host cruises for the past few months, the global cruise ship fleet has collectively lost over four billion dollars in value.
The longer the virus continues to persist, the cruise companies and their stakeholders will continue to lose vast amounts of money. Think about it, the main revenue channels for cruise ships are ticket sales and onboard purchases like alcoholic drinks and casino gambling.
Now, what is the future of the cruise industry? Will there be cruises happening in 2020?
It looks like most cruise companies continue to push the reopening of cruises back due to the uncertainty of the virus.
However, when cruises do reopen, there will be a number of safety precautions and extra steps taken to ensure that passengers and crew are traveling safely. Ships will now require robust screening and monitoring protocols along with comprehensive sanitation practices. There will be more onboard medical facilities and increased medical staff.
Eventually, the cruise industry will bounce back from this setback and get back to enjoying and traveling with their many valued customers.
This time is uncertain for many of us, but one thing we do know, we all want this pandemic to be over so that we can enjoy time spent with family and friends.
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Glossary of terms used in life insurance
People use life insurance to make sure their families or dependents will receive cash benefits if they are no longer there. Use the list below to clarify terms insurance providers use in life insurance. If you'd like to clarify anything, please don't hesitate to reach out to us via the contact section.
**Acceptance** – approval of an application by an insurance company, either instantly or some insurers take up to 14 days to decide if to accept a risk.
**Accident, Sickness, and Unemployment** – coverage in the form of a replacement income (usually up to 12 months) to cover regular expenses, including rent or mortgage payments should the person insured become ill or unemployed.
**Age limits** - the maximum or minimum age of the insured that an insurer will issue a policy for. Typically, the limits are between 18 and 80 years to apply for life insurance, but it may vary by insurer.
**Beneficiary** - any person who gains a payout from a policy.
**Convertible Term Life Insurance** – level term life insurance coverage with the option to possibly convert the policy into a different type of coverage, such as the whole life cover
**Critical Illness Cover** – this coverage supports you and your loved ones financially if you’re diagnosed with a specific illness or medical condition. You’ll receive a tax-free lump sum to help with things like bills and treatment costs. It can be taken out at the same time as life insurance as they cover you for different risks. The insured person must usually survive at least one month after the diagnosis before a payment is made. The conditions included vary according to the life insurance company, but should usually include cancer, stroke, heart attack, renal failure, coronary artery bypass, multiple sclerosis and major organ transplants.
**Decreasing Term Life Insurance (aka Mortgage Payment Protection Insurance)** – Risk life insurance with a lump sum payout which decreases according to the outstanding balance of a capital and interest repayment mortgage with premiums normally remaining fixed.
**Serious Illness (Diabetes, HIV, etc) Life Insurance** – life coverage specially designed for those insureds who have conditions like diabetes, HIV and others. It is based upon the type of the condition, its age, family history, treatment methods and other parameters
**Estate** - means property and money left by someone who has passed away.
**Executor** - person who you name in your will as responsible for handling your estate according to your instructions when you pass away. Their duties include arranging burial ceremony, handling of your assets, payment of unpaid bills and distribution of the surplus to your beneficiaries.
**Family Income Benefit Life Insurance** – after the death of the insured, this insurance provides regular income for the entire policy period instead of a one-time payment
**Gift Inter Vivos** - are gifts you give away during your life. If the giver were to die within seven years of giving a substantial gift, this could leave the person receiving the gift with an unexpected inheritance tax (IHT) bill. A gift inter vivos policy, set up in trust, can help provide funds to pay an IHT bill by providing cover for any IHT liability on gifts that you make over your available basic IHT nil rate band.
**Group Life Policy** – life insurance coverage provided to many people, such as individuals working for a single company. It is characterised by more lenient coverage limits. Depending on the payroll, the minimum number of people in a group is usually 20-25 people, although some companies provide group life of up to 15 people.
**Guaranteed Life Insurance** - a kind of life insurance where anyone is accepted without any medical exams and regardless of their health condition.
**Guaranteed Premium** – the premium doesn't change and stays at the same level throughout the duration of the policy.
**Income Protection Insurance** – insurance that pays you a fixed monthly amount (usually covers around 80% of your pre-tax salary) if you can’t work due to sickness or injury, with payments continuing until you are able to resume your work, retire, die, or upon the expiry of the policy.
**Increasing Term Insurance** – coverage and premiums increase annually by a predetermined amount without a medical examination requirement. People who need additional coverage to mirror income or inflation increases often select this coverage.
**Indexation** – when a policy is tied to inflation, with benefits and premiums increasing annually
**Insurable Interest** – when one party has a dependent and/or close financial relationship to another. Insurable interest relationships exist between spouses, a company and key workers, in a close company between director shareholders, and someone who financially depends upon another person.
