r&b cain spring 2015

SPRING 2015

Kat ColeThe Rise of a

Business SuperstarFrom Hooters to Cinnabon to

Group President, FOCUS Brands Inc.

7 Social Media Strategies Hiring is a Risky Business Equal or Equitable Pay No More Problems

Cain insuranCe

RISK BUSINESS&MAGAZINE

2 RISK & BUSINESS MAGAZINETM SPRING 2015

RISK & BUSINESS MAGAZINETMSPRING 2015 3

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Cain Insurance Risk & Business MagazineTM is published by Carle Publishing Inc. All content, copyright 2015, Carle Publishing Inc. All rights reserved.Risk & Business MagazineTM is a valued and recognized trademark of Carle Publishing Inc. This publication may not be reproduced, all or in part, without written consent from the publisher. Every effort has been made to ensure the accuracy of all content in this publication, however, the publisher nor Cain Insurance Ltd. will be held responsible for omissions or errors. Please address all editorial and advertising inquiries to Carle Publishing Inc., 60 Shayla Court, Fredericton, NB, E3G 0N3, Canada. Carle Publishing Inc. is not held responsible for the loss, damage or any other injury to unsolicited material (including but not limited to manuscripts, artwork, photographs and advertisements). Unsolicited material must be included with a self-addressed, overnight-delivery return envelope, postage prepaid. Carle Publishing Inc. and Cain Insurance Ltd. will not give or rent your name, mailing address, or other contact information to third parties. Subscriptions are complimentary for qualified individuals.

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PUBLISHER Carle Publishing Inc. EDITOR-IN-CHIEF Andy Buyting GRAPHIC DESIGN John Christenson CONTENT COORDINATOR Stacey Cowperthwaite

CONTRIBUTORS Dave Armstrong Gary Belding Andy Buyting Greg Crabtree John DiJulius III Eric Fry Verne Harnish Dave Kerpen Matthew Pearn Joe Pulizzi Dr Brad Smart Neil Wadhwa

ADVERTISING (National) Keith Keane ADVERTISING (Local) Reece Cain

PHOTOGRAPHY All images sourced from Carle Publishing Inc. or Thinkstockphotos.ca unless otherwise identified.

RISK BUSINESS&MAGAZINE

&

AINCInsurance Services Ltd.


PUBLISHER Carle Publishing Inc. EDITOR-IN-CHIEF Andy Buyting GRAPHIC DESIGN John Christenson CONTENT COORDINATOR Stacey Cowperthwaite

CONTRIBUTORS Dave Armstrong Gary Belding Andy Buyting Greg Crabtree John DiJulius III Eric Fry Verne Harnish Dave Kerpen Matthew Pearn Joe Pulizzi Dr Brad Smart Neil Wadhwa

ADVERTISING (National) Keith Keane ADVERTISING (Local) Reece Cain

PHOTOGRAPHY All images sourced from Carle Publishing Inc. or Thinkstockphotos.ca unless otherwise identified.

welcome to R&B

CONTENTS

www.caininsurance.ca

Welcome to the Spring 2015 edition of Risk and Business MagazineTM.

What was to be a warmer than normal winter turned out to be anything but. Predictions about weather can sometimes be as unpredictable as the business climates, and risk management issues.

The same volatility we find in our weather exists in New Brunswicks business climate. Since our last magazine edition in the fall of 2014, New Brunswick has elected a new government on the promise of improving the economy, reducing debt and placing a moratorium on the exploration of shale gas with in the Province.

Businesses like provincial economies require more than just wishful thinking. Much can be accomplished within your business as it can in a Provincial economy, with appropriate risk management. Hoping for things to get better without proper analysis will not improve your business or our economy.

We hope you will enjoy our spring edition and you find some risk management tips in the articles, to help your business improve.

As always we are available to discuss any of your insurance or risk management issues at any time.

Yours truly.

Dan and Luke

From Waitress to President:

The Rise of a Business Superstar

Kat Coles Sweet Success

16

Letter from the Owner 5

Whats Going on at Cain Insurance 6 Keep Up With Whats Happening

No More Problems, Please! 9A Different Approach to Strategy for all Companies

7 Social Media Strategies 12Have Social Media Work for Your Company

Hiring is a Risky Business 14Topgrading Steps to Hiring Better

Creating Inspired Moments 20The Importance of a Customer Service Vision Statement

Right Questions, Right Time 22The Importance and True Relevance of a Question

Equal or Equitable Pay? 24How to Get Top Team Performance

Untapped Resources 26Leveraging Funding...Sharing the Risk...Sharing the Benefits

Family Ties 27Family Business, Successor or Sale?

Steps to the Next Level 28Take Your Content Marketing Strategy to the Next Level

Protecting Profits 30Business Interruption Insurance Can Protect You


Whats going on at Cain InsuranceKeep Up With Whats Happening

Welcome: Ellen Daigle: Cain Insurance is happy to have Ellen Daigle join our team as the new personal lines manager. Ellen has over 30 years of industry experience, along with both CAIB and CIP designations bringing immense industry knowledge and experience to our team. Ellen also operated her own successful brokerage for nine years. Ellen enjoys spending her free time with her loving husband and son, and is an avid gardener and world traveler.

Jordan Clendening: Jordan has joined the Cain Insurance team as a producer trainee. Jordan graduated from the University of New Brunswick with a Kinesiology degree in sports management. He displayed his strong work ethic while playing for UNBs Varsity Reds Hockey Team where he won two CIS national championships. Jordan recently left Rothmans Benson & Hedges as a sales representative to embark on his new career with the Cain Insurance team.

Farewell: As we welcome new staff members, unfortunately we must say goodbye to a few as well. We would like to thank Leah Shaw and Melanie Maunder for years of great service they provided to Cain Insurance and our clients. We are sad to see them leave, but we wish them the best of luck in their future endeavors.

Luke Cain visited the Leo Hayes High School entrepreneurial class to share with them the experience and knowledge he has gained while being an entrepreneur here in New Brunswick.

Charitable Donations This past Christmas the Cain Insurance staff was able to help a number of deserving OPAL sponsored families. Cain Insurance provided these families with Christmas gifts. Dan & Luke were happy to match the staff donations, so these OPAL families could have a Merry Christmas. Cain Insurance loves giving back to the community when they can, and we were very pleased to have the opportunity to help these families during the holidays.

R & B

BY: VERNE HARNISH AND ANDY BUYTING

No More Problems, Please!A Different Approach to Strategy for all Companies

First, my public apology to all the companies Ive misguided over the past two decades, as well as an apology to my employees. And while Im at it, let me add a public apology to my family and friends.

