Step by step

Small business protection is a market that can be extremely lucrative for IFAs and well worth pursuing. However, although many intermediaries have embraced the opportunity, many have yet to begin. Getting a foot in the door of the corporate market can prove to be the difficult part with successful marketing key to success.

IFAs need to be aware of potential clients and ways of securing possible new leads, which can be found by simple means such as the phone book, Yellow Pages or Thomson local directory. Keith Lindsay, partner at business consultancy group, Valoris, recommends IFAs check the local Chambers of Commerce or databases such as Dunn and Bradstreet for leads.

Where to start

He says: 'The key is for an IFA to consider which type of business tends to be most productive from his or her point of view, identify the objective characteristics of such businesses ' turnover, industry sector, number of employees and so on ' then get a data provider to identify which businesses fit that criteria. The data providers should be able to supply contact names, position and contact details.'

Accountants can also be a source of leads as they will already be auditing books and can therefore set up contacts with professional bodies.

Phil Calvert, proprietor at Training Strategies, says: 'The main sources of potential new business clients remain the same as always ' the phone book, accountants and solicitors. Do not just stick to the smaller local firms of accountants ' many large national firms still pass leads to IFAs, so it is worth building relationships with them as well.'

Aside from some more obvious means such as cold calling and mailshots, Calvert suggests alternative ways of securing new clients such as contacting your printer, estate agent or local newspaper.

'I am aware of several IFAs who are introduced to new clients by their printer. In each case the IFA and printing firm have formed a partnership, adding value to each other's businesses. Not surprisingly, the printer's entire client list is made up of business customers.

'Estate agents are often also a good source of business introductions, and given a good relationship between them and an IFA, high quality leads can result. It is important to make sure your estate agent connection is skilled in asking the right questions and is keen to promote this added value service of providing access to an IFA,' he says.

'Finally, keep an eye on the local newspaper. The local press is always keen to feature new local businesses, or those businesses that are doing well, for example those that have secured a big order or deal. IFAs can send a good luck or welcome card and then follow up in the usual way,' he adds.

Finding your bearings

Roger Edwards, head of products at Scottish Life, suggests one means of obtaining new clients is by looking at a local map.

He says: 'One of the basic steps is looking at a map and seeing what business are on the IFA's route to and from work.'

However, your existing client base is an excellent starting point for marketing small business protection to clients who do not already have it, or are not aware of the product.

'IFAs need to research their own database. If you are offering a corporate pension scheme, this could be a springboard into small business protection. Identify the companies out there, look at the personal hierarchy which will show the employees and will show who the important people are to market the product to,' Edwards says.

Some IFAs form, or are part of, small businesses themselves and if they have got small business protection implemented within their own company, this could be a valid selling point when trying to promote the benefits of protection to clients.

Mike Haughton, protection product development manager at Royal & SunAlliance, says: 'If an IFA has their own small business protection, this sets a good example which can be passed onto clients and used as a promotion. IFAs can also show how cheap cover is.'

Once a list of possible existing clients has been drawn up, Lindsay says you need to look at each client more specifically.

'The next step is to think through the specific needs of different types of existing clients. It is fair to assume that similar sized target clients will have similar needs, however it is less likely that just using industry as an indicator will be successful. For example, a sole building company will have quite different needs to a national company. The question then becomes how to get in front of such businesses. This should be easier if it is an existing client ' phone or write suggesting a meeting to discuss issues other clients are addressing with no obligation,' he says.

Once you have established contact with a potential lead, ensure you speak to the right person. It will more than likely be one of the key workers who make the decision whether or not to adopt a small business protection plan.

'Getting to see the decision maker is the key to it. The IFA needs to set up a presentation to the board and then have some sound financial arguments of the effects on the business if something happened to one of the board,' Edwards says.

Speak clearly

The language used to sell a plan is also important. Jargon and complicated terms are unsuitable, as many small businesses will be unfamiliar with insurance terms.

'Try and move away from the usual insurance language. If you asked to speak about key person insurance, it doesn't sound too exciting where as asking whether they have a profit protection scheme in place it sounds more in line with what the business is interested in,' Edwards says.

It may be difficult to steer away from complicated language particularly when dealing with technical subjects, but help is available and many providers are more than willing to support any IFAs troubled by some of the more technical issues.

Calvert says: 'There is definitely a perception that business protection is complicated and hard work, but this need not be the case. Of the providers who are active in the business protection market, most are very good at helping with the technical details. Indeed, the technical support given by providers in the business protection market is often more substantial than that offered by the family and personal protection market. I think a little more could be done to help IFAs turn the technical issues into practical sales ideas.'

Keith Simm, mortgage and protection marketing manager at Norwich Union, agrees: 'Product providers can help with technical side, there are issues such as business protection taxation. Providers can supply relevant information and technical guidance. Norwich Union has a helpline and booklets for IFAs.'

Many providers have helplines and some also provide direct lines to the underwriters. Lindsay says: 'The answer is that there is loads of support available especially from the main life providers, for example, for guidance on local marketing; material available for overprinting with the IFA's name and joint campaigns ' depending on expected business levels,' he says.

Once the marketing hurdles have been overcome, the advantages of providing small business protection can be extremely rewarding for an IFA both in terms of financial gains and possible new clients. By providing a company with protection the opportunities to cross-sell financial planning open up and new leads can also be generated.

Lindsay says: 'If the customer is satisfied with the advice, you find that local businesses know other local businesses so you could generate new leads into the market.'

Edwards agrees and believes by offering business protection, members of the company could be spurred into obtaining cover for themselves.

He says: 'There is always a tie-back to personal protection. If an IFA convinces a board member they are worth £500,000 to the company, then there is an opportunity to say the company values you at £500,000, how much does your family value you at?'

Aside from the possibility of new leads, the financial rewards can be enormous. Haughton says: 'The main advantage for IFAs entering the market is that it can be a very lucrative business.'

'It is an advice-orientated market,' Edwards adds. 'Due to the tax implications it needs to be put together properly and is complex which takes time, it needs advice and an expert to look at the ins and outs. The rewards for IFAs are that in general these policies are big sums assured therefore the financial reward for their effort and work is good for business.'

Adele Burton is a staff writer