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- So, it's very, very important that you are aware of your deductible, you talk to your agent, you understand what it means, and you embrace the worst case scenario. You look at Murphy's Law and you realize that's gonna happen. - Hello, my name is Eric Chep and I am joined in studio by Clay Clark and we are so glad that you are here and we are ready to help you out. We are gonna dive into the complicated issue of business insurance. - [Clay] Oh yeah. - So, Clay, why don't you, let's just dive in, why don't you go ahead and tell us why business insurance is so important. - [Clay] Well it's insurance, it's very important because you might get sued for playing an incredible, incredible instrumental track like this, but anyway, no, seriously, it's great because this is a topic we need know because if you are gonna own a business at some point you are going to be sued and when you are sued, you wanna make sure that you're protected, right? - [Eric] Yes. - So, we're gonna hop into it here and so the big idea here is why, why is business insurance important? It's really, you have five main ideas I wanna clarify with you, okay? So, first off is you cannot predict the future. You can not predict the future. So, Chep, previously to working with us here at Thrive, have you, you were a part of a small business, is that right? - [Chep] Yes, sir. - So, your mom and dad owned a construction company? - [Chep] Yeah, a concrete construction company. - Do you recall, were they ever sued at any point? Do you remember them being sued at all or not so much? - [Chep] People tried to sue us every year, but we had a checklist and systems in place to make sure we were covered in those situations, but yes. - [Clay] I mean, almost all the time you're being, so I'm just giving you some statistics here that'll blow your mind, some mystic statistics, okay. - Okay, let's hear it. - [Clay] So, think about this, okay, this is why this stuff matters. Ask yourself, what percentage do you think of civil law suits are going against small businesses? What percentage of civil law suits are going against the small business owners? Would you, would you want to speculate? - 30, 40 percent, maybe. - Erh! But, very, very close. It is 52%. - So, I'm gonna give you a little bit of galaga, let me, let me get, let me get that mojo going, once I get, let me get that going. See this is, right here, we're just working on my skills and let me get my skills all fine tuned. Let me hit that. Oh, there it is! Nice, nice. See that's the, you see if I was more professional I would have had that ready to go. Let me try that again, so. Alright, almost. So, 52%. 52% of civil law suits are involving small businesses and so that research comes to us from our good friends at the Klemm Analysis Group, that's the SBA research group, okay. So, they basically do research for the SBA, okay. Now, the next big idea is you need to protect your employees, okay. The next big idea, you need to protect your employees. So, Chep, you obviously have worked in small business before, in your mind, I mean cuz you're, you know, you've seen it a little bit, why in your mind do you feel like that people, you know, would wanna protect their employees from lawsuits, hypothetically? - Accidents happen. - [Clay] Okay and you worked in construction, did you ever see an accident? - A lot. - [Clay] Did you ever see a guy chop his leg off with like a saw of some kind? - Not quite that bad. I watched my dad almost cut his finger off once, which was pretty horrific, but - Did he sue himself? - He tried, no he didn't. But people fall down, people slip, anything can happen. Like you said a minute ago, you can't predict the future. If something happens with your employees, you need to have an avenue to take care of them and protect them. - So, I'm gonna walk you through this here Thrivers, this is the big concept I wanna make sure you're getting here. Murphy has this law. Who's Murphy, who's Murphy? Do you know who Murphy was? - [Chep] I know the law, I don't know who he was. - Well, see, no one knows who the guy was. So, I'm gonna kinda give you that, that knowledge that, you know, it's that deeper core knowledge, here, okay. - [Chep] Knowledge bomb. - Yeah, knowledge bomb. So, let me give it to you, knowledge bomb by the way. Oh, sick! Okay, so here, yeah score for America! Okay, so here we go, knowledge bomb here, okay. Edward Murphy, okay this is the guy who's the guy that the Murphy's Law is named after, okay. He was an american aerospace engineer. Basically, his job was to make sure that the crew could get out of planes, aircraft, when they