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This month, we’re talking about business succession planning. It's a topic you might shy away from if you think it's full of complicated questions you won't be able to answer, like how to do a business valuation. The good news is that it doesn't have to be complicated - if you have the right partner to help you make sense of it. That's us!

At its heart, business succession planning is about protecting what your client has taken years (or maybe even a lifetime) to build. It's not so different from selling an individual life insurance policy. The moving pieces may be different, but if you can convince a client to protect his family with life insurance, you can tap that same emotion to help convince them to protect their business and their retirement.

How to Identify Clients Who Need Your Help

If you use Insureio, our CRM, you can add notes and tags to a client record to make searching for clients that fit this profile super-easy.

Business succession planning is a big topic, so where do you start? Let's take a look at the overall client profile, based on more than 10,500 clients in Principal's Business Owner and Executive Solutions (BOES) program:

  • Industries: Professional and technical services, manufacturing, construction, wholesale trade, and retail trade. These are the top 5 most common industries among Principal's BOES program participants.
  • Number of employees: More than 80% of Principal's BOES clients have between 1 and 99 employees.
  • Years in business: The more years, the better. 40%+ of Principal's BOES clients have been in business for at least 25 years. After a quarter-century of doing business, these clients probably have a balance sheet worth protecting - and are nearing retirement.
  • Sales volume: $1 to $3 million.
  • Company type: 65% of Principal's BOES clients own S or C corporations.

Which of your clients fit this profile? Bam. You've just identified your target market.

How to Identify Services They Need

The next step is figuring out what to offer these clients. The options vary based on whether your client runs a sole proprietorship, partnership, LLC, or corporation (S or C), but the broad categories remain the same:

  • Family income needs: When you're talking about a profitable business that generates income, you need to ask whether that client has a plan for estate-tax funding. If his or her estate will include full or partial shares of that business, will it tip the heirs over the estate-tax threshold? If so, let's leverage life insurance to help them pay that tax.
  • Exit strategies: Who is going to run the business when your client retires? Who is going to take over ownership when the client passes away? Now is the time to answer these questions in legally binding documents like wills and buy-sell agreements - before they cause arguments or lawsuits among your client's employees and family members.
  • Disability funding: This includes salary continuation for employees and disability buy-out for owners. Are there any policies in place that provide for a buy-out should one or more of the owners become permanently disabled?
  • Qualified plans: What are your client's plans for retirement? Can she use a qualified plan to structure and fund a transfer of ownership when she retires or passes away? This broad topic also covers ESOPs and cash balance plans.
  • Nonqualified plans for employees and owners: This includes plans for executive bonuses, which serve as great retention incentives for key employees and partners.

We can help you get more familiar with each of these concepts and how to discuss them with your clients. Our sales kit is a great place to start. Once you've identified specific clients to pitch these concepts to, we can help you find and create materials to share with them, including presentations, emails, and more.

Here's what's in our FREE 48-page business succession planning sales kit:

  • 1-page guide to succession planning resources here on
  • 14-page buy-sell guide
  • 14-page key person guide
  • 9-page 412(e)(3) defined benefit plan guide
  • 2-page non-qualified 401(k) look-alike plan guide
  • 6-page planning form to use with your clients during discovery
Get Our FREE Business Succession Planning Sales Kit

Need help with a case already in progress? Give us a call at 800-823-4852 or email us at [email protected].