Business Overhead Expense: A Great Door Opener to the Small Business Market

Small businesses (4-100 employees) make up most businesses in America. They are usually the result of one or two founders bringing together unique skills and growing the business. Many of them are “customer facing” businesses where the ongoing success comes from the customers knowing Partner A or B is there to work with them. Think about repair shops or dental/legal/accounting/medical practices. Losing a partner to a disability could risk losing hard-won customers.


A Business Owner Disability Could Spell Doom for the Business

If that happens, what will be the future of that business? While many of these owners may have installed employee benefit programs, how many have established a business benefits program to provide for the business’s ongoing success?

In the event of an owner’s disability, the business’s revenue can drop quickly as customers seek services from another business. Unfortunately, the vendors that supply products or services to that business (i.e., rent, mortgage, utilities, suppliers, insurers, equipment loans) still need to be paid. Employees may start to seek new jobs sensing the business is failing. That part could be the worst since businesses rely on experienced employees to make things run smoothly. Imagine losing your best people.


Business Overhead Expense to the Rescue

How can you be a hero to small business owners? Explain how a properly structured business overhead expense (“BOE”) plan can step right in and pay all those expenses while the owner is recovering. A BOE is focused solely on protecting the business. Indirectly, that protects the employees by keeping their place of employment functioning. If a business requires special training of the owner to provide services, a “professional substitute” provision provides funding to hire a comparably credentialed person to step in.

If the owner cannot return to work, a BOE plan helps to “keep the doors open” while the business is put up for sale. The new owners would have confidence that they are taking over a business with a seasoned staff, no back due payments, the same suppliers, and just a name change.

The sale would no longer be a “fire sale” but a “business continuation” transaction. The owner could salvage something more than selling a closed business without a BOE plan having kicked in.

BOE gets you in the door to the small business market. Plans can be designed for multiple owner settings, from blue to white collar businesses. Plans go as high as $50,000 per month in coverage. Show your current and prospective business clients that this is just one of the many problems they may have for which you have solutions.


By Ed Stone, LTC, DI & Annuity Specialist