As the saying goes, protection isn't bought – it's sold. We're committed to helping you grow your business, so here you’ll find advice and ideas to help you sell business protection.
In most small to medium enterprises there are four key business functions, leadership, the managing director type role; production of the goods or services they provide; financial control, although this may be outsourced and sales and marketing. If you want to show your clients the value of business protection, you could start the conversation by finding out who's responsible for these key functions.
For example, is there a managing director, a production director, a finance director or a sales and marketing director? Or are there other skilled employees that are crucial to the success of the business? Ask what would happen to the business if one of these people became critically ill or died. Losing the knowledge and skills of these key people, even for a short time, can cause real problems if it means the business can no longer meet its obligations.
In terms of business continuity, there are three important questions to ask your clients. Firstly, ask them how they would replace a key person, for example, their sales director. What would be the financial and practical difficulties of replacing them? It takes time to find a replacement and even longer for them to start generating a profit for the business. This can often take up to a year, if you include recruitment time and notice periods. There are also recruitment costs to think about, for example, the use of a recruitment agency, as well as salary and package for the replacement. In my experience, this can all add up to somewhere between £25,000 and £150,000, money most businesses won't have budgeted for and will suddenly need to find.
Secondly, because businesses rely on each other, ask them how their customers, competitors and creditors would react to the loss of a key person. If customers, which often include other companies, don't stay loyal to the business, turnover and gross profit could go down, which could affect whether the business could meet its fixed costs. If it can't meet its fixed costs, the business could fail. If the business can't perform as well without the key person, will trade creditors maintain the same credit terms, or want to reduce their liability? The competition may also take advantage of the business's vulnerable position by attacking its customer base or poaching key staff.
Lastly, ask your clients what the liabilities of the business are and how creditors and customers would be affected by the loss of a key person. Key people could be shareholders and partners in the business and may have invested their own money. If they die this loan amount is then immediately repayable to their estate and the business is liable for this.
Businesses have a key relationship with their bank, as they can ultimately control the cash flow of the business. It's important to think about how the bank would react to the loss of a key person. For example, they might demand that overdrafts are repaid, which would impact on the cash flow of the business. Making sure that a business keeps the confidence of its creditors, banks and customers is vital. Lack of confidence in even one relationship can undermine the rest. The bank will worry what the creditors will do and vice versa and both will be concerned about customers' attitudes. Having key person cover in place reassures creditors, banks and customers that the business can still meet its obligations. If they still have confidence in the business, they'll keep supporting it.
Our decision tree is also a useful tool when trying to decide on the most suitable types of business protection for your clients. You can also talk to our sales consultants for further help.
If you're trying to show clients how valuable business protection would be, you could start the conversation by asking them what would happen to their business if they lost a key person. This helps identify different risks to business continuity and could lead to discussions on:
And all of these areas can lead to business protection opportunities for you.
Our sales aid Questions to ask for business protection can help you start the business protection conversation.
Every client has different priorities, needs, hopes and expectations.
Getting to know a client's priorities can help you identify the areas that need most protection. The risks to the client's business can depend on its size and structure. For example:
If you don't have access to a business protection fact find, you can use our calculator to capture the key details of your client's business. It'll also give you ideas on what types of cover are best for their business.
Once you know exactly what a client's needs are and what they're looking for from their protection, you can use our sales aid Business protection – what we cover to help you find the right type of protection to suit their needs
And to give you idea, we've created a 'How to use a business menu plan' sales aid that provides an example of how you could structure the cover using a menu approach to protection.
If a client has a small business, they may already have relevant life plans for their employees. While this type of plan makes sense to protect employees' families in case the worst should happen, the business would still be vulnerable if it were to lose the knowledge and skills of a key person and couldn't meet the costs of finding a replacement right away. If this happens, the families of the remaining employees won't be protected if the business starts to suffer.
If your clients and their employees already have a Relevant Life Plan with us, this could make it easier when it comes to underwriting them for business protection.
Our Helping Hand service can support a client's business in a number of ways, and they won’t need to pay anything extra to use it. That means if a client loses a key person through death or illness, they'll have access to a careers specialist who’ll be able to help with sourcing a temporary replacement within 48 hours or a full-time replacement if it’s needed. Legal help is also available including advice on all aspects of employment law.
What's more, the person covered and their family (partner and children) also have access to a dedicated nurse who can give them practical and emotional support for as long as it's needed.
This service could really make a difference to your clients during difficult times and show them the value of your advice.
Find out more about our Helping Hand for business service. Alternatively, listen to our short podcast.
Helping Hand is a package of support services, provided by third parties that aren’t regulated by the Financial Conduct Authority. These services aren’t part of our terms and conditions, so can be amended or withdrawn at any time.