Are Business Owners a Good Market Niche?
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Wealth and business ownership go hand-in-hand. One study showed that the wealthiest 10% in the U.S. controlled 94% of the business equity.
This concentration of wealth indicates that a thriving advisory practice focused on business owners could be only a few clients away.
My surveys of financial advisors revealed that relatively few are devoted to this niche. And an estimated 90% of advisor marketing is business-to-consumer and not business-to-business.
Those advisors that adopt a “b-to-b marketing mindset” can make this a “rich niche.”
But does that signal that advisors should build their practice around business owners?
As someone who has spent decades in the trenches marketing and selling to business owners and executives, this can be a thriving market niche for many advisors.
But with a few caveats.
Fundamentally, a business-to-business marketing strategy is different than the business-to-consumer plan that the majority of advisors use.
And just because an advisor is accustomed to working with high- or ultra-high net worth individuals and families where business ownership is common, the business owner market may not be for you.
What are some key pros and cons of business owners as a market niche?
Where do your fees come from?
If you are an advisor who enjoys advanced and strategic planning and gets paid for services such as financial planning and advising on corporate plans, then business owners may be strong clients for you.
If you generate all your fees from assets under management, then private and small business owners may not be right for you because much of their liquid wealth can be tied up in the business.
Are all business owners the same?
While all business owners are not created equal, they do tend to have certain common characteristics:
- higher incomes and more wealth than the average professional or individual.
- businesses that have equity value, which can be the biggest asset in their personal net worth. Often that asset is illiquid and/or the business owner will focus only on the cash flow that the business creates.
- a familiarity with making decisions, they tend to delegate, and they hire people to get things done.
- likely an expert in their field or business and understand they can’t be an expert in everything. They may appreciate a financial advisor’s expertise and value.
- more complex planning needs than an employee, offering value-add opportunities for planners who understand the financial planning implications of the often complex choices that business owners make.
- authority over their company’s qualified plan and profit-sharing plan and/or how advice is offered for the plans at work. This marks an additional sales opportunity, reason to engage, and revenue source for advisors.
- work harder and longer hours than the average employee and, as a result, especially value their time outside of work.
- prefer LinkedIn as their social media of choice, which opens up for advisors an easy way to reach many business owners.
Finally, if you have a sense for which business owners and executives you’d like to approach as possible clients, it is easy to gather information about them and their businesses.
In contrast, if you sell to millennials in your city or pre-retirees in your town who are predisposed to be a fit for your type of advice or planning, it may be hard to pin down exactly…
- who is your target market,
- how best to market to them, and
- how many individuals or couples your target market includes.
How easy is it to get your arms around a target market of business owners?
For example, how many landscaping businesses are there in your town?
Where are they located and who owns the business?
How big is the business and how can you reach them?
This information is only a few keystrokes away, compiled on one or more popular database sources.
And this data is easily supplemented by a quick internet search, a review of the company’s website or Facebook page, and a scan of the owner’s LinkedIn profile.
Whether you are targeting large pharmaceutical CEOs and executives, business owners of middle market manufacturing companies, or partners in legal and professional firms, individual contact information and a business profile is available on demand.
More good news: there are likely dozens of COIs and influencers who are already marketing and selling to the type of business owner you want to meet. Networking and marketing through others offers fertile ground for results.
Finally, do you like working with business owners?
Some advisors prefer to work with retiree couples. Some enjoy engaging with a market such as teachers or employees of a specific company.
If these are your people, or, if you have never worked with a business owner, you might think twice about the market before jumping in with both feet.
Here are five questions to ask and answer before you plunge headlong into the business owner market…
- Do I have the planning expertise or team to work with complex situations?
- Do the majority of my fees come from traditional assets under management or other sources?
- Have I worked with a few business owners to know I want to specialize in this niche?
- Will I have to make significant changes to my current practice to specialize in this niche?
- Do I have a sense for a specific type of owner or executive to target?
Once you decide that business owners are right for you, you don’t need to commit to a specific niche within this group for life, but a little go-to-market planning will go a long way toward avoiding a marketing quagmire and revving up your fees.
Bob Hanson is co-author of Marketing Power for Financial Advisors. Get his new free report, 7 Business Owner Marketing Secrets of Successful Advisors, here.