Doing business with business owners

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Between higher living costs and increased economic worries, many Canadian families are under financial pressure. One way advisors can adapt is learning how to steer clients back on track  when they have second thoughts about their insurance. Another way is to explore new segments of the market, such as life insurance for business owners.

This article explores some of the reasons why you might want to focus on life insurance for business owners as well as some tips for success.

Reasons to work with business owners

Here are some of the reasons why successful business owners can make ideal insurance clients:

They have cash flow. A profitable business generates cash flow that can either be paid to the owners of the business or reinvested to help strengthen and grow it. Corporate-owned life insurance is an investment that can achieve a number of goals that are important to business owners, such as building equity, reducing risk, and minimizing tax.

They understand risk. Business owners have worked hard to build something of value, and life insurance can help them shield it from risk. For example, buy-sell agreements can help protect the ownership of the business, and key person insurance can help secure the integrity of the management team.

They have unique needs. In addition to managing risk, business owners have other needs that can be met through insurance. For example, corporate-owned life insurance can be used to build investments within the business, extract money from the business, or pass the business down to children in a tax-smart manner.

They can become significant investment clients. Many successful business owners dream of selling their business some day. When that happens, there may be a significant amount of cash that needs to be redeployed, often into retirement investments.

Here’s another advantage to serving business owners: they are often part of a network of people who need individual insurance and investment advice. This includes staff, family, and fellow business owners. As a trusted advisor to their business, you are in a great position to be of service to their network too.

Tips for positioning your practice

If you decide that the business market is where you want to concentrate, there are some important steps to take. Business owners are often savvy and demanding, so here’s how to be prepared:

Have a clear value proposition. When it comes to pitching your services, it pays to know exactly how you can help business owners. Learn about their worries and their desires. Practice communicating why you are not just someone who happens to work with business owners, but a dedicated expert who understands and solves their unique problems.

Know what to ask. Once you’re sitting down with business owners, you’ll want to ask questions that go beyond what you might normally ask a family. What is the structure of their business? Who are their key people? What are their financial targets? What is their exit strategy or succession plan? How are their personal and business finances connected?

Master the solutions. Before approaching this market, you need to not only study the needs of business owners, but also how to identify and implement the right solutions. You don’t have to know everything at first, but you should gain knowledge and build your confidence around at least a few key strategies to get things started.

Build a strong network. Your network should include business owners who can become clients, and other professionals who can become collaborators and referral sources. You can meet business owners at conferences and events, and by asking for introductions from your existing contacts. Consider seeking out tax and legal professionals who can assist you with your clients and also refer their clients to you.

One final thought: business owners are busy people. So once you have a slot in their calendar, be ready to get down to business. Be on time, have a clear agenda, and ask good questions. If you are presenting solutions, rehearse your recommendations and know your stuff. They will appreciate your preparation and professionalism.

The classic image of an insurance advisor working with families at the kitchen table will never go away. But if you’re seeking an area of opportunity where both the challenges and the rewards might be even greater, the boardroom table might be your ultimate goal. And, when it’s time to select the right life and health policy for the job, Beneva will be here to help.