Most business owners are walking a financial tightrope—without a safety net.
You see it. You know it. Yet, too many advisors and insurance agents hesitate to have the tough conversation about succession planning. Maybe because it’s uncomfortable. Maybe because it feels complicated. But here’s the truth: If you aren’t talking to your business owner clients about buy/sell planning, someone else will.
And that “someone else” might not be looking out for your client’s best interest.
KEY TAKEAWAYS
- Most Business Owners Have No Exit Plan – Two out of three have no safety net. One bad quarter—even one bad day—and it all could fall apart.
- Even Solo Owners Need a Buy/Sell Agreement – A trust, a key employee, or a step-by-step sale. There’s always a way.
- Advisors Must Lead the Conversation – Be the advisor who builds their client’s safety nets before they need it.
THE HARSH REALITY: MOST BUSINESS OWNERS HAVE NO SAFETY NET
Here’s a stat that should keep you up at night: Only 34% of privately owned businesses have a formal succession plan in place. That means 66% of your business-owner clients are one unexpected event away from falling off that tightrope—without a safety net.
- What happens if they die unexpectedly?
- What if they become disabled and can’t run the business?
- What if their “informal plan” to sell the business to an employee or family member falls apart because no funding mechanism exists?
If you’re not actively solving these problems, you’re leaving massive value on the table— for your client and for yourself.
THE BUY/SELL AGREEMENT: A ‘MUST-HAVE,’ NOT A ‘MAYBE’
Buy/sell agreements aren’t just for partnerships. Single-owner businesses need them just as much—if not more.
There are three key strategies that can help solo business owners create a seamless transition plan:
1. The “No Sell Buy/Sell” Strategy
This approach is for business owners who don’t have a clear successor but want to protect their family.
How It Works: The owner sets up a trust that acts as the buyer of the business, funded by a life insurance policy. When the owner dies, the life insurance proceeds buy the business from the estate.
Why It Matters: Instead of forcing a rushed sale, this strategy gives the family time to either run the business or sell it at the right time, for the right price.
Key Takeaway: “A goal without a plan is just a wish.” – Antoine de Saint-Exupéry. Don’t let your clients “wish” their way into a succession plan—help them take control.
DMI VICE PRESIDENT – LIFE SALES.
2. The “One-Way Buy/Sell” (Key Employee Buyout)
This is for business owners who have a rockstar employee who wants to take over—but doesn’t have the capital to make it happen.
How It Works: The Key Employee buys a life insurance policy on the owner. When the owner passes, the policy payout is used to buy the business from the estate.
Why It Matters: The business transitions smoothly, without financial stress. The employee gets ownership, and the owner’s family gets fair market value.
Key Takeaway: “Someone’s sitting in the shade today because someone planted a tree a long time ago.” – Warren Buffett. This strategy helps owners plant the right financial tree—before it’s too late.
3. The “Sole-Owner Transition Plan”
This strategy is for owners who want to gradually transition ownership to a key employee while protecting their own financial security.
How It Works:
- The employee buys a small percentage of the business upfront.
- A buy/sell agreement is put in place.
- The remaining ownership transfers over time, using a mix of installment notes and life insurance funding.
Why It Matters: It creates a structured, low-risk path to ownership while ensuring the owner is financially protected if the employee leaves or passes away.
Key Takeaway: “By failing to prepare, you are preparing to fail.” – Benjamin Franklin. Help your clients avoid failure by building a real plan.
YOUR ROLE: THE TRUSTED ADVISOR, NOT THE ORDER TAKER
Too many advisors are afraid to push this conversation because they don’t want to “rock the boat.” But here’s the deal: If you’re not bringing up buy/sell planning, you’re doing your client a massive disservice.
Think about it this way: If your client dies tomorrow, what happens to their business?
- Do their family members know what to do?
- Is there a clear successor?
- Is there a funding mechanism in place?
If the answer is “I don’t know,” then it’s time to act
THE NEXT STEP: GET THE RIGHT TOOLS & SUPPORT
You don’t have to figure this out alone. The Business Market Coach Program at DMI gives you the strategies, tools, and expert guidance to confidently help your businessowner clients secure their legacies.
For more information, BOOK A MEETING WITH JOSH RHEM, DMI Vice President – Life Sales
Don’t wait until your clients are already in free fall. Be the advisor who builds their safety net—before they need it.
MOST BUSINESS OWNERS HAVE NO FORMAL EXIT PLAN.
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JOSHUA RHEM
VICE PRESIDENT – LIFE SALES
Joshua Rhem has over 15 years of experience in Insurance and Investment services, with experience as an RIA to financial institutions, an insurance producer, and wholesaler. Throughout his career Joshua has always been especially interested in making sure that insurance is viewed as a vital component of a well-constructed comprehensive financial plan. Understanding the obstacles that advisors face each day, Josh is eager to support them, and promptly responds to their needs. He enjoys helping advisors, brokers and agents grow their business with strategies to identify opportunities and helping to effectively position insurance products as meaningful solutions to their clients’ financial goals.
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Maureen James, FLMI, AIRC, ACS
Owner/Principal at Summit Compliance Group, LLC
“Making regulatory compliance work for you, not against you.”
For more than thirty years, we have been making regulatory compliance a practical part of your business so you can focus on growth. We specialize in making complex insurance and investment regulations understandable and are committed to helping our clients identify and manage their unique compliance risks.
Neither DMI Marketing nor Summit Compliance Group, LLC provide legal advice. You should seek legal advice from your attorney. You are solely responsible for compliance with any federal, state, or local laws and regulations.