**Key Person Life Insurance** – life coverage for a person who makes a significant contribution to the financial status of a company. Directors, partners, executives, and shareholders are commonly considered key people. The coverage features a lump sum payout benefit designed to financially protect the company upon the death of the individual.
**Lapse** – where a policy stops because the customer stops paying premiums or a policy not renewed.
**Length of cover** - amount of time you’ll be covered for by an insurance policy, often also called the policy term.
**Level Premium** - a payment that stays at the same amount throughout the term of a policy.
**Level Term Life Insurance** – payout under this life insurance policy is a fixed lump sum.
**Life of Another** – an application for life insurance which is made by someone other than the insured. The applicant must provide evidence proving that he or she has an insurable interest in the insured before an insurance company will approve the policy.
**Lump Sum** - benefit that a life insurance company pays out in one amount when the insured person passes away.
**Renewable Term Life Insurance** – life cover for up to five to ten years that may be renewed without a medical examination.
**Reviewable Premium** – if a policy which specifies a reviewable premium, it means the insurance company can change the premium at the pre-set review times (typically every 5 years, but can also be annually). Normally insurers will review premiums every five years however some companies do review them annually. Insurers may change premium to account for average claims or wider economic conditions. As a result, your monthly premiums could increase significantly without any control on your part over how much the policy will cost you over its lifetime.
**Settlor** – means a person or entity that makes a settlement of property and other assets under a trust, also known as a donor, grantor, trustor, and trustmaker. This person appoints trustees, designates trust beneficiaries and agrees to the trust terms.
**Terminal Illness Benefit** – an additional usually free 'bolt-on' option provided when you buy life insurance that allows to get a payout under life insurance policy upon diagnosis of a terminal illness, rather than waiting to pay out after passing away.
**Total and Permanent Disability** – a term used in a critical illness policy that applies to cases in which the individual may never be able to work again and there is no hope of recovery due to injuries.
**Trust** – trust used in insurance is an irrevocable trust with a life insurance policy as its asset, allowing the trustor or settlor to exempt assets away from their estate for inheritance tax purposes. The type of trust most commonly used with a life insurance policy is a a flexible power of appointment trust, which allows the trustor to appoint new trustees and change beneficial interests. After a life insurance policy is placed in the trust, its insured person stops being the owner of the policy. The trustee manages the policy payout on behalf of the policy beneficiaries when the insured person passes away. Trust can offer you control over how your assets from insurance policies are used after your passing and can protect your beneficiaries against having to pay inheritance tax on the life insurance payout.
**Trustees** – person or entity appointed by a settlor to manage a trust according to its provisions. The settlor is often also a trustee and must appoint at least one other trustee, perhaps a solicitor, family member or family friend, who must be over 18 and would serve as legal owners of the assets in trust for the trust beneficiaries.
**Underwriter** - an insurance expert or insurance company that decides on the risk of your insurance, the amount of risk of your cover and the premium for this, i.e. how much you should pay for it if the risk is within the risk appetite as sometimes it can be outside of it.
**Waiver of Premium** – a feature in an insurance policy that covers your monthly premiums if you’re ill and out of work, either until you’re working again or the policy expires, while keeping your coverage intact. Waivers can be found in life insurance policies, but can be also obtained in health insurance and critical illness policies.
**Whole of Life** – life insurance policy that lasts the lifetime of the insured person. It's also known as traditional or permanent life insurance and pays a lump sum benefit upon the death of the insured.
**Will** – a legal document setting out the names of one or more people to manage a person's estate, who are known as executors, and how they should distribute the estate upon the person's passing.
Before purchasing your or your family member's life insurance, it is always recommended to consult with life insurance experts. Our FCA-authorised and award-winning insurance partners can help guide you in a friendly and free phone consultation as to what life insurance plans can be most suitable to your particular circumstances, searching the market for you and dealing with all the necessary paperwork.
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It takes less than 30 seconds to set up a free phone consultation with them to check how different plans from various insurance companies compare against each other and fit you best – just fill in a quick quote form on the button below and get a free, no-obligation quote from FCA-authorised life insurance experts!
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Are life insurance payouts taxable?
People use life insurance to make sure their families or dependents will receive cash benefits if they are no longer there.
## Are life insurance benefits taxable?
When money is paid as part of a life insurance policy in the UK, the payout is not taxed, meaning the person or persons receiving the payment should not automatically pay tax on the money. However, although generally exempt from income tax, some life insurance benefits may still be subject to inheritance tax.
## Life insurance and tax implications
Since life insurance benefits are considered part of your estate, which is subject to inheritance tax (IHT), your loved ones, the beneficiaries of your life insurance, might have to pay tax on the inheritance they received from you, including its life insurance portion. This inheritance tax depends on your financial situation at the time of your death and the size of your life insurance policy payout.
