Understanding the basics of business succession planning and then using the right language to communicate its value are the building blocks to success within the SME advice market, according to risk store founder, Sue Laing.
At the risk store’s 2010 annual Life Risk Forum, Ms Laing distilled the concept of business succession planning into its fundamental components and showed her audience how to build an SME advice proposition by offering solutions that address those fundamentals.
… business succession planning is simply estate planning by another name
Ms Laing argued that for advisers looking to simplify their approach to a market sector that may appear quite complex, business succession planning is simply estate planning by another name. She maintains that a small to medium enterprise business is a ‘conglomerate of assets of the owners’ that needs to be protected, should the worse happen, and that insurance is simply the funding mechanism.
‘The worst’ can be either death or disability, but where the disablement of one of the business principals can often create more uncertainty than in the event of the principal’s death.
Ms Laing stressed the importance of communicating with any client in their own language, and the SME client is no exception. She told advisers to apply the KISS principle (Keep it Simple, Stupid). In this case, the KISS principle comprises:
- Engagement
- Empathy
- Simplicity
For example, Ms Laing suggested that prospective clients would be more likely to engage with the adviser if the adviser talked about protection of the client’s personal wealth and estate, rather than their business succession plan or business insurance.
Having established this approach, Ms Laing outlined the steps involved in the business succession (estate) plan that will in turn achieve three key goals (Control, Cashflow, Certainty) for all SMEs in the event of the death or severe disablement of a business principal.
Ms Laing covers in detail the steps to achieve these outcomes in her one-day Business Succession Planning workshop, but in broad terms they relate to funding and guarantee issues.
In the risk store Forum session, advisers were also presented with arguments by Ms Laing that would successfully overcome client objections relating to alternative funding for partner buy-outs, such as the sale of property or access to additional debt.
Ms Laing contends that if the adviser can present a business protection planning solution that is expressed in a language the client understands, with little to no industry jargon, and can offer simple solutions, they will be in a good position to have the client appreciate the peace of mind the proposed solution will achieve.
