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Starting a business is a stressful endeavor. There is so much to consider regarding basic operations and so many forms to fill out and papers to file. It is truly a wonder that businesses are able to get off the ground at all. If you are a new business owner, you know that insurance of all types is very much part of the equation in the development and opening of your business. However busy you are with the basic operations of business, you must take time out to implement a strategy to keep your business secure. To be sure, an essential ingredient to this security is taking out “key person” insurance (also known as Business Life Insurance).

Key person term life insurance is taken out on the life of the key executive or the business owner. All firms or small businesses depend on the key people or business owner to manage and keep the business running. These head people are critical for the success of the business and therefore the insurance is actually taken out for the benefit of the business. Businesses take out the policy on the key individuals and so the business also pays for the policy premiums. The monies that are paid to the business upon the death of the key executive or business owner allows that firm or business the time to figure out what direction to take. Those left to run the business can strategize as to how they can save the business. Will they hire a new head executive? Will they restructure operations? Will they need to eventually sell off assets or sell of the business altogether? What debts need to be paid? No matter the case, the monies paid out by the term life insurance buys a business much needed time to make the important decisions that need to be made.

What Value to Place on a Key Person

To be sure, any business operation would feel displaced upon losing its key person — especially when considering how to replace him/her with someone just as competent. In small firms, it is usually the founder who holds responsibility for keeping the books, managing employees, handling key customers and running all basic operations. Losing the key person leaves any company with much uncertainty and instability. There is no easy formula for determining the value of a key employee as each circumstance is unique. The company must consider anticipated profit losses, replacement costs and a compensation-multiple formula. These are typical methods of estimating a loss and subsequent policy value. The best thing to do is to shop for rates from several different life insurance agents as they can help you estimate how much of a policy to buy. You may also get term life insurance quotes online. Most agents agree that buying term life insurance instead of a whole or variable life is better as the premiums will be much lower.

Sole Proprietorships

Keep in mind that one-man operations do not need to take out key person term life insurance. If you are a business with zero employees there is no need to worry as your assets transfer to your family (family employees do not count). If your family depends on the income from your business, it is advisable that you take out personal life insurance.

You do not want to overlook the importance of an investment such as key person term life insurance. It can mean the survival or closure of your business legacy.

Many business owners simply set up shop and instantly start running ads. They never invest any time in designing their marketing or sales strategy. The result is that they lose thousands of dollars and usually don’t get the sales results that they’re after. We’re going to share with you a simple marketing strategy that’s time tested and business proven. It will empower you to get the maximum leverage from your marketing efforts.

Think of the overall market in your city. Your ‘potential market’ is comprised of all the potential buyers of your product or service in your city. To simplify the process, we overlay a ‘Spectrum’, called ‘The Buyer’s Spectrum’, over top of the potential market. Realize that on one end of the spectrum, 3-5% of the market have a preferred vendor (a family member, a business that they’ve been with for years, etc.) and will never buy from you.

On the other end of the spectrum, 3-5% of the market are NOW buyers and respond quickly to virtually any type of marketing. This leaves roughly 90% of the market that doesn’t want to buy what you’re selling right now yet WILL BUY at some future date.

Amazingly enough, the majority of companies focus their marketing efforts exclusively on the 3-5% of the market that are NOW buyers. They leave the remaining 90% of potential customers on the table. Their philosophy is that if a prospect doesn’t buy from them right now, then they discard them and focus on the ones that do want to buy from them. If you share this philosophy, you’re making A BIG MISTAKE!

‘Why’ do you ask? Well, think about a grove of orange trees. If you wanted to pick the ripe oranges, do you think that all of the oranges ripen at the same time? Of course not. The oranges ripen all at different times (we call this ‘The Customer Buying Cycle’). So what do you do, simply pick the few oranges that are ripe and then burn the rest of the field? Once again the answer is no. Yet this is what many companies do.

If you want to get more of the ripe oranges, then what you must do is water, fertilize and nurture the orange tree grove consistently. Bit by bit, the other oranges WILL RIPEN. And when they do, you’re there pick them. Now you may not get them all yet you’ll certainly get the lion’s share.

In the same way, you ‘water, fertilize and nurture’ the 90% of your potential market that doesn’t buy right away. And like the grove of orange trees, bit by bit, they too will ‘ripen’ or buy what you’re offering. If your marketing strategy addresses this, then you will get the lion’s share of the customers.

For you to get most out of your marketing and sales, your marketing strategy must address the phenomenon of both ‘The Buyer’s Spectrum’ and “The Customer Buying Cycle’ to be effective. Make sure to read our article “How To Increase Your Sales By 300% Or More By Effectively Leveraging Follow Up Systems”.