Seven Critical Questions to Ask Business Owners

Having a casual conversation with a business-owner prospect? Turn him into a client with these thought-provoking questions.

By Thomas E. Fowler, CLU, LUTCF

My goal when talking with a business-owner prospect is to engage him in a conversation that allows him to discover his own planning needs. The process I use is called guided self-discovery. I do this by asking probing, open-ended questions that help the prospect talk about his goals, dreams and even failings.

Imagine having a casual conversation with someone who has identified himself as a business owner. Here are some questions that you can lead with or work into the conversation as it develops.

1. Will your business survive you?
Many business owners I’ve met and worked with are dynamic individuals. They are the driving force that make the business succeed. But when they leave the business because of death, disability or retirement, the business fails because no one knows what to do, who to follow or where to find anything.

This question leads to an interesting motivational question: Are you the indispensable person in your company? And its follow-up question: How will your company function when it loses its indispensable employee?

2. What would happen to your business if you disappeared?
A client told me the story of her friend who was on vacation in Switzerland. The man told his wife he was going to hike a trail and meet her in one hour in the parking lot. He never showed up. Switzerland does not issue death certificates. She was unable to get to the financial assets she needed to support her family. About two years ago, his body washed out of a crevasse.

Follow-up questions include: If you disappeared, who would be in charge of your business? Would your family have access to your assets?

3. In the event of your death or disability, what would happen to your lines of credit?
I asked this question to my biggest client, whose net worth at the time exceeded $100 million dollars. His response was that he didn’t know. I advised him to check. After checking, he told me nothing would happen, because the loans were callable only if there was a substantial change in ownership. My response was, “Do you think the death of a 100 percent shareholder in an S corporation with no succession plan qualifies as a substantial change in ownership?”

4. What does retirement mean to you?
This is a great thought-provoking question that can lead to a very interesting conversation. For many business owners, retirement is death. But the answer may be varied. One is, “I plan to die in the saddle.” Another may be, “I will continue to work, but will gradually decrease the time I spend at the office.”

Many business owners have all their wealth tied up in their business. They can’t retire because they use the business as their personal bank account. Thus, the business doesn’t have the cash flow to support the owner and the successor.

Follow-up questions include:

• How much money will you need in retirement to remain in your own world?
• Retirement age now is 70, and you need to plan on living to 100.
• Will you be able to support yourself considering these time frames?
• Will your business be able to support your lifestyle and the financial needs of the business?

5. Who can hurt you the most?
In his book, The 21 Irrefutable Laws of Leadership, John Maxwell asks the question of leaders as they survey their organizations, “Who could hurt you the most?” and “Which employees are key to your business success or to your transition strategy?”

6. If you had died last night and I was your financial advisor, what would you want me to say to your spouse?
This is a powerful question. Once you ask it, you must stay quiet until you get an answer. This question will reveal the prospect’s personal values. I’ve received answers that were full of love and feeling, and some that were cold as ice. It is a showstopper to even the most hardheaded business owner.

7. Do you have children who are active in the business, as well as children outside of the business?
One of the biggest dilemmas business owners face is how to distribute their estate to their children when the major asset in their estate is the business. The choice they make can promote family values and relationships, or irrevocably split the family forever.

This is an excerpt from a speech given at the 2005 MDRT annual meeting. Used with permission. All rights reserved.

For more tips on selling to business owners, read “Opening the Door to Business Owners.”

Thomas E. Fowler, CLU, LUTCF, is a 15-year MDRT member with five Court of the Table honors, and a past NAIFA trustee. He has more than 30 years of experience assisting owners of closely held and family-owned businesses in estate and business planning. Contact him at tom@fowlerfinancial.com.