I just didnt know any better until I read a thin 70 page book called the

Thin Book of Appreciative Inquiry

I apologize for dredging up all their problems, for focusing on what is wrong instead of on what is right. I apologize for focusing on the Fs instead of the As. I just didnt know any better until I read a thin 70 page book called the Thin Book of Appreciative Inquiry.

Quick summary Focus on whats working instead of on whats not working. Period.

Heres the rub. During quarterly planning and consulting sessions the tendency is to make a list of problems and then spend

the bulk of the time discussing these problems and trying to solve them. No wonder people dread the process.

This was brought home to me recently when a client introduced

me, as his new consultant, to some of the people in his accounting department. One of the women quipped I suppose youre here to point out everything were doing wrong. Ouch! But an accurate description of the role of most consultants.

As a leader of my own firm, Ive fallen into this same problem analysis focus of solving my growth company challenges. And as a father, during a recent teacher-parent conference, I caught myself focusing more on the Bs than the As, even though I now know better these are difficult habits to break.

RISK & BUSINESS MAGAZINETM SPRING 2015 9


DRIVING REVENUES

So whats the alternative? Let me go back to my latest planning session with the client mentioned above. Their main challenge was driving revenue. Rather than analyze all the reasons why revenues were NOT growing as rapidly as they would like, we took a different tack. Instead, we explored a time when revenues were exploding i.e. when things were going great.

Rather than analyze all the reasons why revenues

were NOT growing as rapidly as they would like...

we explored a time when revenues were exploding

i.e. when things were going great.

Back a number of years ago, one of their divisions had driven revenues from $2 million to just over $9 million in the span of twelve months. Since then, that divisions revenues have gone flat. So we brought in the head of that division and rather than spend an hour analyzing why revenues had gone flat, instead we asked what were you doing right back then that caused revenues to explode?

First, the head of the division was getting to re-live a positive time, rather than hash through a bunch of negatives. More importantly, about an hour into the conversation, as we continued to explore what worked for them in the past, the head of the division had a major insight.

Back a few years ago, he was spending about a week a month out in the field visiting with his main distributors and customers. However, after experiencing the sharp jump in revenues, he was sucked into all the challenges of running a much larger operation which had reduced his field time to less than a week every quarter. The minute he said it, the CEO looked at his head of operations, he looked at me, and we all looked at the division head and we knew our answer had been found. We then spent the next hour figuring out how to get some

activities off the division heads plate so he could get back out in the field.

Results? When I checked back three months later, though the division head had not yet achieved a week/month of field time, he had managed to get out a lot more than he had been and in the process found a new product that may likely add $10 million in revenue next year! Now the company is faced with finding the cash to support the added inventory and again, when explored how they had successfully accomplished this in the past.

DEFINING AND FOCUSING ON THE CORE CUSTOMER

While discussing the downturn of company profitability over the past few years, Certified Gazelles Coach Andy Buyting brought a new client in the security guard industry through a core customer exercise. After analyzing the hard numbers and the gradual shift in customer profile in recent years, it was found that approximately 76% of their customers made up less than 5% of their revenues.

What they concluded was they were wasting far too much (76%) of their time, attention and resources servicing clients that were simply not profitable. This was taking them away from their larger clients, clients they were better equipped to service well, and would most likely contribute to larger and more profitable growth in the future.

Result? Within a three week period, they essentially fired (transferred out) three quarters of their customer list. This freed up their operations and admin people to focus on their large profitable clients. It also provided their sales team with clarity on their core customer, and has allowed them to grow larger, faster and with much stronger profitability.

TURNAROUND STRATEGIES

Another friend who turns around business said he uses a similar process. He simply asks for a graph of the companys financial performance for the past decade or so, looks for a point where the performance was stellar, and then brings together leaders and employees who were around during that period and spends a couple days inquiring into what

the company was doing then that they arent doing now.

In one recent turnaround, he found seven distinct activities the firm was doing during the boom times that they werent doing now and he simply focused the firm on doing those activities again, even though the market and products had shifted over time. Results? Another successful turnaround.

FOCUS ON STRENGTHS

Marcus Buckingham, the strengths movement guru (Go Put Your Strengths to Work), notes that if you want to help your children with their Fs, ask them about their As what did they do to get their As, why they like that subject more than the other, what the teacher does, etc. You dont ignore Fs, but you must study the As, not dwell on the Fs, if you have any hope of supporting your child in a positive way.

You dont ignore your problems, but its far

more productive to study whats working...

The same with your company. You dont ignore your problems, but its far more productive to study whats working, in your own company or others, as the best way to solve the challenges facing your growing firm.

As a Certified Gazelles International Strategic Advisor, Andy Buyting provides strategic direction for high growth companies and their management teams as they grow their organizations to the next level. Learn more at www.AndyBuyting.com

Verne Harnish is founder and CEO of Gazelles, a global executive education and coaching company, Verne has spent the past 30 years educating entrepreneurial teams. Hes the author of Mastering the Rockefeller Habits which is endorsed by over 100 CEOs of mid-size companies and is published in ten languages.

BY: DAVE KERPEN, FOUNDER AND CEO, LIKEABLE LOCAL

7 Social Media StrategiesHave Social Media Work for your Company

Gone are the days of strictly using traditional marketing vehicles. Today, savvy SMBs use search marketing, search engine optimization and various social media platforms to market their companies online. And, today is as good a time as any to look at your social media strategy.

More than 1.3 billion people in the world are on Facebook, including over 180 million Americans. Twitter recently surpassed 400 million accounts.

LinkedIn boasts over 300 million users. Many SMBs are trying to take advantage of these trends, by using social networks to promote themselves and broadcast their messages, but few are fully reaping the rewards.

If you stop thinking like a marketer and start thinking like a customer, youll understand the secret to social media is in the social more than in the media. Its in being human, and being the sort of person at a cocktail party who listens attentively, tells great stories, shows interest in others and is authentic and honest. To put it simply, the secret is to be likeable.

Here are seven tips to be more likeable and ensure great success using social media:

1. Listen first and never stop listeningBefore your first tweet, search Twitter for people talking about your company

and your competitors. Search using words that your

prospective

customers would say as well. For example, real estate agents should use Twitter and Facebook to search for people using the words looking for a realtor in your town. Youll be surprised how many people are already looking for you.

2.Dont tell your customers to Like you and Follow you, tell them why and how they shouldEverywhere you turn, you see Like us on Facebookand Follow us on Twitter. Huh? Why? How? Give your customers a reason to connect with you on social networks, answering the question Whats in it for me? and then make it incredibly easy to do so. Note the difference between these two calls to action: Like our page on Facebook vs. Get answers to your questions on our Facebook page.

3. Be authenticYour customers dont want to read impersonal posts and sales offers all day. Instead, be human and be yourself. Are you sponsoring a Little League team in your town? Share it with your fans! Know a few jokes related to your industry? Tell them! Show your companys personality and watch your online community to engage and grow.

