Given the increasing importance of business protection in the current economic climate, Jerry Bayman looks at how advisers can attract new business clients.
There are three phases advisers need to consider when attracting business clients: planning, research and approach.
The first step advisers need to take is to put a business plan together. Decisions need to be made on the type, size and location of the business they would like to attract. The ideal target is small to medium-sized enterprises as they tend to be more reliant on key people for their survival. These businesses are categorised as having 250 employees or less but it might be better to concentrate on the smaller end – say up to 50 employees – which still accounts for over 97% of all businesses, according to the Department for Business, Enterprise & Regulatory Reform.
Advisers should decide how much time they want to allocate to winning new clients. The business still has to be run so it is important not to give up the day job. Blocking out dedicated time in the diary will help prevent other jobs encroaching on it. It is also important to take time out to study the subject. Business protection is not something that can be learnt in half a day, so advisers need to attend provider-organised training courses and undertake personal study.
When targeting business protection prospects, it is important to decide on a budget in line with estimated returns. This business can be very profitable, with a typical protection case covering four lives generating earnings of around £5,000. However the adviser should allow for flexibility and be prepared to revise projections in light of their own experience.
When getting into the research phase, employing a retired person or marketing student and allocating tasks such as process work, often makes sense. A principal of an IFA firm might need to generate £100+ an hour, so they should not waste time on a £10 an hour job. So, employing an undergraduate, who will probably be glad of the money and the experience, is a good starting point.
The next job is to start finding potential clients. Existing connections are the most likely to give early results so the client bank is a good place to start. The ‘student’ should go through the fact finds and look for clients who are in senior positions within a business. Although sole traders are not the prime market for this type of cover, looking for businesses that employ people is beneficial as employees such as shop managers could be key. Partners, directors and shareholders of private companies are also good prospects.
Existing business connections such as accountants, solicitors, estate agents or stationery and office equipment suppliers can be a good first move.
At some stage it will be necessary to look for brand new clients. The question is where to start. Walking the streets is one way but there are more scientific and productive methods.
All limited companies and limited liability partnerships have to be registered at Companies House and submit annual returns of information to the registrar. This is publicly available and there are a number of areas where it can be obtained.
Companies House at www.companieshouse.gov.uk is useful for looking at particular companies and giving valuable information. It is also cheap; the annual accounts and company information sheet can be downloaded for £1 each.
However, for accessing data on a more manageable basis, business information companies can be a more useful resource. These include: Dun and Bradstreet at www.dnb.co.uk; Kompass at www.kompass.co.uk; and Key Note at www.keynote.co.uk.
These organisations get their information from Companies House but it can be edited by business size, location or sector. Key Note, for example, publishes a ‘regional leads report’ that gives a lot of information on companies in a given area. Businesses that have loans could also be targeted. Companies with loans secured against their assets have to report them to Companies House and these could be approached to re-broke the loan cover.
Before parting with hard cash it is worth visiting a library where a lot of these manuals are available for free. Some libraries may also offer free access to online services so these should be explored.
For sole traders and ordinary partnerships there is no requirement to make any returns, so the yellow pages at www.yell.com, is as good as any place to start, although there are other publications worth searching out. The library will probably have a copy of the local chambers of commerce at www.britishchambers.org.uk – membership and joining is not that expensive for a small business.
Advisers looking at a particular business sector will find libraries often have the appropriate trade directories. Talking to the local council can be useful as it may have information published on business parks and industrial estates.
Business clubs are also a good source of potential clients. These can vary from e-trading sites, such as Ecademy, to breakfast and lunch clubs. There are also national organisations such as the British Business Club, but many are local organisations so a Google search would be the next step.
Another useful resource is Business Link at www.businesslink.gov.uk . This government-sponsored service is full of free advice on all sorts of aspects of running a business, including getting new clients.
Timing is important. Businesses often change and this can provide opportunities. Pensions may need restructuring and key person and share protection cover may need rearranging. Keeping an eye on the trade press and local business pages where management changes are often publicised is one way of being alerted to any opportunities. Some business information services also provide alerts when changes occur.
Accountants, solicitors and general insurance brokers are in the best position to influence business protection. However, establishing relationships with them requires time and application.
What is the best approach? Writing, telephoning, email, face-to-face or a combination? Face-to-face is more time consuming but could be worth the effort on, say, a trading park where there is a concentration of potential clients. It is harder for someone to avoid an approach if it is in person and even if it is not possible to get through to the decision maker, it provides the opportunity to speak to gatekeepers face-to-face and create an initial relationship.
Gatekeepers are a feature of the business market and need to be circumvented or used. The latter approach is probably the best route and treating them with respect normally produces results and valuable information if they are on side. It helps to sell the concept to the gatekeeper, explaining why it is important to the business. Find out the best time to call and who the decision makers are, usually the finance and managing director. Writing to them first before phoning gives an anchor for the phone call. Decide what ‘hook’ is most likely to appeal. Re-broking existing cover to reduce costs might interest a finance director in the current environment. Setting up a relationship with corporate finance brokers will allow advisers to offer refinance deals.
Business people are generally busy so, unlike a personal client, they may not have time to sit through an hour and a half fact find. Advisers should consider keeping pitches brief – experience has shown that a request for 20 minutes is more likely to get an appointment, which may be extended if the client is interested. Stating the purpose and the possible benefit the client might get from it will be appreciated. It is useful to consider the structure of the meeting as well.
The first step
The initial purpose is to establish a clear need to progress to a second meeting, this may be to include other members of the business. In the corporate environment there may well be a longer path to completing business than in the individual market. Two or three meetings may be required before a recommendation can be made, however, dealing with a multi-application sale means it is profitable on a time-reward basis.
Hunting for prospective business clients needs persistency. Businesses are constantly evolving so, even if an initial approach has not worked, it pays to keep in touch, perhaps by a regular newsletter. Opportunities can arise in the future when the business needs to refinance or restructure. It is vital to pay close attention to the research and planning as knowledge is power: the more that an adviser knows about a business the more chance opportunities will present themselves.
Jerry Bayman is national partnership manager, corporate protection at Bright Grey
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