"Mark's Barks Blog - Keys To Success"For years, agents say that they are in the “Business Market,” but what does that really mean? Are they taking the right approach? Are they truly in that marketplace?

When approaching a business owner, what are you asking? The same questions that they have been approached with 100 times before…Do you have a plan in place if something were to happen to you or one of your partners? Do you have a 401(k)? What are you doing for retirement? Do you have a Succession Plan?

These questions will typically go in one ear and out the other so quickly. Why, because they know it (you) will cost them money, which is not the intent of any business owner. A different approach and conversation starter should be…. When is the last time you had a proper business valuation? Business Valuations are the cornerstone of beginning the process towards uncovering the answers to these and many other questions in a non-obtrusive way. Instead, you are coming in under a consultative role, and in the process, uncover areas of weakness where they are exposed to severe tax consequences. Essentially “saving” them money in the long run. The true sales opportunities will organically come to the surface.

The reality is that most times, businesses don’t have a valuation in place or they simply have a number in mind that has been derived with no real methodology behind it. Without a proper valuation, business owners open themselves, or should we say, their heirs, to a host of planning nightmares.

An undervalued business interest can result in huge tax liabilities and/or business succession and continuation issues. In some cases, through strategic alliances, it is possible to provide an initial Business Valuation without cost to the business owner. It is important to align yourself with firms that can provide access to these platforms. This will significantly increase your value proposition to your current and prospective client base.

By offering this initial “no-fee” service, it is hard for a qualified prospect to say no. Once this first level service is provided, a number is generated that is either:

  • Exactly what the client thought their business was worth
  • It’s less than what they thought, or
  • It’s higher than they thought

Regardless of the outcome, there is a planning opportunity that awaits you. You now have a road map that will lead you to the planning stages and implementation of products to solve a number of planning issues that will likely be uncovered during the process. And from a financial underwriting standpoint, you’ll know exactly what they will qualify for before you even get to the application stage.

Now let’s take a look at some of the opportunities that can be uncovered…

Buy-Sell Sales
Often times, there are partners involved in the business setting. Once determined, the conversation ensues about the implementation of, or the review of a current formal agreement.

Key-Employee Retention
During the process, Key Employees are identified and the effect of the loss of that person can potentially have on the business. Strategies can be implemented to protect the business in a number of ways, through death benefit if that person prematurely passes and/or the design of “golden handcuff” type of benefits that can be used for retention of that employee. Perhaps a Deferred Compensation Program or an Executive Bonus §162.

Succession Planning
You can uncover the need for Succession Planning to assure the continuation of that business for the next generation. This is a very important element that comes up often during the process.

Estate Equalization
Perhaps there is a family business that only some of the children are involved with. The father of two siblings wanted to make sure that both of their children would inherit equal shares in the family business. The problem was that the one child has been working with his father over the last five years and had significantly grew the business while the daughter wanted nothing to do with it. As you can imagine, this would cause a lot of bad blood in the family. In our example, Estate Equalization sales allow for a life insurance policy to be purchased on the life of the father so that his daughter would receive her equal share of the business without causing friction between the two siblings.

Personal Financial/Estate Planning
The largest asset that a Business Owner has is their business. Now that you know what it’s worth you can transition towards the personal needs of the individual including Income Continuation, Estate Planning, Retirement Planning, etc.

There are many other ways that a Business Valuation can uncover many sales opportunities. These are just some of the possibilities. The real question is how are you approaching the business owners? Are you truly in the “Business Market?”

By asking the typical questions that have been asked over and over again, it is just not as effective as asking When is the last time you had a proper Business Valuation? If you start off with this approach, not only will you open doors, but you will have the key.

 

Mark Milbrod

About Mark Milbrod

Mark’s Barks Blog is authored by Mark Milbrod, the Principal of our New Jersey Sales Office. Mark brings over 30 years of experience to his insightful commentary on the insurance industry. Through his Blog posts, you will learn about new sales trends, be educated on selling techniques and overall, think differently about your role as an insurance professional.

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