4.Why ask questions?Wondering why nobodys responding to your posts on Facebook? Its

probably because youre

not asking questions. Social media is about engagement and having a conversation, not about self-promotion. If a store posts on Facebook, Come in and see whats on the sale today, nobody will comment and nobody will come. If that same store posts a question as simple as Whats your favorite gift youve ever bought? and attaches a great picture, people will be more likely to comment online and engage with the company.

5. Surprise and delight your customersWant to bring more attention to your companys social media pages and become more likeable overall? Figure out ways to surprise and delight your customers on a regular basis. Offer contests and raffles or encourage your community to join the conversation for a chance to win local gift cards that show off a towns personality. Remember, free is like magic and a delighted customer will share their experience with friends and family.

6. Share pictures and videos to tell storiesPeople love photos. The biggest reason Facebook went from zero to 1 billion users in just 10 is photos. Photos and videos tell stories about you in ways a text alone

cannot.


You dont need a big production budget, either. Use your smartphone to take pictures and short videos of customers and cool things around town. Then upload them directly to Facebook, Twitter and LinkedIn. A picture of happy, attractive customers is social media gold. Try a video featuring testimonials from your happy customers! A picture really is worth a thousand words and a video is worth a thousand pictures.

7. Spend at least 30 minutes a day and use tools to help Likeable Local offers a software that makes social media fun, easy, and effective for small businesses. With advertising, analytics and idea suggestions, Likeable Local gives you the tools to be successful on social. If you bought a newspaper ad or radio ad, you wouldnt spend five minutes on it or relegate it to interns, so dont do it with social media. Spend real time each day reading and learning, listening and responding, and truly joining the conversation. The more time and effort you put in to social media, the more benefits youll see.

The strategies listed above are critical to maintain and grow an online community, but before you even consider social media I tell Likeable customers consider this: Social media will help magnify and multiply the conversations about your company. Will you be happy about the nature of those conversations?

Before you get involved with external communications online marketing, advertising and social media look internally at your company.The secret to the most effective marketing is so simple just be likeable.

Dave Kerpenis the the founder and CEO of Likeable Local,the cofounderand Chairman of Likeable Media, the NYTimes Bestselling authorof 3 books, the #1 LinkedIn Influencer of all time in pageviews, ahead of Bill Gates, Jack Welch, Mark Cuban and Barack Obama, and the proud father of Charlotte and Kate Kerpen.


14 RISK & BUSINESS MAGAZINETM SPRING 2015 14 RISK & BUSINESS MAGAZINETM SPRING 2015

The ability to make good decisions about people represents one of the last reliable sources of competitive

advantage, since very few organizations are very good at it. Peter Drucker

Which managers among us have not suffered from too many costly mis-hires? Dr. Brad Smart, widely respected as a hiring expert, offers three common sense steps to help us hire better. He coined the term Topgrading to mean achieving 90% success hiring and promoting people.

R&B: Brad, lets get straight into it. Why is hiring very risky?

Brad: Because almost all managers suffer from poor hiring results. I met with the number one Human Resources executives from the largest 100 companies in the world. Across the board, they said that 75% of the people they hire turn out to be disappointments.

R&B: Why is the success rate so low for most companies?

Brad: Most companies mis-hire people because of three things: One, candidates get away with lying on their resume and in interviews; two, interviewing methods are so shallow Forrest Gump could pass them; and three, companies dont verify what candidates told them because the reference calls they conduct are generally ineffective.

R&B: I know Topgrading has ways to overcome problems, but first lets talk more about risk. What are the risks when there is a mis-hire?

Brad: For three decades weve asked managers to estimate what it costs in money and time when they mis-hire someone. Bottom line, the average estimated cost of mis-hiring a $100,000 per year manager is over $400,000,

Hiring is a Risky BusinessTopgrading Steps to Hiring BetterBY: DR. BRAD SMART, AUTHOR AND PRESIDENT AND CEO OF TOPGRADING, INC.

and the average number of hours wasted sweeping up after a mis-hire is more than 250 hours. The cost of keeping low performers gets bigger over time because they suck the energy and productivity of high performers who must work harder to prevent mistakes and later correct them.

R&B: OK, so what are the steps managers can take to hire better?

Brad: Step 1: Use the Topgrading truth serum which is simple: Tell candidates that a final step in hiring is for them, not the company, but for them to arrange reference calls with their former managers and others. The low performers, those with hyped resumes, drop out because they know there is no way that they could get their former managers to talk with the hiring company nor would they want you to.

Step 2: Conduct a Topgrading interview. Remember, all the remaining candidates are motivated to tell the truth. The Topgrading Interview walks them through their career so you can really understand how they evolved and what their abilities and competencies are today. Start with their first job and come up to the present and ask: What were your successes? What were your failures? What were any additional key decisions or any important people interactions you had? Appraise your boss. (Its very important to see what sort of bosses they liked, or not.)

And here is the single most important and revealing question of all: If we were to ask you to arrange a reference call with your managers, what is your best guess as to what they would list as your strengths

and your weaker points and how would they rate your overall performance?

The Topgrading interview reveals how people they performed and improved, and how they learned from mistakes. Values are revealed and over time, clearly defined patterns uncover their strengths and weaker points today.

Step 3: Ask candidates to arrange reference calls with their former managers and then make those calls. This assures solid verification of everything the candidate said. Ask candidates to arrange the calls with not just their bosses, but anyone you want to talk with. It might be a couple of sharp subordinates or peers. Or for a sales rep candidate, maybe you want to talk to a couple of customers and so forth. Candidates arrange the calls so theres no telephone tag.

R&B: Thats brilliant. With regard to the Topgrading Interview, would you recommend one person or a panel do them?

Brad: That is a terrific question. Definitely use two interviewers, the hiring manager and another manager, perhaps Human Resources. General Electric started with 25% success and with solo Topgrading Interviews improved to 50%. Jack Welch, GE CEO at the time, asked how they could improve and I suggested two interviewers. He implemented it and GE achieved an over 90% hiring success rate. Soon after, GE became the most valuable company in the world in terms of market capitalization.

The cool thing is that thousands of managers have been trained in Topgrading and when they use these three basic steps and conduct tandem Topgrading Interviews, they too achieve 80% and even 90% hiring success. And many managers prefer to have a Certified Topgrading Coach as the main

interviewer and they serve as the tandem partner.

R&B: Is Topgrading just for large companies?

Brad: No! A single mis-hire in a small company could be devastating.

Thousands of small- and mid-sized companies have

successfully Topgraded.

R&B: What proof is there that Topgrading really works so well?

