Understanding the Small Business Market – Four Phases of the Business Owner

Jeff S., AMS Financial Advisor

Having worked with business owners for over 50 years, I have learned a few lessons – almost always the hard way!

For many producers, the business owner market seems like the “Holy Grail,” because they can see all the opportunities to help. Buy-Sell agreements, retirement plans, overfunded life insurance, the list goes on and on. However, businesses go through four stages in a company’s life cycle, and the issues to deal with change at each stage. We’ll discuss each phase and what you can focus on to do the best job possible for the prospect.

But first, there is one universal truth that you need to understand, not only for business owners but for every prospect you’ll ever meet.

1. There must be real issues/problems to be solved.
2. The prospect needs to have a desire to solve them.
3. And they must have the money to do something about the issue/problem.

If any of these three elements is missing, a sale cannot take place. When you look back at sales you have lost you’ll see one of these items is missing. Also, when you are at the first appointment, and you find out one of the three is missing it’s a good time to move on to the next prospect. Rick Metcalfe was fond of saying, “the most powerful word in sales is NEXT” do not waste your time!

Phase One Business Owners:

They are a start-up, often “Mom and Pop” businesses.

Needs: Everything, but the most immediate is customers.
Desire: They may have it, but can’t do anything about it because of…
Money: It’s usually is very scarce, and what they have is needed for the business.

If they can create a small budget, then try to solve big problems in the most economical way possible. For these business owners, term insurance is a good solution.

Phase Two Business Owners:

These are usually still “Mom and Pop” businesses, but they’ve had 5+ years of growth. They probably have 5 or more employees, and Mom does the books in an office instead of at the kitchen table.

Needs: They still have needs in almost every area you can imagine and…
Desire: They may have a desire to solve them if…
Money: They have the money.

To solve their issues, you should still focus on the areas that can truly devastate the family: death, disability, and LTC. If there are funds still available, then it would be appropriate to discuss retirement options.

Phase Three Business Owners:

This is the most difficult phase. You drive up and see a parking lot full of employees’ cars next to a large manufacturing plant.

Needs: You are convinced he needs a buy-sell, overfunded life insurance for retirement, and the list goes on and on.

Money: You “know” he has tons of money that can be used to solve his problems – the new Porsche and the picture of his plane proves that.

Desire: I put this last because when dealing with Phase Three business owners, this is almost always the one element lacking because they feel invincible. Their business normally has never faced a true financial crisis. Also, their ego prevents them from admitting they need help. No matter how competent you are, they are mentally “patting you on the head” and thinking, “I’m smarter than you, go away.”

If you are working with a Phase Three, what catches their attention is the new “shiny penny,” it appeals to their greed. But even if you have that “shiny penny” don’t be surprised if they find a way not to implement.

Phase Four Business Owners:

Phase Four business owners can be the most rewarding to work with, from both an intellectual position and a financial one. They know they don’t know everything, and they will listen to good advice. But if you are just “selling” and not solving real issues, they will end the appointment quickly.

Needs: Legacy planning, business continuity, retirement planning and more.

Desire: Is usually high for the issues they care about – they need to tie up loose ends.

Money: Usually not a concern if they have strong feelings about an issue or issues.

Phase Four Busines Owners know good information from bad, so be well prepared when dealing with them. Because of their stage of life, almost all of your financial products arsenal may be needed to solve their problems.

One word of warning – sometimes Phase Three Business owners just grow old, and they still “pat us on the head.”

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Hiring and Retaining Top Employees – How Small Business Owners Can Compete

Josh Ver Hoeve – VP Annuity & Life Distribution

May is National Small Business Month.

Do you work with small businesses or small business owners? Over the past fifteen years, I have worked with some of the most successful financial advisors in the country, and one of the most apparent challenges has been turning business owners into clients. For the advisors that are in the business owner market, they typically got there by creating relationships with single individuals who introduced or referred them to a business owner. Almost all of the advisors in the business owner space got there by networking and relationships.

In several instances, this happened by over-delivering to a single client and giving so much to one person that they felt an obligation to refer to you, much like any referral-based advisor practice. Most of you reading this right now are small business owners. Understanding a business owner’s concerns is imperative in creating a relationship with them. *There are 28 million small businesses in the United States which outnumber corporations by over 1,000 to 1. Seventy percent of those small businesses are owned and operated by a single individual. Because there is no secret sauce to getting a new business owner client, let’s focus on one of the most common issues business owners face and how we might be able to appeal to this concern.

According to Entrepreneur.com, twenty percent of small business owners say that employee retention is their largest roadblock to business growth. Finding the right person for the job and attracting that individual enough not just to take the job, but also stay with the organization is very challenging. How can a small business compete with recruiting and keeping talent in the same way a large corporation can? Indexed Universal Life is one of the answers. First, think about all of the challenges business owners face, and then think about the benefits of an indexed universal life policy, from tax-free income to living benefits. Then comes the question of cost to a small business owner. But what if they can’t provide enough benefit?

This concern transitions us to Kai-Zen which is a strategy you can use to leverage business owner dollars. Take a look at a quick video on this very concept from Grace Bernard from NIW:

Interested in more information? Contact the Life Sales team at Asset Marketing for more information at 888-303-8755.

Also, E-mail jverhoeve@assetismarketing.com to request your Allianz Life Business Insurance Kit!

*Business Insider

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