If you are unsure how to start to tap into the business protection market and how to take advantage of this potentially lucrative income stream, there are a number of steps you can take to identify and engage effectively with potential clients for business protection.
Identifying potential clients
You should start by taking a look at your existing client bank. Many of your mortgage clients and corporate or high net worth clients will also require this type of cover. You may have already encountered many businesses when addressing IHT cover.
You will need to be able to identify as early as possible who the key decision maker in the business is, so that your effort is focused in the right direction. We have all heard of stories of hours and days of effort wasted because the adviser had not been dealing with the appropriate person in the business empowered to make the final decision. The decision maker could be, for example, the major shareholder, the MD, or the finance director.
Outside of your client bank look to use and improve your professional connections. Work closely with solicitors and accountants - the latter are nearly always the trusted adviser that you have to get onside to progress business protection.
Join and work through your local Chamber of Commerce (www.britishchambers.org.uk). There is an extensive national network with a comprehensive programme of events that provides a great opportunity to network and promote your services. Read up on Trade Associations (www.taforum.org) and use the Business Link Centre (www.businesslink.gov.uk)
Before seeing a client you could obtain their company accounts from Companies House (www.companieshouse.co.uk), giving you a better understanding of the company’s needs. Some providers offer a pre-application service giving you the opportunity to discuss any issues such as medical disclosure, underwriting limits and tax implications before you have even met your client.
See your everyday business suppliers, like printers, caterers and recruitment agencies as potential customers. Or check out local newspapers, Yellow pages (www.yell.co.uk) and Thompson’s Local directories (www.thomsonlocal.com) and hold seminars for local business owners, perhaps arranged with the local Chamber of Commerce.
These are just a few of the simple steps you can take to develop your client relationships and start to tap into this market.
Business protection - understanding key areas
Once you have developed your client relationships, to start to effectively engage with these potential clients for business protection there are many steps you can take to broaden your understanding. Whilst deep technical expertise of the following is not necessary, a good understanding will allow you to position business protection effectively in the broader context and will help you drive out clear needs and opportunities with your clients.
Sector profile
You should obtain surveys that identify the key concerns (usually protecting the business, recruiting and retaining employees and controlling costs) and preferences of the small business owner. How do they like doing business, what is their reliance on trusted consultants, one-stop shopping, IT familiarity and general expectations?
It may be possible to just concentrate on one or two key trades, then you can really get to know what is happening in your clients’ world. Read the trade journals and appreciate and be proactive in discussing the issues and latest developments. Ask how the business came about and what challenges they have overcome to date. Many business founders will continue to be likely candidates for keyman cover.
Some types of business insurance such as employer’s liability and motor are compulsory, others like public, product and professional liability (unless required by the governing body) are not, but they all compete in cost terms with business protection.
Risk management is a growing area of importance with many businesses now maintaining risk registers covering areas such as regulatory, competitor, IT and people risk. Find out if keyperson, loan or sharepurchase risks are properly captured on these registers?
Find out information on the legal structure/agreements of the business, partnerships for example will have a partnership agreement. These agreements will cover a range of matters, such as name, business, roles, decision making, profit sharing, accounts, dismissal and dissolution.
Other key areas to particularly focus on are life cover needs driven out by double option or automatic accrual provisions and requirements to effect and maintain income protection and pension plans.
Are agreements and trusts up to date and tax effective? Are both fellow partners and family properly looked after?
Accounts and taxation
Learn to navigate around accounts looking at the balance sheet, profit and loss statement, operating profit and cash flow. Information here will be used to calculate keyman cover, but it can also identify key employees, level of pension provision, loan commitments and investment opportunities. Understand the broad taxation position and key dates for businesses to file returns and pay tax.
Be prepared
These are just a few of the ways in which you can broaden your knowledge of your clients’ business and therefore their need for business protection. In many cases the business will be looking for a good broker to help them assess and mitigate risk. Whatever the scenario, you may only have one shot and a limited amount of time to convince the business that protection is worthwhile – good preparation is therefore key!