If you want to leave an inheritance for your family, chances are you will also want them to suffer from as little tax as possible on the inheritance you are passing on.
> Tax numbers are always subject to change, but at the time of writing, if you are single, the current threshold for inheritance tax in the UK is £325,000, meaning that, if the total value of your possessions at the time of your death exceeds £325,000, any amount over £325,000 will be taxed at 40%. If you are married or in a civil partnership at the time of your death, each part of the couple has their own inheritance allowance of £325,000, meaning the couple will benefit from a total inheritance tax-free allowance of £650,000 and will only have to pay 40% tax on anything above that level.
If your life insurance payout was to take the total value your estate to a level in excess of the above threshold relevant to your situation, and unless the money is going to a charity, that excess value will be taxed at 40%.
## Trusts for life insurance
However, there is an easy way that families in the UK can legally use to avoid having to incur inheritance tax liabilities on their life insurance payouts. To achieve this, they simply put their life insurance policies into a trust. If a life insurance payout is "in trust", it is considered separate from your estate and thus not likely to be subject to any inheritance taxes.
Trust means that someone else, be it your lawyer, family member or other trustee of your choice, is in control of the life insurance payout distribution from a legal perspective. This takes life insurance payout outside of your estate and thus outside of your tax liabilities. At the same time, you can still have the trustee follow your wishes when handling your life insurance payout. So the funds will be paid out the same way as you wish, probably even faster as the payment will not have to go through the estate inheritance tax and legal procedures.
When you talk to one of our FCA-authorised life insurance advisers, you can ask if you can buy your insurance policy in trust, they can certainly help and guide you how you can set it up.
## Benefits of life insurance in dealing with tax liabilities
If a family's wealth likely to be transferred as inheritance is of a size exceeding the above thresholds (which would be the case for most property owners in the UK given the rise in average property prices over the last several decades), one of the important benefits of life insurance and putting it into a trust can be the support it provides to families who have to pay their tax bills on the inheritance received.
As life insurance payouts from trusts are exempt from inheritance tax, families can use life insurance as a very cost-effective and efficient mechanism to meet their tax liabilities on the estate that will arise on a family member's passing. Thus, senior family members can quite affordably help their loved ones to avoid having to sell off their inherited property or other possessions in order to meet the demands of the taxman they would have to deal with.
> If you believe your family is likely to have to pay inheritance tax on your estate after your passing, it might be worthwhile to look into setting up a life insurance plan and calculate the amount of this tax before purchasing it. This will help you make sure your life insurance payout is at least sufficient to cover the potential tax liabilities for your loved ones and if you'd like to leave more than the taxman's share then go for some extra help for your family as your future policy payout.
Before taking any practical steps, it is always recommended to consult your own financial adviser who will be able to look into your specific situation and assist in making those decisions. Our FCA-authorised and award-winning insurance experts can guide you in a friendly and free phone consultation as to what life insurance plans can be most suitable to your particular circumstances and life planning.
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It takes less than 30 seconds to set up a free phone consultation with them to check how different plans from various insurance companies compare against each other and fit you best – just fill in a quick quote form on the button below and get a free, no-obligation quote from FCA-authorised life insurance experts!
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Best payment apps to have on your phone
With the world becoming more modernized, universal payments have been becoming more necessary especially with everyone becoming more familiar with products that are international based or just ones that are within the country. Whether it’s based off paying things such as household utilities, important bills like insurance and even just shopping from websites online or at the local store; having your card on your phone regardless if it’s on app or a digital wallet has become more ideal. It’s only a bonus that you don’t have to carry around your physical wallet making it better for contactless payments.
Furthermore, taking in these eight apps, let me explain why you should consider having one of these apps at hand next time you want to pay for something big like insurance or maybe even something small during your trip to the store.
**Apple Pay** is probably the easiest thing to have on your phone especially if you’re an Apple user. These days almost every website or store takes Apple Pay in order to assure a faster process at checkout. Whether you’re buying shoes online or at the boba shop trying to pay for your drink, Apple Pay allows many to pay for things at the tap of their phone with the shipping address already being saved in order to avoid unnecessary time. Not only that, but Apple now allows people to send money through iMessage.
**Samsung Pay** just like Apple Pay serves the same purpose but for Samsung users instead.
**Google Pay** which is formerly known as Android Pay, is exactly like Samsung Pay and Apple Pay but it is more opened towards other phone types that aren’t supported by the two phone brands.
**PayPal** is known to be one of the biggest money exchange apps there is. Anybody can send money to a business when purchasing things online or even to their family or friends. It also allows people to send money abroad by altering the money currencies accurately for somebody on the other side to receive.
**WeChat Pay**, although only really used in China, is actually one of the most important money apps there is. People use this app to pay for utilities or medical bills that need insurance, entertainment or just for anything they really want. WeChat Pay has it all.
