The Psychology of the Small Business Owner

Consider the sheer courage of Canadian business owners. With so many commercial risks and liabilities, from property and casualty to employee fraud, credit risk, key-person vulnerabilities – and now cyber attack (see story on Page 23) – it’s a wonder anyone would want to run a business today.

The right insurance can insulate business owners from chance, fraud and mishap. The trouble is, few entrepreneurs know how to buy insurance. One RBC survey found a full 30 per cent of Canadian business owners do not understand the risks that affect their business.

More importantly, few insurance brokers understand how to sell to entrepreneurs. This market gap spells trouble for underinsured businesses. But brokers who embrace the eccentricities of the SME market, which represents 98 per cent of Canadian businesses according to Industry Canada’s definition of 100 or fewer paid employees, will find it presents tremendous opportunity.

To win the hearts of business owners, brokers have to earn their trust. Here are a few tips:

Understand the lifestyle. Business owners work long hours (about 50 hours a week). Most lack formal business training, so internal processes and cash flow often take a back seat to serving customers. (Note: this may explain why they have so little patience for vendors who don’t go to the wall every day for their customers.)

Don’t overpromise. When an entrepreneur looks around, they see problems everywhere: managing finances, finding talent, fighting off the competition, maintaining production, motivating the sales team. When a salesperson promises to help solve their problems, it’s no wonder they laugh inside.

State your value early. The small-business market is very cost-conscious. Unlike corporate decision-makers, business owners spend their own money when investing in products and services. If you’re not focusing on value, you’re wasting your time.

Establish an honest, direct relationship. It’s lonely at the top. Business owners often feel they have no one to talk to about their problems. They can’t entrust their doubts to anyone on staff. How can you help them feel less alone?

Be flexible and persistent. Many entrepreneurs founded their business “to be their own boss,” then found out they are now answerable to everybody with a problem. Their time is not their own, so be understanding when they miss appointments or forget to call back.

Know your stuff. Small businesses would be out of business if they didn’t create value for their clients, so they expect the same from you. If they ask a question you can’t answer, get back to them fast.

Once you understand this market, here’s your reward:

A clear “Yes.” When a buyer for a big organization says, “We don’t have a budget for that,” that’s usually the end of it. But business owners are the Napoleons of the office – if they want to buy something, they don’t need anyone’s permission.

Loyalty. Entrepreneurs are looking for suppliers who are as trustworthy and professional as they are. Once they know you’re trustworthy, they’ll stick with you. They’ll share more of their problems, they’ll trust your new product recommendations, and they’ll happily refer you to their friends.

Respect the unique needs of the small business owner, and they’ll give you the highest gift they can bestow: their trust.

From the September 2018 issue of Canadian Underwriter. Subscribe here.