Opportunities Are Heating Up In The Business Market
Tips to find clients and satisfy needs with whole life insurance
Rich Weizeorick
April 2017

The small business marketplace is huge, diverse and underserved. As a result, it offers financial services professionals a variety of opportunities to provide service, cross-sell products for both personal and business use, and expand their client base. The SBA defines a small business as an enterprise with fewer than 500 employees. There are approximately 28 million small businesses in the U.S. (78.5 percent of which have no employees).* Although the number of small businesses declined from 2008 through 2011, growth returned in 2012, creating an increased need for financial services and products.** The economic climate in the U.S. and advances in technology will continue to shape the business market. Today, 52 percent of small businesses are home-based, a trend expected to increase in the future.**  

How can you identify potential clients and tap into this market? Believe it or not, you probably know or are connected to more small business owners than you think. Here are a few tips to get started:

  • Identify a network of friends, family contacts and acquaintances who have the potential to become clients or can put you in touch with potential clients. All things being equal, people prefer to do business with someone they know and like. Start with your current client list. Some of these people may be small business owners. Then make a list of all the people from whom you buy products or services. This includes your dry cleaners, dentist, attorney, local restaurants, barber or beauty shop, your children’s daycare center, and the service that cleans your home or office. And don’t forget the printer who prints your brochures or business cards, your neighbor who owns a heating and air-conditioning company, your lawn care provider, your plumber, or the contractor who remodeled your kitchen. Don’t stop there. Like any networking opportunity, you need to expand your reach to include acquaintances that have potential relationships with business owners. For instance, the realtor you met at last night’s Rotary Club meeting might know the owner of a graphic arts company who needs your services. Or the father of one of your son’s friends might be an executive for a steel processing company. Perhaps he can arrange for you to meet his boss, the owner of the company.
  • Go where business owners go. This includes Chamber of Commerce meetings, trade shows and community events. Potential clients might belong to your local country club, work out at the nearby health club or advertise in your church bulletin. Business owners are often featured in the business section of your city newspaper or business journals, and they sometimes are guest speakers at local high schools or colleges. 
  • Develop strategic partnerships with other professionals, especially CPAs and attorneys. These professionals may be able to help you identify potential clients (and in some cases may refer their business clients to you) and can also help you work with business owners to customize business plans to fit specific needs.
  • Purchase email, telemarketing or mail lists, advertise in the media, be active on social media, and market, market, market.

Using Whole Life Insurance
Now that you have the attention of a business owner, where do you begin? Filling out a short client worksheet together can help you identify immediate needs. Whole life insurance is a good fit for many small business owners because of its flexibility and guarantees. While most entrepreneurs have big dreams, many don’t have extensive financial resources, so here are three ways whole life insurance can help.   

1. Liquidity and Access to Cash
In today’s economic environment, obtaining a bank loan to start a business or buy real estate or equipment can be challenging. As a result, entrepreneurs often rely on personal savings and investments to fund their businesses. This is especially true for people who start businesses after they retire and fund their company with money from their 401(k) plan. For these people, owning participating whole life insurance can be extremely advantageous because it provides guaranteed, tax-deferred growth of their money as well as liquidity, access and control of it during their lifetime.

In fact, using the cash value in a whole life policy as collateral for a loan from the insurance company and then self-financing business purchases isn’t a new idea. People have been doing it for more than 100 years. American businessman and entrepreneur James Cash Penney, Jr., used it when he borrowed against his whole life insurance policy to meet payroll obligations during The Great Depression. After Walt Disney was turned down for loans by the banks, he, too, utilized the growing cash value of his whole life policy to start his little theme park. And McDonald’s founder, Ray Kroc, used this concept when buying out the McDonald brothers in 1961. 

Accessing the cash value in a whole life policy while it continues to grow guaranteed and tax-deferred is often referred to as The Infinite Banking Concept® (IBC). IBC teaches that by collecting a pool of money within a whole life insurance policy, policyholders can remain in control of their money because when a financing opportunity arises, they can decide if, when and for what reason to access this money. The policy owner then has the ability to decide the interest rate he or she will use to repay the loan and the timeframe of the repayment. While loan repayment is not required by the insurance company, repaying the loan is a must with IBC so the funds will be available for future purchases.

Small businesses often are extremely sensitive to economic conditions because they usually don’t have large reserves. So envision the advantages financial flexibility, liquidity and fast access to cash can provide an owner. 

2. Protection from creditors
Due to regulatory changes and an increase in the number of smaller firms in the marketplace, the proportion of small businesses structured as sole proprietorships is increasing.** As a result, these owners may be exposing themselves to unlimited personal liability claims. If you work with owners who are sole proprietors, make sure they are aware of their exposure and then recommend coverage that will protect their assets. 

In these situations, purchasing personal life insurance may help, because in some states, life insurance policies may be protected from creditors. Be sure to check state laws, however, before giving advice.

3. Saving for retirement
The recent financial recession has had a devastating impact on the retirement savings of many small business owners. Over one third (36 percent) of owners cite personal savings as their main source of retirement funding, an increase of eight percentage points since 2008. In addition, less seek the advice of financial advisors.** There also has been an overall decrease in personal life insurance ownership since 2008. Although over half (60 percent) of business owners have a personal life policy, this is down 12 percent since 2008. **

Whole life insurance can help business owners with retirement planning. Its guaranteed death benefit, which is usually received income tax free to beneficiaries, can secure the long-term financial needs of the business owner’s household, while the guaranteed cash value and non-guaranteed dividends can be used to supplement income during retirement. 

Business plans in hot demand?

  • Executive benefit plans for owners and key employees. Projections suggest that as the labor market continues to tighten, small business owners may find it more difficult to hold on to key employees.** Executive benefit plans, which can be funded with whole life insurance, may help.
  • Business succession and continuation plans. The development of succession plans by insurance agents has dropped six percentage points since 2008 because owners overwhelmingly use lawyers and accountants in their plan development.** By working closely with these other advisors, owners may be more willing to include producers in the development of wills and estate plans (which can also use whole life).  

As you can see, small businesses present multiple opportunities for financial products and services. As the number of new businesses increases and employment and payrolls grow, now is the perfect time to work in the small business market. 

*Nazar, Jason, “16 Surprising Statistics About Small Businesses,” Forbes, Sept. 9, 2013.
**“Sizing Up Small Business Owners,” LIMA, 2015.

Author's Bio
Rich Weizeorick
FLMI, PCS, is senior sales support specialist and coordinator of the Business Planning Concepts and Nelson Nash’s Infinite Banking Concept® (IBC) programs at Mutual Trust Life Insurance Company, a Pan-American Life Insurance Group Stock Company. Weizeorick holds a BA in education from North Central College in Naperville, IL, and has over 20 years of experience in the marketing and case design of insurance products. He began his career in 1994 as an outside sales representative at Prudential Insurance Company. Over the years, he moved from outside sales to regional office coordinator and eventually to case design and sales support at Pacific Life Insurance Company, where he worked for more than 13 years before joining Mutual Trust in 2011. Weizeorick can be reached by telephone at 800-323-7320, ext. 5309. Email: WeizeorickR@mutualtrust.com.

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