Brad: Go to www.topgradingcasestudies.com to read 40 case studies. On the first

page is a master chart showing the average hiring success rate improved from 26% to

85%. And every CEO is quoted saying the company is more profitable

because of Topgrading.

R&B: Tell us a little how our readers can learn more.

Brad: They can go to www.topgrading.com to download a free 70-page e-Book, Topgrading 201.


Dr. Brad Smart is an internationally renowned management psychologist and is generally regarded as the worlds leading expert on hiring best practices. Topgrading methods have helped leading companies such General Electric, Honeywell, Barclays, and American Heart Association plushundredsof small and mid-sized companies improve their hiring methods.


The cinnamon roll shouldnt be here. The story of the cinnamon roll only knowing the confines and comfort of mall food-courts, remaining resilient against the glass-half empty nutritionists that called for its downfall, and then becoming the staple item in a billion dollar business, runs parallel to Coles own rise and the challenges she faced along the way. Cole went from waitress to President by thinking bigger, doing more, embracing change, and welcoming all challenges.

BY: NEIL WADHWA

From Waitress to President:

The Rise of a Business Superstar

Kat Coles Sweet Success


Walk through most mall food-courts around the world and youll be sure to smell that magical aroma of sweet cinnamon, brown sugar, gooey icing, melting margarine, and pillow-soft pastry dough, calling your name. Follow your nose and youll end up at Cinnabon, the cinnamon roll brand with a cult following.

The cinnamon rolls popularity hasnt diminished at a time when fast-food chains and restaurant menus worldwide are adopting healthier options. In fact, Cinnabon has hit $1 billion in sales every year since 2012, and its licensed products can now be found everywhere from supermarket shelves, in packaged-foods by Kellogg and Pillsbury, to fast-food restaurants, including Taco Bell and Burger King.

While Cinnabons success can be traced to Makara cinnamonCinnabons proprietary cinnamon from Indonesia that can be found in all of Cinnabons licensed productsand loyal customers willing to indulge in a little guilty pleasure every once in a while, the company can also take comfort in knowing its in the safe hands of Kat Cole.

Cinnabons classic roll is 880 calories330 more than a Big Mac. It goes against all the trends of the make it healthier and make it artisanal discussions that surround food in 2015. Yet it manages to survive, thrive, and expand. In many ways, the story of the classic roll echoes the story of Cole, President and Chief Executive Officer of Cinnabon, who is in a position that might have been unimaginable to her 9-year-old self.

I grew up in Jacksonville, Florida. Our father, who was a Vietnam veteran, had come back a troubled guy, and was making bad decisions. He wouldnt be around for family events, or my mom was left to do things on her own, or he was out drinking and wouldnt come home till late, said Cole, during her recent appearance on Undercover Boss.

So, when I was nine years old, my mom had the courage to leave him and take me and my two younger sisters to a different city so that we could start a new life. She fed our little family of three girls on $10 a week.

Its in these early stages of life where Cole learned to take charge and be responsibletraits not typically asked of a 9-year-old. But its these very traits developed by Cole at an early age that still help guide her throughout her professional career.

Cole watched as her mom became the leader of the family. More importantly, seeing her mom feed three growing girls on $10 a week instilled in her the drive to be successful, a drive that can only be understood by those who have grown up in situations similar to Cole.

10 years later, at the age of 19, Cole started working at Hooters, selling beer and chicken wings. As Coles mom was still raising three kids on a low salary, Cole spent her time outside of Hooters (when not at school) working a second job at a local mall.

Her time at Hooters wasnt one of working for tips, but rather embracing any opportunity that came her way, gladly accepting challenges that others would turn away from.

I was in the right place at the right time with a company that was growing, but at the same time,

I had worked my buns off to be

known as someone who could get the

job done. When the cooks quit, I went in

the back and learned how to cook, when the

managers needed help, I helped, when the other

servers or people needed help, I was there to help, because

I was curious and I genuinely wanted to help, Said Cole, in a

recent interview with NextShark.

Fast forward a year of doing that, I was one of the few people that had

worked every job in the building. So when someone called and said hey, we want you to

go overseas and open restaurants, it wasnt just that I was chosen, it wasnt just that I was lucky,

its that I had happened to put myself in a positionunknowinglyto be one of the top candidates.

I had worked my buns off to be

known as someone who could get the job done.


For Cole, every challenge and every new opportunity was a new chance to learn and grow. She was willing to put herself in new situations, ones that she may not have had the skills or training for at the time, in order become a well rounded, knowledgeable employeerather than one that had only very narrow, replaceable skillsets.

Nothing encapsulates Coles willingness more than when Hooters asked her to help open a restaurant in Australia. Although she had run every aspect of the Jacksonvilles Hooters location, what Cole had never done at that point in her life was step on soil outside of her home state of Floridanever mind stepping on an airplane. She asked management for a day to decide, and after consulting her mom, flew to Miami to stand in line and get a passport, which could be completed within the day. She got the passport, and was soon in Australia, where she spent 40 days helping with the opening of the restaurant.

Management never knew about her day trip to Miami in order to get the passport.

At the time, Cole thought of Hooters as just a pit stop, as she was pursuing an engineering degree at the University of Northern Florida, with plans on enrolling in law school afterwards. But Coles experience in Australia was life changing. Not only was it her first trip outside of Florida, but also management saw how successful she was and started sending Cole to more countries to open more restaurants.

As a result, she made the decision to drop out of school. A big decision, considering Cole was the first of her family to go to collegeand a decision she would revisit less than 10 years down the line. This continued the trend of embracing opportunity and change, rather than question and resist change in order to follow a path seemingly set in stone.

After opening restaurant locations for less than two years, a Vice President at Hooters asked the then 20-year-old Cole to apply for a management job based in Hooters Atlanta headquarters. Cole appliedeven dressing up for the phone interviewand got the job. Six short years later, Cole became a VP of Hooters herself. To make up for the fact that didnt have a university degreerevisiting her decision to leave the University of Northern Florida 10 years earlierCole completed her Graduate Management Admission Test (GMAT) and then enrolled in Georgia State Universitys Executive MBA Program.

In 2010, still a student in her early 30s, FOCUS Brands, the Atlanta-based franchisor and operator of six food-

For Cole, every challenge and every

new opportunity was a new chance to learn and grow.


service chains with over 4,500 locations in the United States and 63 other countries, hired her as the CEO of Cinnabon. Two short months after she was hired, Cole finished her MBA. One month after finishing her MBA, she was promoted to president of Cinnabon.

At 32, Cole was responsible for over 1,000 Cinnabon locations in over 50 countries, which, at the time, was approaching $1 billion in annual sales.