**Venmo** is exactly just like PayPal but more widely used among the younger crowd especially college students!
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Apps that every great traveler should have on their phone
In today’s society, we are basically glued to our phones. We use them consistently all day, checking our social media apps, finance apps, or even playing games.
When traveling to different countries, there are some apps that will make your vacation or trip much simpler.
Let me break down a few of these apps, the purpose of them, and why you should consider downloading them the next time you travel.
<img width="200px" alt="googletranslate" src="/images/googletranslate.png"/> **Google Translate**, aka a traveler’s best friend. In case you run into any language barriers; this app is ideal. It supports fifty-eight different languages via text.
<img width="200px"alt="tripadvisor" src="/images/tripadvisor.png"/>**TripAdvisor** makes it easy to find top destinations and attractions. You can find places to stay, eat, and anything else you would need on your trip. They even provide customer reviews and contact info for each place.
<img width="200px" alt="hopper" src="/images/hopper.png"/>**Hopper** can help you find the cheapest flights possible, and even help you save some money along the way. You tell them where you are from, where you want to go and then the app shows you a calendar of the upcoming year with predicted flight prices.
<img width="200px" alt="packpoint" src="/images/packpoint.png"/>**PackPoint,** an app that shows you what to bring based on the length of your trip, weather conditions, and the activities you have planned. This app can take the stress out of last-minute packing and feeling like you don’t know what to bring.
[<img width="200px" alt="Great personal and business insurance as a service via API's ..." src="/images/LogoWeCovrOrange.png"/>**WeCovr** app](https://wecovr.com/get-wecovr-app) is a handy app offering on-demand insurance coverage when you're travelling or living abroad. If you're in the UK, you can also get other types of coverages such as life insurance or car insurance right in the app.
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Stay healthy holidaying COVID-19 amid the new challenges
Going abroad has always had risks, this has been further complicated by a highly contagious disease that brought much of the travel industry to a halt. As airlines and holiday providers look to recuperate, costs look likely to rise. The ongoing spike in cases in many countries is a cause for concern, with quarantines becoming mandatory after visiting certain countries, particularly in parts of Europe. As lockdown ended, cases have started rising again, and this could coincide with the next flu season – it is recommended that people only make essential travel. There is a real chance of being infected, falling ill and being at the mercy of an expensive foreign healthcare system.
**EU COVID-19 cases June-July 2020**
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<img src="/images/Blog-1-Image-2.gif" alt ="Source: https://www.euractiv.com/section/coronavirus/news/autumn-challenges-ahead-as-covid-rates-rise-amid-european-travel-season/" />
<figcaption>Source: https://www.euractiv.com/section/coronavirus/news/autumn-challenges-ahead-as-covid-rates-rise-amid-european-travel-season/</figcaption>
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Spain has had a significant rise in COVID cases, the average age of a British expat there is 53 and 7% of businesses are run by expats. This means a fair amount of risk exposure, not only will lots of business owners be cash strapped but also potentially be in contact with customers when re-opening.
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Emergency repatriation, affordable treatment and transparency with medical costs are a necessity now when abroad, being stuck in a country ill and in an unfamiliar healthcare system is a vulnerable position to be in. International health insurance not only provides a safety net in the wake of such events, but also provides peace of mind that things will not spiral out of your control. Expats and travellers often need bilingual support, to make smooth claims and to gain a second opinion from insurance provider in-house clinicians such as 24/7 GP’s. The emergence of COVID-19 specific insurance policies, merging travel and medical insurance, lays testament to an increased requirement for customised insurance policies that are tailored to meet an individual/family’s situation.
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[**WeCovr** mobile app](https://wecovr.com/get-wecovr-app) is a handy mobile and web app offering oinsurance both for travelling or living abroad. If you're in the UK, you can also get other types of coverages there, such as life insurance or car insurance right in the app or get in by tapping the button below.
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Growth Marketing Insights by Head of Growth Marketing at Slack
There are millions of companies globally trying to figure out how to reach and satisfy more customers. This talk by marketing expert Rachel Hepworth, who is the head of Growth Marketing at the billion-dollar company Slack, helps you understand what your business should focus on.
## Overview of Growth Marketing Insights from Rachel Hepworth, Slack
Rachel is a very experienced marketer with a background spanning several high-growth startups, including Slack, LinkedIn and Climate Corp that sold to Monsanto for a little over a billion dollars about five years ago.
Here is what we learned from her talk. You can watch it in full in the video below this digest.
## Business Model Fits
Rachel set out very clearly how to think about <u>some key business model fits and how to find those fits, how to think about growth, the key growth tactics and strategies and measure them</u>.