would crash. Because they did crash, right. The last thing he worked on was the Apache, you ever heard of the Apache helicopter. It's like, how would a helicopter sound, it's like a Yeah I was kinda making a different sound, like an aardvark or something. - [Chep] Yeah, it's probably a little more manly than those. - That's better. - Okay, so anyway, so his job was when they're going and eventually they go and they go, I don't hear the anymore and someone says, apparently we no longer are flying. You know, his job was to go how the heck do we get out of this thing, that was his job, okay. So, he came up with this law and his law said that anything that can go wrong, will go wrong. That's his law. So, all I'm saying to you is that if you have a business or you wanna start a business, you are for one, for sure, gonna get sued, okay. Because you can not predict the future. Second big idea is you need to protect your employees because they're gonna be flying around in an Apache and then all of sudden they're going, we are no longer, we, we're outta gas, over. And then, you gotta get outta that thing. So, Murphy's goin', hey you gotta think about all the worst possible scenarios. Now, the third one Chep, can you read the third big reason, this is huge, huge stuff. - Number three, because insurance allows you to concentrate on what matters. - [Clay] Okay, so, like if you have a bagel business, you have a bagel business and you're a boy from Boston. So, you're a boy from Boston. - Bagel boy from Boston. - Yeah, you're the bagel boy from Boston, and you have a bagel business and you're trying to sell bagels, but you know what you need to be focusin' on? Selling bagels, makin' some money, delivering quality products and services and if you're spending your whole day stuck in litigation you're not gonna, you're not gonna have much success. So, it's important you have the insurance in place, so that you don't, you know, spend your whole day looking at lawsuits. So, I'm just telling you, one of my very, very good friends just on Thursday filed a, got entangled in yet another lawsuit, on Thursday. He currently is in three that I can think of. I don't recall the last time he wasn't in a lawsuit and if you own a business, just frankly, you're going to have ongoing litigation, you're gonna get sued, it's just gonna happen and Chep why are you gonna get sued, in your mind? - Again, one thing is accident's happen. People are coming after your money if they find out your successful, there's many reasons, but those are two that come to my mind. - Well, I'm gonna just beat you up on ideas here. One, I would definitely say is because accidents happen, but two, there are, this just in, this just in, let me get, oh nice, nice. This just in, there are jerks out there. There are people that wake up every day with burning desire to sue people. So, some people say, you shouldn't judge people! Most people are good! I, I don't know.
- So I'm just gonna say you will, there are people who just sue people. They just look at your success and they want it, but rather than putting in the work they're just gonna sue you. That's gonna happen, right? Also, third, governments. So right now who is suing Airbnb? Who's saying Airbnb, who's suing them? Who's trying to shut down Airbnb? - [Broseph] The government. - That's right! So you have like the city of New York, they're going, you can't just take part of your house and rent it out to other people, even though people wanna do that, 'cause you need like a hotel license. And people are going, are you aware of how expensive it is to live in Manhattan? You know what, I'm gonna take one room in my house and I'm gonna rent it out, and I'm gonna go on Airbnb to do it because that's how I'm gonna afford to live here. San Francisco, have you ever been to San Francisco? - [Broseph] Yes, I have. - It is expensive, Broseph. - [Broseph] Yes. - And you know what, people are saying I wanna rent out part of my house, and guess who's trying to stop Airbnb in San Francisco. - The government. - The government, right, the local city council. And in 1971, fun factoid for you, in 1971, I don't know if this gets you excited the way I do, but in 1971 these guys are going, we're gonna start this airline called Southwest Airlines, it's gonna be awesome, it's gonna be affordable airlines, and we're gonna, it's gonna be great. We're gonna fly from here to there, from there to here, we're gonna do it at a low cost, it's gonna be great, we're gonna call it Southwest Airlines. And in 1972, who decided to sue Southwest Airlines? - [Broseph] The government. - The government, yes, so the city of Dallas and the city of Fort Worth