In February 2015during the very week of this articles initial draftsKat Cole, now 36, was promoted to president of FOCUS Brands, putting her in charge of Carvel, Schlotzskys, Moes Southwest Grill, Auntie Annes Pretzels, McAlisters Deli, in addition to Cinnabon. A short 17 years ago, Cole was just in charge of wings and beer at the Jacksonville Hooters.

I was the daughter of an alcoholic and a single parent, I worked at Hooters most of my life, and I dropped out of college, Cole explained to Charlotte Alter for an interview with Time Magazine.

You tell me if that inspires you to want to have me run your company.

We think FOCUS made the right decision.

Kat Cole promoted to President of FOCUS Brands

Creating Inspired MomentsThe Importance of a Customer Service Vision StatementBY: JOHN DiJULIUS, PRESIDENT, THE DiJULIUS GROUP

Putting our feet in the shoes of the Customers, [we understood] what they were dealing with and [their] anxiety . . .We were growing the company with such

speed and aggression that we lost sight of the Customer experience.-Howard Schultz, Starbucks CEO,

Wall Street Journal 2011

In 2010, I had one of the highlights of my consulting career: Starbucks asked me to help it re-create its Customer service vision statement. I have worked with Starbucks in the past, but this was different. I knew this was going to be something that would live for a long, long time in Starbucks. Starbucks has always been one of my favorite companies, both as a Customer and as a Customer service consultant. I was so excited! I knew that no one helped create better Customer service vision statements than The DiJulius Group. I knew we were perfect for this project. I was so excited about taking on this project, until I asked them what their current vision statement was that they wanted to change: To inspire and nurture the human spirit one person, one cup, and one neighborhood at a time.

I thought to myself, Wow, thats pretty good. I honestly didnt know if we could improve on that. I asked Craig Russell, senior vice president of global coffee, why he felt that statement didnt work for Starbucks. He replied, We love the statement; those are Howards [Schultzs] words. It is more of our purpose. As far as a Customer service vision, it is too big, too aspirational. We want something thats actionable, trainable, measurable. As I thought about it, he was right. If someone comes in and orders a venti soy latte, and the barista gives

Inspired moments One of the biggest takeaways from this workshop that the group of executives from Starbucks shared was that Starbucks cant change whats going to happen today to its Customers. Whether they get a flat tire on their way to work or they are irate because their package didnt arrive next-day air, as promised, what Starbucks can provide (and does provide very well) is an escapeif only for a few seconds in the Customers day. Starbucks allows its Customers to step inside, collect themselves, see some friendly faceswhether it be the workers, friends, or neighbors from the communityand take a break, enjoy a beverage, regroup, and then go back and take on the world again.

There it was. The team had it: the Starbucks Customer service vision statement. One of my proudest trophies as a consultant is the Starbucks green apron. The next time you walk into a Starbucks, anywhere in the world, and you see a Starbucks employee wearing that signature green apron, politely ask them to turn the inside top of the apron over for you. There is where you will see the Starbucks Customer service vision statement and pillars printed. It reads:

it to them exactly how they ordered it, in ninety seconds, did the barista inspire or nurture their human spirit? Probably not. That is something that takes dozens and dozens of positive experiences. I believe Starbucks does that. But it doesnt happen one time.

So we did what we do with all our consulting clients when making a Customer service vision statement; we started with scripting a day in the life of a Starbucks Customer (see chapter 5 for the day-in-the-life discussion). A Starbucks Customer is easy to relate to. Virtually anyone reading this book can relate, whether you actually frequent Starbucks or not. Starbucks customers are people with discretionary income who are battling the hustle and bustle of their busy lives, trying to balance everything they have going on personally and professionallypeople dealing with the daily grind that can wear us all down from time to time.


The content for this article was taken from The Customer Service Revolution: Overthrow convention Business, Inspire

Employees, and Change the World, (January 2015 Greenleaf Books)

by John R. DiJulius III

PersonalizeThis means customization. With over eighty thousand ways someone can order a Starbucks beverage, you truly can have it your way.

OwnStarbucks trusts its employees. They can own the experience. If a little girl drops her hot chocolate, a Starbucks employee can give her a new one for free.

Each of the pillars is critical, but only in conjunction with each other. Customers want their drinks made exactly how they ordered it, quicklybut not by someone with an attitude. Just the same, a

Customer does not want someone to greet them by name and have their drink ready for them before they order it, only to have their drink made incorrectly.

Big Impact The Starbucks service vision statement contributed to the companys turnaround in 2010 and 2011. Earnings rose 44 percent, Customer visits rose by 5 percent, and more Customers were paying for higher-priced items.

Why is the service vision statement printed on the inside of the green apron? It isnt for the Customers or public to see; it is for the Starbucks employees to see. And every time they put that apron over their head, they are reminded of their job for every Customer with whom they come in contact with.

Pillars to the service vision statement The four pillars to the Starbucks service vision statement have to do with the companys key drivers of Customer satisfaction:

AnticipateThis might mean that if a barista notices a Customer in a business suit, at 6:05 a.m., ordering his coffee, while barely looking up from his smartphone, he probably has some place to be. Get him his drink and help him get on his way. On the other hand, it can be a completely different pace at 9:05 a.m., when a barista encounters a few mothers who just dropped their children off at school and seem to be in no rush.

ConnectA connection could be recognizing regulars and having their drinks ready for them, or it could just be a smile or a kind word.


John R. DiJulius III is considered the authority on world-class Customer service and is the author of three books on Customer experience. He is the president of The DiJulius Groupa Customer service consulting fi rm that works with companies like Starbucks, Chick-fi l-A, The Ritz-Carlton, Nestle, PwC, Lexus, and many more. John is also the founder and owner of John Roberts Spanamed one of the Top 20 Salons in America


You are in the middle of your second or third good discussion with a prospect and everything seems to be going great. The prospect seems engaged and happyto work with you.

Then prospect poses an innocent sounding question,So, how big is your company?

Without hesitation, you answer that question. You recite, more or less verbatim, the standard reply you were trained to recite when people ask you about the size of your company. The answer laid out for you in your orientation workshops, promotion materials, and brochures: 85 employees, a headquarters location, and 3 other regional offices across Atlantic.

The prospect nods and the conversation continues.

Although there are plenty of smiles, pleasantries, and earnest promises

to be in touch as you wrap up your meeting, the

oddest thing

takes place once you leave the building...All forward motion stops.

The prospect no longer returns your calls. Your emails receive ambiguous replies and weeks pass by. Youre off the prospects radar screen. You find that no one else in the company seems willing to acknowledge your attempts to reach out. Its like the prospect has ordered everyone in the enterprise to deny your companys existence.

What happened?!?You answered all the prospects questions!

My belief system states you should only answer your prospects questions if doing so can help you... or at least it cant hurt you.