People talk a lot about **product market fit**. It sounds like a really easy concept, but one that’s really easy to forget when you’re in the midst of trying to build your company and your idea is fantastic. Rachel said she made this mistake at Climate Corp, where the founders had a vision: they <u>built up the product and the company before asking anybody if they actually wanted that product</u>. <u>The hard reality was nobody wanted that product because they didn’t ask them. So they scaled before finding product-market fit, which was really painful</u>.
How is product market fit defined? Rachel likes Marc Andreessen’s definition, who basically says:
> “Product market fit means being a good market with a product that can satisfy that market.”
So if you break this down, what does this mean? **Being in a good market means being in a market that is large enough to sustain your business.** You can envision a world, where you have fantastic product market fit and your market is one person. Unless that person is Richard Branson and he’s going to buy your spacecraft or whatever it is, it’s probably not a good idea to build a company off of it.
And then a **product that can satisfy that market is obviously a product that satisfies a particular need that the market has, but the key thing** is that **<u>product market fit is not the only fit that matters</u>** and this is something that’s often overlooked.
Rachel elaborated on a very useful framework that Brian Balfour recently came up with. He called it the **market-product-channel model** fit and it’s about how **you have to master all of these fits if you’re going to have a company that is successful and grows**.
If one breaks it down, it looks like follows:
1. The first is **the market,** i.e. who you are selling to and this is going to define your opportunity. Its size drives how big your company can grow. It’s not always easy because defining the market correctly is not always simple. In a classic example that people quote is Uber, where the market was taxis, but it’s actually not taxis, it’s basically _anything that needs to move from point A to point B_. In a market, one needs to think about who are _the people, what are the challenges that they’re trying to solve, do they know they have those challenges_ (because it makes a difference if they realise they have them or not) and then _do they care about them_ (because sometimes they have a challenge, but they just don’t care about it that much so it’s still not a particularly good market to enter).
2. **Product** is obviously what you’re selling and then product-market fit is _if you are selling something that solves a real need of the market_.
3. The next fit is **channel** – it’s about _where you’re selling it_. This can be _online ads, this can be field sales, this could be a retail store_ – how are you getting that product to the market. Balfour’s insight is really that **you can’t change the channel – you can only optimise your product to fit a channel.**
- So as an example of this, if you have a _high-volume transactional, quick time-to-value product_ – a good example is travel like Priceline – _your channel can be online ads_ because people know what it is, they understand the need, they search for it, they buy it, they get the value from it right away, it works really well. If you have _a low volume product that needs a lot of education online_, _ads is not going to work as well_ because people _don’t trust you enough to purchase the product_. If you have a product that is _inherently viral, you can use social._ So LinkedIn works really well. <u style="font-size: 14px;">Priceline strategy if we’re going to go viral and that’s how we’re going to scale is clearly not going to work that well because the product isn’t built for that channel</u>.
- And then model is inherently about **how much you’re selling it for**. So do you have a _high-cost/low-volume model_, do you have a _low-cost/high-volume model_ and that’s going to influence **the channel that you sell in**. Because once again a <u>high-volume/low-cost model will work really well in ads, but something that is a million dollars – good luck getting somebody to buy it online</u>, <u>without speaking to a human being</u>! You probably need something like _field sales consultative selling_. That’s _the classic enterprise SAAS model._
- And **you can’t mix these up, so a classic mistake people have made is thinking that they have built a better mousetrap and now they can do an SEM ad for something that cost five hundred thousand dollars because their product is so amazing and people are going to buy and it’s the new way of working**. This is not reality and Rachel tells us from her Slack experience that it was an evolution they had to go through. <u style="font-size: 14px;">Slack now has a large field sales component.</u>
- And then finally market-model fit. So again if your model is low-cost/high-volume and your market is five people, you fundamentally have a problem. So you have to make sure that your market and model fits. And the key is that all of these things need to work together for your business to scale successfully.
Rachel gave a great illustration of a real-life example of what happens when this goes wrong. A classic example of that was Climate Corp, which actually had a lot of these fits correct, but **\*what they got wrong fundamentally was the marke**t\* and what that means is there was a **domino effect where everything else fails when one of your assumptions turns out to be untrue**.
Climate Corp, originally called Weather Bill and rebranded to sound more adult and sophisticated, was built on this concept that _weather impacts 80 percent of businesses in the world._ So if you’re a ski resort and it’s too warm or you’re NASCAR and it rains, or you’re a grocery store and there’s a snowstorm and you can’t get your trucks through on time, there’s real financial impact from the weather and there’s actually no way to mitigate that risk at that time.
You could swap billion-dollar derivatives and that was about it, which is obviously not super-useful for most companies. So Climate Corp’s founder said:
> “wouldn’t it be a great idea if we build a weather insurance product that was highly customisable,
> you can edit it online, and you can buy easy contracts in just a few minutes to protect against weather risk, just like you do flood insurance, car insurance, whatever it may be and then you could have more predictable revenue. Market is huge because it’s 80 percent of all businesses, the risk is clear, financial impact is obvious, so we clearly have a winner!”
