Hispanic businesses struggle to find the right partners to plan for the future
Insurance professionals can grow relationships with Hispanic business clients by serving as risk-management partners.
I grew up around Hispanic entrepreneurs. My father was a former Mexican migrant worker who, along with others in my family, went on to build businesses that are still successful today.
While they faced many challenges along the way, they succeeded in the end because they believed in themselves.
I’m glad to see that can-do spirit is still alive and well today in the Hispanic business community. Recently, Nationwide partnered with the U.S. Hispanic Chamber of Commerce and Reimagine Main Street to conduct a survey of Hispanic small businesses (HSBs). Even after a tough couple of years battling through the pandemic, almost seven in 10 Hispanic business owners remain optimistic about their companies’ futures.
The survey showed something else that was familiar to me. Many Hispanic businesses are not seeking professional guidance when it comes to planning for the future.
Early on, as my father built his business, he wore many hats and figured out how to solve each day’s new challenge largely on his own or with the perspectives of family and friends. That’s how entrepreneurs of all backgrounds are wired. But I find it particularly prevalent in the Hispanic community.
It’s an admirable trait. As a business grows and becomes more complex, however, there comes a point where every leader needs to recognize professional advice and guidance can help them improve their business performance.
That’s where advisors and financial professionals can make a difference. Across the country, Hispanic Americans and five million Hispanic-owned businesses contribute over $800 billion dollars to the U.S. economy each year. This growth is accelerating as Hispanic entrepreneurs start businesses at three times the rate of the general population, presenting a huge opportunity for agents, brokers and financial advisors to provide value.
Unfortunately, this community continues to be underserved by our industry, according to the Nationwide survey. In the past year, less than one third (29%) of respondents worked with an advisor or financial professional to update their business investment strategy, and only 14% worked with one to plan for business disruption.
Here’s the good news
As you look for opportunities to build relationships with this group, you can engage them knowing they want your help. Almost all (94%) HSBs are open to seeking guidance about ways to make their business more resilient, but nearly half report they struggle to find the right partners.
Whether it’s a Hispanic or general market business client, my challenge to you is to think of yourself as more than an insurance advisor. You can establish an even stronger relationship with your clients when you come to the table as a risk-management partner. That may involve engaging with solutions that are already in your toolbox, or it could mean helping clients identify other gaps in their protection strategies and bringing the right partners to the table to address them. By doing so, you’ll build trust, strengthen the relationship and create an opportunity for mutual referrals with other partners you bring to the conversation.
When engaging business clients, take the opportunity to facilitate a broader risk management discussion. I like to think of risk in the following categories, which may also be helpful in your conversations with these clients…
Financial risk
Does the business have a strategy in place to weather the next financial disruption? Here are some quick tips to address this situation:
- More than half of HSBs (56%) said that the difficulties of the last few years left them with no cash reserves. Support them by developing a strategy for securing capital to replenish reserves, invest in the business now, or at least build a plan to access capital when they need it. This could involve helping clients create a stronger relationship with a bank or financial institution – or understanding solutions like Securities Backed Lending as a source of liquidity.
- One of the most common steps HSBs have taken to prepare for future challenges is reducing operating costs (55%). One way to help your business clients control expenses could be considering self-funding their employee health insurance plan, and including medical stop-loss solutions that protect them from the impact of large claim activity.
People risk
What happens if a business loses its most valuable asset or fails to attract the talent it needs to grow? Here’s how to talk to clients about this risk:
- While HSBs indicate that they are hiring, only 18% have increased benefit offerings and more than half (55%) offer no benefits at all. Only 14% worked with a consultant to explore new employee benefit Add value by connecting clients with a resource to address this opportunity.
Liability risk
Where could the business lower its risk of being sued? Does its insurance policy cover all they think it does? As an advisor, you should know that:
- Only about one fourth (26%) of HSBs worked with an insurance professional to ensure coverage is up to date. If they haven’t met with their agent for a while, recommend they revisit that relationship, or consider connecting them with a good commercial insurance agent from your network.
- Only 11% of HSBs said they are likely to consult an attorney for guidance on business resilience. There are many risks that a simple consultation could assess and address. This is particularly important if they’re running a business that invites customers onto its premises.
Technology risk
Cyberattacks are on the rise. Are your business clients ready?
- Fewer than one in five (18%) HSBs worked with a technology professional to update their business’ cyber security strategy in the past year. If they’ve grown since they put technology protocols in place, it might be time to help them find a new partner to ensure they have the right level of protection. And if they don’t have cyber insurance, now might be a good time to do something about it.
Partner risk
Does the business have trusted partners that practice good business hygiene, and do they have a backup plan if their current supplier or partner cannot serve them for whatever reason?
- Vendors, consultants or anyone they trust to manage data or key relationships are in a position to help or hurt their brand. HSBs are struggling to find new partners according to our survey. If they are not getting the right level of service from an existing partner, it could be a precursor to a more significant problem for the business. Leverage your network to bring new options to the table if that’s the case.
Nationwide created a discussion guide to help insurance advisors and other financial professionals meet clients with a broader risk management perspective. I encourage you to use this as a jumping off point in your efforts to position yourself as a true risk management partner.
When you engage Hispanic or general market business clients, start thinking about how you can broadly help them with risk management. You’ll find they view you as a more indispensable part of their team, which can open the door to additional sales opportunities and referrals. You can also feel great knowing you’re helping them face an uncertain future with a stronger game plan.
Juan Jose Perez is President of Corporate Solutions for Nationwide. This article is published with permission from Nationwide and may not be reproduced.
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