Since prospects tend to smokescreen their questions - meaning that they tend to ask questions whose true purposes arent likely to be clear to you at first - you must make sure, first and foremost,

that youre answering the real question.

Guess what? When that prospect so innocently

asked, How big is your company?

the real question

was: Will you be able to handle a 4-province distribution schedule?

As it happens, you can handle a 4-province distribution schedule. But the answer your company taught you to repeat only mentions one province. And that was enough (non)-information for this prospect to tune you out... without telling you why.

In most cases, and especially in the early going, you have to assume that every question you hear from a prospect is a smokescreen question.

So the question, How soon can you get shipment to us? may mean, Can you get shipment to us by 10:30 Thursday morning? The question, How strict are you with quantity discounts? may mean, Can I take advantage of the quantity discount and arrange for a 14-day split-shipment?.

If you make a habit of answering the first question you hear, youll never understand the real question!

You must discoverwhy the prospect asked you the question you just heard. You must identify the underlying intent.

BY: ERIC FRY, MANAGING PARTNER, SANDLER TRAINING

Right Questions, Right TimeThe Importance and True Relevance of a Question


Intent:The importance and true relevance of the question to the topic of discussion.

If you dont know the intent you cannot respond intelligently.

How do you identify the intent? By Reversing.

Reversing is the strategy of responding to your prospects questions and statements with a question. It puts the verbal ball back in the prospects court.

Reversing prevents you from attempting to mind-read. It adds clarity and completeness to the prospects smokescreen questions and statements. It helps you uncover the underlying intent of those questions and statements.

Some reversing questions include:

Why do you ask?

Why is that important?

Why did you bring that up just now?

What are you really asking?

What are you really saying?

Reversing must be done with caution. Firing back with questions in response to the prospects

questions may sound harsh. So in most cases, you will want to precede your

questions with softening statements.

Thats a good question. And youre asking me that because...?

Many people ask me that. And thats important to you because...?

Thats an interesting question. Why do you ask? (What brought that up?)

Good point. And you brought that up now because...?

I appreciate you sharing that. I cant help wondering, what are you really saying?

Often it takes three or more reverses to get the prospects real question.

In this case, if you had asked effective Reversing questions, you could have gotten to the prospects true question and

confirmed that a 4-province roll-out was no problem.

And you would still be in the game.

Eric Fry is Managing Partner with Sandler Training. Prior to Sandler Training, Eric worked for a number of well-known, international organizations including Xerox and Staples Advantage while honing his skills in sales and leadership throughout his career.


Ever since I identified Labor Productivity as the #1 key to profitability in my book Simple Numbers, Straight Talk, Big Profits!, I have continued to research how the best teams produce more than their peers.

Professional sports teams offer a good laboratory for this discussion. The NFL presents the best picture since they have a labor agreement that imposes a salary cap that prevents any team from spending more than the cap amount any one year. I offer up the New England Patriots as the best example of this. They have made it to the playoffs 12 out the last 14 years and won 3 Super Bowls. During that same time period, the Oakland Raiders have not even come close to the playoffs.

Clearly, the Patriots have produced more output for every dollar they spent than the Raiders. This requires every dollar spent to be productive. Every position player, every coach, and every front office person has to do their job to select the right players, negotiate a fair pay for performance, develop a successful game strategy, coach the players to be ready, and execute to their best ability during game time.

Your business is no different. I contend that every business has a natural salary cap that they must live under. For every level of revenue, in every industry, businesses have a common cost structure they must live by. The only thing that changes the non-labor costs in business is the actions of exceptional team members. If you have exceptional

managers who select, lead, and manage their team, only

then will you be able to beat the competition.

Sounds great, but it is hard to do. I have come to believe that the missing element is compensating your team equitably not equally. As I have been able to study my clients data, it has become evident to me that productive people want to work around other productive people. They also want to be recognized with reasonable differences in pay based on their measurable (or perceived) performance. This is what we refer to as Market Based Pay for Market Based Performance.

Whether you try to keep wages confidential or are open book like my company is, your team has a way to find out (or guess) what their peers make. I do not recommend it for every business, but if you do not hide compensation, it causes fewer headaches if you truly strive for no inequities in pay of your team. Internet sources for comparable pay like Glassdoor.com and Salary.com make readily available data for pay comparison. What you need to do is establish your process to coach your team through where they stand to how they can make more by producing more.

In Adam Grants blog from giveandtake.com, I read a quote that really struck me:

Equal or Equitable Pay? How to Get Top Team PerformanceBY: GREG CRABTREE, PARTNER, CRABTREE, ROWE & BERGER, PC

Equity matters more than equality. Differences in pay arent a problem as long as theyre fair. When players are paid less than teammates who arent performing any better, jealousy, resentful, and discouragement often follow. When theyre paid less than teammates who deliver more value, they understand.

I could not agree more. Your team knows who is productive and who is not. Your job is to take action before the productive ones leave you for a more equitable position. Why would you be the Oakland Raiders when you could be the New England Patriots?

Greg Crabtree, Author of Simple Numbers, Straight Talk, Big Profits, is a partner at Crabtree, Rowe & Berger, PC, an accounting firm focused solely on the needs of entrepreneurs, helping them build the economic engine of their businesses.

BY: GARY BELDING, BELDING BUSINESS FINANCING SOLUTIONS

Untapped ResourcesLeveraging Funding - Sharing the Risk - Sharing the Benefits

The private sector has always been frustrated with the level of interference, red tape and the lack of focus from the public sector. However, under all the layers of bureaucracy, there are hidden golden gems bundled as financial assistance programs as well as technical support.

As much as the federal and provincial levels of government attempt to make it easier for business to access these programs and support, many go undiscovered and untapped. There are a number of financial assistance programs that can assist eager young entrepreneurs as well as small and medium sized New Brunswick businesses.

Some of the federal assistance programs and support:

Atlantic Innovation Fund Encourages partnerships among the private sector and research institutions to develop and commercialize new and improved products and services.

Business Development Program Assists start-ups,

business expansions and modernization projects with non-interest bearing repayable loans.

Atlantic Shipbuilding Action Plan Designed to encourage businesses in the Atlantic Provinces to take advantage of opportunities related to the renewal of the contract for the naval and coast guard fleets.

SEED Capital Program Focuses on young entrepreneurs 18-34 years of age wishing to start-up or expand a business with repayable assistance up to $20,000.

Canada-Atlantic Provinces Agreement on International Business Development Helps established export-ready companies expand their activities in new and diversified markets.

Industrial Research Assistance Program Assists with research, development and commercialization of new technologies. This is customized technical and business advice with non-repayable contributions.