And the answer was:
> “we do not have a winner”!
The reason for that is that nobody understands weather risk. The founders did because they spent years researching it, but if you ask your local bike shop, if they suffer if there’s one inch of rain or two inches of rain and what are the dates that that rain might fall, how much money they’re going to lose what if it’s super-hot, do they get fewer bike rentals on that day? They simple don’t know!
So a highly customized model just meant many opportunities to select the wrong inputs for something you’ve never heard about before. And then **hand over money to prevent losing money versus to make money**. All things that make it particularly unattractive to a small business owner, but Climate Corp didn’t realise this at the time. They thought they were brilliant.
> <u>This market that we envisioned, this very large market did not exist, it wasn’t real.</u> **There wasn’t market in here that was real that we eventually did figure out and that is it’s a particular industry: agriculture!** So who has weather risk and they really know it right deep in their bones – it’s <u>farmers</u>! What specifically is the agriculture that has the most risk in terms of revenue – it’s corn and soybean because it turns out that’s 80 percent of farming and they have very similar risks. Who’s willing to spend a lot of money to protect their crops? It’s farmers. So the market was there, but it was a different one than we originally envisioned and it also is very different from the thousands of SMBs that we pictured.
So what happened? So Climate Corp got their market wrong and because they got their market wrong, they got their product wrong – they built a product that could be customised by anybody online, highly iterable, but not specific so you had to understand your own risk. They didn’t tell you what it was. So **the product market fit wasn’t there**, Climate Corp ended up creating a **correct product market fit by deeply understanding the risk that the farmers had and then serving enough to them.** So instead of saying “hey corn farmer, you got a lot of risk, go buy a contract, figure it out”, they said:
> “Hey we know **that when your corn is pollinating, if there’s low heat, it won’t pollinate, you’ll lose money**. Here is a **corn pollination heat stress – all we need to know is where is your farm located and how many acres do you have** (which is something that people do have a great deal of confidence in), **so you’ve removed that risk.**”
Because they had the market wrong, they had their channels wrong. So the founders came from Google (this was about 10 years ago) and they believed the world was going to be transformed by Adwords and all businesses would be sold through Adwords. As you know, they weren’t totally wrong, but they were a little bit wrong. Turns out that weather insurance does not work to be sold through Adwords and there are a couple reasons why:
1. didn’t exist before so nobody’s searching for it,
2. people don’t understand it. They **land on a website and you’re asking you to give a lot of money to a company you’ve never heard of.**
<u>None of this is good for an Adwords channel</u> and again because the product was very complex and the time to value was long, ads didn’t work very well. **What does work is field sales**. In the beginning they did online ads – really poor, <u>they eventually turned to field sales.</u>
As a result, Climate Corp had their model wrong – their model was a mass volume of cheap daily contracts. It turns out **it should have been a couple of million dollar contracts a month**. <u>And again your channel is going to change based on your model </u>and then finally because our market was wrong, we didn’t realise that we had to have really expensive contracts. **What they did is they changed their channel sales model through agents.** **It’s expensive, highly consultative**. Also, agriculture is a very relationship-based market. So you’ve got a farmer – he buys insurance from his crop insurance partner, his father bought insurance through that crop insurance agent’s father and on and on and on. It’s really amazing, it goes back generations, they certainly don’t trust a start-up company from San Francisco. They needed to go through trusted agents and again you only know this **by deeply knowing your market model**. They went from <u>high-volume/low-cost to low-volume/high-cost</u> and again it all reflects the market of corn and soybean farmers.
So how to figure this out without spending a year and a half and a lot of money throwing things at the wall and failing and thinking are going to go out of business? Rachel’s answer is **a customer development model which Steve Blank has evangelised over the years**. And the <u>theory of customer development is that this is really you can apply the scientific method to building up your business:</u>
> **So you have a hypothesis, you don’t go all in, you test it, you prove it, you either iterate, because it didn’t work or you invest more deeply, which is a fundamental mistake that they made in the beginning of Climate Corp.**
The first two stages of customer development are really about building out those four fits that Balfour talked about a lot and the second are about scaling your business. 2. - So **customer discovery** is about **understanding the problem your customer has and validating that it’s real**.
- **Customer validation is validating that you can sell to them** so not only do they need to have a problem – **they need to be willing to purchase a solution**.
- Then **company creation is about creating a scalable process to keep selling**.