were like, yeah, you can't do that, and they end up winning like 30 years later. And why did they sue them? Because they wouldn't move to the airport that was more expensive. Aw, so I'm gonna say this, one, we talked about it, it's when accidents happen. Two, people just, people who are not good people. Three, the government can sue you. I mean so, this is all step, let's move on to number four. - Alright, you want me to read that one off again? - Yeah, just read off number four. - Okay, number four. - Yeah, here we go. - Because having insurance means you can take more chances. - Okay, so the thing is when you're an entrepreneur what you're doing is you're saying I'm exchanging guaranteed for something that could be great. I'm exchanging guaranteed good for something that could be great. So as an example, and again I pick on you 'cause you're real examples, real people. You came from a family that owned their own business. Why in your mind would somebody wanna own their own business and not just go work somewhere else, because by the way there's a great reason in my mind to go work for somebody else. But if you're somebody who says I wanna start my business, why would you do this? - Big picture, to make more money. - Okay, and I'll tell you the big three. I see it all the time, and I work with entrepreneurs all over the world. One, as they say, you know I really, I'm not what you would call employable. I'm not somebody that can hold a job. I, you know, people are around you, and they talk, like your former bosses, you know. They'll say, "So what was it like to work with Clay?" And the former boss says, "We'll just say he was highly motivated, "not really employable." So some people, they're just not employable. And second, some people really really want to do something great, grandiose, right? They wanna do something huge, right? Third, this just in, they have to. - [Broseph] Oh, that's a big one. - So they have to. So like for me, I have five kids, right? And I don't wanna live under a bridge. Even though that song was a great song, you remember that song? - [Broseph] The Chili Peppers? - ♫ Sometimes I feel like I don't have a partner ♫ - [Broseph] Yes. - That song was great. ♫ Take me to the place I love ♫ - You remind me of Flea. - Oh really? ♫ Take me all the way ♫ I don't ever wanna ♫ Look up Under the Bridge by Red Hot Chili Peppers. That's a great song but not a place you wanna live. -Yeah. - So if you don't wanna live in a van down by the river, or you don't wanna live under a bridge, some people, they just have certain goals or certain obligations or certain, and they need to be self-employed. So these are the reasons why people start a business. Really really important here, we make sure we get this, is it allows you to take more chances if you don't have insurance and you have five kids, you're just being stupid. I mean you can pay a stupid tax which is called a lawsuit that you're not ready for. Moving on, let's read off the next one here. - Alright, number five, this is our last one. Number five, because it will make your business seem more trustworthy to potential clients. - Yeah and see that's the thing, somebody's like, are you insured, are you insured? I remember back in the day with my old DJ company, you know we started the DJ company, let me get my music going here because I feel like I need that to kinda - [Broseph] There we go. - So back in the day I started this DJ company out of my dorm room, thought it was pretty special. I brought the EONs, you know, EONs are now a new kind of speaker that JBL makes. Back in the day though we had the TR225s. - [Broseph] Oh, the TR225, yeah. - Yeah and they were nice speakers, and so I bought some of those. Had a Shure SM58 microphone. Had that mic, it's indestructible. I've got you know two different dual-deck you know CD players going on, I can beat-match. I had the deal, felt like I was the dude. And so I would go out there and DJ at the Yucatan Liquor Stand, and people would go, ah, and I'd say, ladies and gentlemen, welcome to the Yucatan Liquor Stand, I am your biggest fan, I am Clay Clark, I am the man sent here to make your evening incredible. If you're looking for dollar long-necks, we have 'em. You're looking for margaritas, we have 'em. You're looking for an incredible dance floor, we're got it. You're looking for an empty dance floor, we don't have it. So ladies and gentlemen, I would do that every week, and people would kinda come to the parties and it would grow and grow, and then I thought, you know what I'm gonna do, I am going to do something awesome, I'm gonna do something incredible, I am going to start deejaying weddings.