Some of the provincial assistance programs and support:

One Job Pledge Wage reimbursement for hiring a recent post secondary graduate with assistance of up to 70% of wage costs to a maximum support of $10 per hour for a duration of 52 weeks.

Small Business Investor Tax Credit Program Provides a 30% non-refundable personal provincial tax credit for investing new share capital in a new or existing business. A minimum of 3 investors with a minimum total investment of $10,000 is required.

Innov8 Program Assists in reducing the risk

of researching, developing,

acquiring, and implementing new intellectual property and innovative technologies with funding support up to $25,000.

NB Growth Program Provides non repayable contributions for both capital expenditures and wage costs for start-ups, business expansions, diversification, and productivity improvement projects.

Export Development Program Works closely with existing export-ready companies exporting outside of the Maritime Provinces with both domestic and international activities.

Words of caution, a number of these programs are industry specific with budgetary constraints at various times of the year. Some of the assistance programs will be over-subscribed while other programs go untapped. It is surprising that a number of these initiatives are unknown and host very few applications. The financial assistance program incentives are designed to provide a contribution towards the total investment. It will also reduce the risk, create incremental jobs and spur economic growth.

It is always beneficial to know how to navigate through the various departments and application process; but at the end of the day, it can be worth the voyage.

Gary Belding has worked in both the public and private sectors for in excess of 40 years and understands the world of financing. Gary was the former Manager of Financial Programs with Business New Brunswick, the economic engine of the provincial government. Gary has the experience, knowledge and is able to navigate through the financial landscape and now operates his own business, Belding Business Financing Solutions, www.beldingsolutions.com



Family TiesFamily Business, Successor or Sale?BY: DAVE ARMSTRONG, EPR DAYE KELLY & ASSOCIATES

A typical family business has been built over a lifetime or many generations. The founders and successors ultimately want the fruits of their labours to benefit their families. A time inevitably comes when the existing guard will either pass the business on to a family member or sell to an outside party.

More often than not successor family members are not in a financial position to fund a direct purchase of the business. An estate freeze is often used to transfer the future growth to the next generation at little to no upfront cost. This strategy creates special fixed value shares and their outstanding value is managed through a carefully crafted estate plan considering taxes on death of the special shareholders.

Alternatively, a direct sale of the business to family successors can occur however, when entering into transactions with non-arms length individuals, tax rules must always be contemplated to ensure a successful transfer from a financial perspective. A reasonable determination of the fair market value of the business must be performed regardless of the underlying details of the plan. In general, the rules in the Income Tax Act operate to ensure the business is transferred within the family at its fair market value even if the exiting owners do not receive the same cash proceeds.

If the sale of the business is to an outside party, a major consideration for Canadian private company shareholders is the use of their capital gains exemptions. A properly constructed plan can result in a shareholder shielding significant taxes on capital gains with the $813,600* capital gains exemption.

I often advise that the entire family should be considered with a family business sale. Its important to make sure all parties understand the reasons for a sale and are satisfied with the results. Having family meetings and

healthy discussions provides comfort for eventual estate heirs and minimizes confusion and disagreements down the road. If the underlying objective is to preserve the legacy of the family business, engaging the family unit to be part of the succession planning process can help to align interests and improve long-term future success of the transition plan.

A shareholders agreement is necessary to legally enforce the outcome of any succession plan. If corporations exist post sale, shareholders agreement(s) outline the rules of how the business is to be conducted and what happens when major events occur. An important major event to consider is the death of a private company shareholder in my experience it is best to have these considerations written down and agreed in advance, versus dealing with arguments and uncertainty at an emotional period for the family.

During any major changes (such as a transfer of business ownership), I often recommend my clients refer to their personal wills. Usually existing personal estate directives are outdated and require significant changes.

As a general rule of thumb, the time to plan succession or sale is three to five years in advance of the event. Professional advice should always be sought to ensure the best outcome for the family.

* 2015 indexed $800,000 capital gains exemption in effect at date of this article

Dave Armstrong is a tax partner with EPR Daye Kelly & Associates in Fredericton. He specializes in Canadian income tax matters and estate planning.

R & B


According to the latest research from Content Marketing Institute, just 38% of marketers say they are finding success with content marketing. With nine in 10 marketers doing some kind of content marketing, but yet the majority failing at it, we have a significant problem. In many cases, marketers are doing the wrong things. Heres five thoughts you need to be thinking about right now if you want to take your program to the next level.

1. Take best of breed seriously Ninety-nine percent of companies

BY: JOE PULIZZI, FOUNDER OF CONTENT MARKETING INSTITUTE, AUTHOR OF EPIC CONTENT MARKETING

Steps to the Next LevelTake Your Content Marketing Strategy to the Next Level

dont do this. In my third book,Epic Content Marketing, I talk about six principles that are essential to epic content marketing. The sixth, and perhaps most important, is setting a goal/mission to be the best of breed informational provider for your industry niche i.e., to truly be the leading informational resource for your industry.

Ask yourself this:If your content marketing disappeared from the planet, would anyone miss it?

If no one would miss your information, youve got work to do. Start by setting your goal, then set up the processes and invest in the people you need to reach that goal.

2. Follow the 3-legged-stool model Almost every successful media company in the world leverages the 3-Legged-Stool model: creating content for digital,print (print magazine or newsletter), and in-person (customer event or series of customer meetings). I believe that if your brand doesnt leverage all three channels in a meaningful way, you cannot truly be an industry-leading informational source.

Beyond that, there is a huge opportunity in leveraging print channels specifically. Just think of it like the value of a trade show where all your customers are in attendance, but none of your competition showed up. Thats the value print content marketing currently represents. I smell opportunity.

3. Leverage native advertising while you can In a recent LinkedInnative advertising*post, I wrote the following:

Publishers are using native to survive and grow. Brands are using native to steal audience from the publisher. Its that simple.

Im not sure how long publishers in your industry will offernative advertisingopportunities. If Im a brand, Im going to want to go all-in

on leveraging native to steal as much audience as possible. Look into it.

4. Kill a channel Heres a publishing truth: Its likely that, with each new channel you add to yourcontent marketing plan, the other channels you are already using will take a small hit in quality and focus. Ive seen this time and again as our concentration goes wider and our relevance gets broader.

Id like to challenge you to kill a channel (or two) and put a renewed focus on the channels that are most worthy of your time and attention. Be amazing: Be great at distributing content through three channels; use another three to heavily promote that content; and forget the rest at least for a while. Then check the results.

5. Begin with the end in mind If youve read Stephen Coveys long-time best-selling book,The Seven Habits of Highly Effective People, youll recognize this one as the second habit:Begin with the End in Mind. In Coveys words:

It focuses on what you want to be and do. It is your plan for success. It reaffirms who you are, puts your goals in focus, and moves your ideas into the real world.