- And then **company building** is about **operationalising that process so you can scale.**
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="675" src="https://www.youtube.com/embed/gmO4jomGuXI?feature=oembed" title='E806: Rachel Hepworth, Slack Head of Growth Marketing: how startups can best "Go to Market and Grow"' width="1200"></iframe>
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Bad debt Britain – unpaid bills are at their highest since 2009
Latest ABI figures show that claims paid by trade credit insurers are running at over £4 million every week – their highest level since 2009. Over 200 firms every week helped by trade credit insurance. A record £340 billion of UK trade is being covered by trade credit insurers.
Insurance pay outs made by trade credit insurers in 2017 to help businesses get through challenging trading conditions were at their highest level since 2009 according to figures published today by the Association of British Insurers (ABI).
During 2017 high profile company failures included Monarch Airlines, Palmer and Harvey and Misco, which have continued into 2018 with the collapse of Carillion, Toys R Us and Maplin. With company insolvencies up 4 percent in 2017, UK firms continue to face challenging trading conditions at home and abroad.
The ABI’s annual trade credit insurance statistics highlight that:
– Claims paid to businesses due to non-payment of debts in 2017 totalled £225 million, the equivalent of £4.3 million every week. This is up 7 percent on 2016, and the highest amount since 2009.
– In 2017 there were 11,017 claims. This equates to 212 firms being helped every week.
– The level of trade covered by trade credit insurance in the UK stands at a record £340 billion, up 7 percent on 2016.
– A fifth of policies covered businesses exporting goods or services overseas, with just over three-quarters covering domestic trade. The trade credit market continues to grow, with nearly 13,000 policies in force.
– Unsurprisingly, given a number of high profile insolvencies in the second half of 2017, the value of claims received in the last quarter of last year, at £130 million, was the highest quarterly figure since the first quarter, 2009.
Commenting on the figures, Mark Shepherd, ABI’s Assistant Director, Property, Commercial and Specialist Lines, said: “The failure of a number of high profile businesses, such as Monarch Airlines and Palmer and Harvey in 2017 and the recent collapse of Carillion, dramatically highlights the value of trade credit insurance. With over £4 million paid to businesses every week, trade credit insurance can make the difference between survival or demise following non-payment by a customer. The expertise of trade credit insurers is helping firms navigate challenging trading conditions, enabling them to expand at home and overseas, so helping Britain thrive. With the number of policies rising and insured trade at a record high, more firms are recognising that this cover is an essential business tool to help them assess the credit risk of potential business partners. But too many firms remain unprotected, and with intermediaries selling the vast majority of these policies, we need to raise awareness of the importance of trade credit insurance.”
**Fill in the quick form on the link below to discuss how a credit insurance policy can protect your business against potential credit losses**.
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Less than 3 out of 100 trade creditors insured
As many of our readers will know, the construction and outsourcing services provider Carillion collapsed two weeks after the start of 2018 weighed down by the massive £2.2 billion debt and pension liabilities, which became the largest corporate bankruptcy in the UK in a decade.
As it turned out, the vast majority of UK suppliers to Carillion did not buy insurance against the risk of not being paid for the goods and services they provided. Out of the estimated losses of £1.2 billion, only £31 million was insured with trade credit insurance insurers according to ABI, amounting to less than 3 percent of their losses.
The chain reaction from the insolvency is now forcing many of its SME suppliers to lay off personnel.
To prevent finding your company in a similar situation, we can only encourage you to speak to us at the earliest opportunity. We work with many insurers active in trade credit insurance. Such insurers paid out about £210 million in claims only in 2016 according to the Association of British Insurance, so the product does respond to bad debt events.
Unfortunately, it is mainly SMEs that are most affected by the domino effect of their larger customers defaulting that often choose to ignore the real dangers of customer non-payments and not invest in a good trade credit insurance policy.
Speaking to us in advance will provide you a peace of mind that should a Carillion situation happen in your sector, you are going to be able to recover your losses. Reach out to us today via any convenient channel, including phone, email, website or live chat.
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Massive losses for uninsured creditors
According to recent insolvency statistics from Infolink, total unpaid/unsecured credit losses totaled over £1.9 billion for the second half of the year, up 6 percent on the first half of the year. 80,000 ordinary unpaid trade creditors (excluding 8,000 occurrences of HMRC as creditors) lost an average of £23,900, from 5,178 insolvencies. The average asset shortfall for unsecured creditors in each Insolvency was approximately £499,000.
At least 20 percent of the unpaid creditors don’t have sufficient financial reserves to stand the losses they are incurring; almost 10 percent of the unpaid creditors are themselves insolvent and 15 percent have a working capital deficit.
With only 10 percent of unsecured creditor losses covered by a trade credit insurance policy and 20 percent of unsecured creditors not having the financial reserves to stand the trade credit losses, it is hardly surprising that unsecured creditors are more than 3 times as likely to enter insolvency proceeding themselves, when compared to rest of the business universe.