- So I go to the hotel and the guy says: Do you have proof of insurance? And I said... Yes. Now, I did not have insurance - [Voiceover] Car insurance. - Well, I didn't have business insurance so you know what I did? Do you want to speculate? - [Voiceover] You told him that you did? And went on with the job? - Well, I did what Steve Jobs did Now Steve Jobs, let's review: Where did Steve Jobs start Apple? - [Voiceover] In his garage? - Is that legal? - [Voiceover] Probably not. - Wait a minute. He didn't open up an office and he started his business out of his what? - [Voiceover] Garage. - In Spanish that's Gara-hey - El Garage. - Yeah. Anyways, let me read this to you: He founded, Steve Jobs founded Apple at a garage at 2066- we're gonna pull up the image of it 2066 Crist Drive Los Altos, California. 2066 C-r-i-s-t Drive Los Altos, California. Can we go there? Okay, we're gonna. As we go there we're gonna do- Go onto maps real quick. I just want to go to maps, Can you click on the maps? That is where Apple started, homies! Look around. Can you look around? Can you roll around and scroll Lookit there, he's got neighbors, but that right there, that's the garage. There it is. That's the garage where Steve Jobs started Apple. And he started it there without, somebody say it with me now: - [both] Insurance - Because you have to do an action step that's gonna freak some people out You have to- and I want everyone to write this down, this is huge. I'm giving you an action step right now, Action step. You don't get this kind of knowledge anywhere else. This is the action step, you need to do this. You need to 1. Test if your idea is viable. Meaning can you sell it? Because if you can't sell your business will go to- don't fill in the blank, if you can't sell, your business will go to- it rhymes with if you can't sell, your business will go to- But once you can sell, you need to go ahead and buy insurance. You feelin' me? So you test your idea, then you buy insurance. So I said to the guy... Yes. I have insurance. Now I'm not advocating being dishonest, I just was. But what happens is you go out there and I made a copy of the insurance that a friend- actually I made a copy of my car insurance and I changed the words - [Voiceover] There you go - So it said business insurance and I gave it to him. He didn't look at it, I didn't look at it. I hoped he didn't look at it, and I D.J'd. And you know what I did after I booked my first 7 or 8 parties? - [Voiceover] Got insurance - That's right, Because at that point, I realized I needed it and I didn't want to get sued. And so Apple today, guess what they have. - [both] Insurance. - People who have a business model that works have - [Voiceover] Insurance. - Right. If you don't, you're sorta dumb. But I think it really- I mean, I don't know as a fact Everybody here needs to test to make sure their idea is viable. As in, will people buy it? Will people exchange their monetary earnings for the goods and services that you're offering. At a price that you need to charge to make a profit. If that answer is yes, then you need to buy insurance. You feelin' me? - [Voiceover] Yes sir. - But if you have this wonderful idea for your snow cone stand, or your D.J. service, or your building company, I mean- Now the second big step I want to make sure we do here, Action step. Okay, second one. Very very important: Ask yourself how much are you prepared to lose? Because if you're somebody watching this and let's say that you're a second generation guy you're not a complete yuppie, but you're kind of a yuppie You're not feeding your- You have a purebred dog, and that purebred dog that you have you have hired a full-time man who feeds that dog lobster because you're too busy. If that's you, you probably want to buy insurance first. So you have to ask yourself. This is the action step. Ask yourself how much money am I prepared to lose? If you're a college student with a net worth of zero dollars maybe you're even a negative 69,000$ because you've borrowed money I would recommend you open up in your garage and start that business. Look up the Hewlett Packard garage. Hewlett Packard garage This is the famous Garage Majal, where they get folks at Hewlett Packard. Oh yeah, look at that. Just go there and it's- Oh, nice. Look at that, click on that. That's the garage where Hewlett Packard was founded right there folks. Does it look like that one of the largest tech companies in the world had insurance at that point? - [Voiceover] I think not. - See these are the things that- Can we look this up? Can we look up here, Yahoo? And say, Jerry Yang? And then put where he founded Yahoo. Let's just look at it, see if we can find a picture of it. Go to images and we'll see if we can find it. Come on, baby. Come on, baby. Jerry Yang, Yahoo. Okay, well we're not - It's a lot of it's a lot to - Well, it's him in his glory days. But you know what happens is- Okay, here we go. Here's another example. Zappos, Zappos. Let's see if we can find this picture. Type in Zappos and Tony Shay, yeah he has a weird spelling don't worry about it. And then put apartment, and then founding. There you go. And then just go to images. So anyway, homie, when he was building Zappos, he didn't have the money needed to go out there and have an awesome office so he built it out of his apartment. We'll find the image, we'll add it in the editing. The main thing we gotta get here is that- Let's review: Zappos started in an apartment Was that legal, did they have insurance? Can you have a commercial business in your apartment? - [Voiceover] No. - No. Could Apple start in their garage? No. Could Jerry Yang start- you look it up it's crazy He was working in some sort of shack. No. Could Hewlett Packard start in a garage? No. But did they all start there? Yes. So I'm just saying to you, is you've gotta start somewhere start with the tools you have, don't get overwhelmed. But get out there and test the viability of your idea first and if your idea is viable, then buy some insurance. If you have a ton of money to lose then it's very very important that you make sure that you mitigate your risk, that you've minimized your risk to start so you don't lose everything. Am I missing out on something? - [Voiceover] I don't think so, it sounds pretty good. Well, those are the reasons why it is important for your business to have insurance. Thank you for joining in, and we'll have some more coming up for you.
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