If you dont know what you want to be, in terms of your content marketing, when you grow up, how will you know if you are on the right path?

Things to do: Create yourcontent marketing mission statement.

Set a subscriber goal for your content.

Decide what you ultimately want subscribers to do.

Answer the question, How Will We Know We Are Succeeding?

Joe Pulizzi is the founder of Content Marketing Institute and author of Epic Content Marketing. Joe can be reached on Twitter @JoePulizzi.

* Native Advertising

A Directly Paid Opportunity. Native advertising is pay to play. If a brand or individual did not pay for the spot, its not native advertising.

Usually Content Based. The information is useful, interesting and highly targeted to the specific readership. In all likelihood, its not an advertisement promoting the companys product or service directly.

Delivered In-Stream. The user experience is not disrupted. The advertising is delivered in a way that does not impede the normal behavior of the user in that particular channel.

Again, the goal of native advertising is to not disrupt the user experienceto offer information that is somewhat helpful and similar to the other information on the site so that the content is engaged with at a higher rate than, say, a banner ad.

BY: MATTHEW PEARN, FOSTER & COMPANY

Many New Brunswick entrepreneurs have learned the hard way that unexpected property damage can take a big bite out of profit. A broken refrigeration unit, a leaking pipe, or faulty wiring can damage equipment or spoil inventory, putting you out of business for days or weeks. While many consider these unexpected expenses as simply part of the cost of doing business, others choose to protect themselves against lost profit by purchasing insurance.

Business Interruption insurance policies (or BI insurance) allow businesses to recover lost profits when accidental property damage brings their enterprise to a screeching halt. Some businesses whose profits are dependent

upon products supplied by a partner business may choose to

purchase Contingent Business Interruption insurance (CBI insurance), which allows the insured business to recover lost profits when the partnering

business

Protecting ProfitsBusiness Interruption Insurance Can Protect You...

suffers an accident that limits the supply of products and, in turn, hurts profits for the insured business.

Not every BI or CBI insurance policy is created equal. As decisions from Canadian courts show, businesses should seek advice on the wording of these policies so that all parties are well informed on the limits of insurance coverage well before a claim arises.

Business Interruption Insurance Disputes between insured businesses and insurers often turn on the careful review of the words of an insurance policy to see if coverage should be paid.

An interesting case from British Columbia shows how disputes over BI policies can crop up between insurers and insured businesses, and how important the wording of the policy can be.

EFP Holdings Ltd. v. The Boiler Inspection and Insurance Company of Canada

The facts of EFP Holdings Ltd v. Boiler Inspection and Insurance, 2001 BCSC 1580, are fairly straight forward. EFP Holdings was in the midst of selling its

manufacturing plant to a new owner when

the plants boiler broke down as the result of an accident.

To save the sale of the plant, EFP made minor repairs to the boiler, but advised the

purchaser that full

repairs to be completed during

a maintenance shutdown of the plant after the

sale. The purchaser of the plant had required EFP to have all machinery in working order before completing the sale. However, the parties agreed that instead of delaying the deal to fix the boiler, EFP should discount the purchase price for the plant by an amount equal to the profits which the new owners would lose when they stopped business to repair the boiler. To recover this money, EFP applied to its insurer for benefits under a BI policy.

The BI policy required the insurer to pay for EFPs lost profit if work at the manufacturing plant was interrupted or interfered with solely as the result of an accident which occurs while this coverage is in effect.

EFPs insurer denied coverage for the loss, saying that when the plant shutdown occurred to repair the boiler, EFP would no longer be the owner and would not directly suffer a financial loss. EFP argued that it was entitled to BI coverage because the boiler had broken down while it still owned the manufacturing plant, and the business interruption was inevitable.

The Court determined that as the boiler failed while EFP was still the owner of the manufacturing plant, and the repair would inevitably require a partial plant shut down, the insurer must pay for the discount taken by EFP in the purchase price to account for lost profits. This was required even though the business would not have suffered the loss until after the sale of the property.

The insurer also challenged whether BI benefits should be paid to EFP when work at the manufacturing plant would not have come to a complete standstill during repairs of the boiler. The Court analyzed the terms, interrupted and interfered with from the BI policy and decided that it provided coverage for both partial and full shutdowns of the manufacturing plant.

But Picking a Policy Can Be Tricky


Matthew Pearn is a lawyer with Foster & Company, a Fredericton law firm specializing in resolving insurance-based legal claims. For more information about Foster & Company visit www.fosterandcompany.com .

Contingent Business Interruption Insurance CBI insurance claims most commonly arise when a manufacturers supplier suffers an accident and is unable to provide the insured business with goods or services needed to complete products sold by the insured business. During the resulting shutdown, insurers often question whether lost profits should be off-set by a benefit the insured benefit has gained during the temporary closure of the business.

Neste Canada Inc. v. Allianz Insurance Company of Canada

In Neste Canada Inc. v. Allianz Insurance Company of Canada, 2008 ABCA 71, the insured business, Neste, made a claim with its insurer under a CBI policy. Neste was in the business of refining motor oil. To make these products, Neste needed butane to run its own plant. Nestes butane supplier, TransCanada Midstream (TCM), had an explosion at its plant and was unable to provide Neste with its ordinary shipment of butane.

Neste made a claim for business interruption arising from TCMs accident and resulting closure. Meanwhile, during the plant shut down, Neste carried out maintenance on its plant.

Nestes insurer declined to pay the full value of the policy, arguing that because Neste benefitted by carrying out maintenance during the shutdown, the value of its business interruption claim should be off-set or discounted by the value of this benefit.

The Court disagreed that the claim should be off-set by Neste being able to complete maintenance. As the insurers expense was not increased by Neste carrying out maintenance, and since the repairs might not have been scheduled to happen at that time but for the lack of butane, the Court stated that the insurer has no legitimate concern if the

insured does something to draw some collateral benefit from the situation.

The CBI policy also included a waiting period within which Neste could not claim for business interruption. Neste argued that the waiting period began from the date of TCMs explosion. Nestes insurer argued that it began from the date that the last butane delivery arrived at Neste.

The Court reviewed the terms of the CBI policy and agreed with the insurer that the waiting period began from the last delivery of butane to Neste. This shrunk the period of time during which Neste could claim for lost profits.

Take-Away Lesson While considering whether to purchase a BI or CBI policy, the directors of a business should look to a broker for advice to make sure that they understand the meaning of the insurance policy that they purchase.

Understanding how the courts will interpret insurance policies allows

companies to plan their business affairs more effectively. In addition, business directors will better understand their rights if faced with lost profit from a business interruption. A careful reading and analysis of insurance policies prevents future surprises for both insurance companies and insured businesses.


r&b cain spring 2015

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