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Startups not synonymous with young people
Startups not synonymous with young people. Bill Gates, Steve Jobs, and Mark Zuckerberg are three of the biggest role models for entrepreneurs. They are all famous for starting their companies in their early 20s and in many ways set the benchmark for what a successful entrepreneur looks like.
And yet, there is reason to believe that we’d be better off investing in older entrepreneurs. They are actually far more successful than younger ones, according to [new research](https://theconversation.com/most-successful-entrepreneurs-are-older-than-you-think-95402), which analysed the age of all business founders in the US in recent years and how well they did.
Young entrepreneurs may have some advantages. They are often native users of the most modern technology, are more flexible and do not have family commitments (and therefore inclined to take more risks). But a [recent publication](http://www.nber.org/papers/w24489) in the National Bureau of Economic Research shows that middle-aged entrepreneurs are far more successful than younger ones.
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The study reveals that entrepreneurs who are under 25 tend to perform poorly. The probability of success increases once people reach 25, then performance seems steady among people aged between 25 and 35. The success probability then starts to jump after the age of 35, jumping again at the age of 46 and remaining stead toward the age of 60.
## Respect your elders
Success as an entrepreneur depends on [your skill set](https://www.sciencedirect.com/science/article/abs/pii/S0883902609000998), which includes education, experience, knowledge and skills. Economists call this human capital. It’s essential for exploring hidden opportunities and exploiting existing ones.
While young people may have an edge creatively and technologically, their lack of industry experience, as well as financial security, will also effect their business success. We gain knowledge and skills through both education and working experience. And, perhaps unsurprisingly, the research found that entrepreneurs with longer industry experience – particularly when it was industry specific – have higher success rates than those who have shorter experience.
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This has serious implications for the way we teach business in higher education. The idea of the young entrepreneur has fuelled a huge number of courses in business schools, which are a very popular choice for young people.
In the UK alone, there are [64 entrepreneurship bachelor degrees](https://www.bachelorsportal.com/study-options/268927062/entrepreneurship-united-kingdom.html) and [106 entrepreneurship masters degrees](https://www.mastersportal.com/study-options/268927062/entrepreneurship-united-kingdom.html). Universities invest in entrepreneurship support to students such as co-working spaces and [entrepreneurship hubs](https://www.ucl.ac.uk/enterprise/), as well as helping students gain [graduate entrepreneur visas](http://www.dmu.ac.uk/dmu-students/careers-and-employability/start-a-business/graduate-entrepreneur-visa.aspx).
But, the clear evidence that older, more experienced people make for better entrepreneurs suggests that MBA graduates without the requisite work experience should not be encouraged to start their own business right away. A lot of entrepreneurship education promises students that they will be ready to launch their own start-up as soon as they graduate. As a result, universities overemphasise start-ups among graduates as a key success indicator of their education programme.
## Good things come to those who wait
Sure, there is potential for students to start something of their own after their graduation. But the question remains: will they become successful entrepreneurs? Would it be better to encourage them to start a career first, and consider entrepreneurship at a later stage, where the chance of success will be double?
Unlike science or engineering education where students are trained to work as scientists or engineers after they graduate, entrepreneurship graduate students may need to change their mindset that they have to start their own business right away. This is often accompanied by thinking that if they don’t, it will be too late or may be seen as a failure to launch their entrepreneurial career. Yet, although Jobs started his business at 21, arguably the peak of his success came with the iPhone, which was released when he was 52.
Entrepreneurial graduates have a lot to offer existing businesses, including bigger corporations. While some traits, such as risk taking may not align well with corporate culture, a lot of companies are in need of employees who will innovate and take their own initiative. Companies such as [LinkedIn](https://www.fastcompany.com/3003818/linkedin-launches-incubator-turn-employees-entrepreneurs), [Apple](https://www.cultofmac.com/200915/apples-blue-sky-program-gives-select-employees-20-time-to-do-whatever-they-want/) and [Microsoft](https://www.microsoft.com/en-us/garage/about/) are constantly trying to encourage their employees to take time away from their regular duties to work on new, innovative ideas.
Business schools should also think about shifting their education toward more middle-aged, experienced candidates. The same goes for the numerous start-up grants and programmes, which target young people, often giving funding without a need for collateral. Older entrepreneurs, meanwhile, have to resort to using their savings or home as collateral – despite the fact they are clearly a much better potential return on investment.
[Sukanlaya Sawang](https://theconversation.com/profiles/sukanlaya-sawang-467930), Associate Professor (Reader) in Small Business, Innovation and Well-being, _[University of Leicester](http://theconversation.com/institutions/university-of-leicester-1053)_
This article was originally published on [The Conversation](http://theconversation.com). Read the [original article](https://theconversation.com/why-middle-aged-entrepreneurs-are-better-than-young-ones-96297).
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