Hispanic business owners seeking risk management advice present opportunity for advisors and financial professionals

Key Takeaways:

• Hispanic Americans and five million Hispanic-owned businesses help contribute over $800 billion dollars to the U.S. economy each year. This growth is poised to accelerate as Hispanic entrepreneurs start businesses at three times the rate of the general population, presenting a huge opportunity for advisors and financial professionals to expand relationships.
• Many Hispanic business owners are optimistic about the future of their businesses, but even the savviest owner needs advice from subject matter experts who can help them plan for the unexpected. As we celebrate Hispanic Heritage Month, I encourage you to consider how you can help address the needs of this fast-growing segment.
• Small business owners wear many hats, and the topic of risk management presents an opportunity for you to add value. Advisors and financial professionals have the opportunity to help business clients assess their existing protection strategies and identify gaps or blind spots that could trip them up in the future, such as people risk, financial risk, liability risk, and more.

The last two-plus years have presented business owners with challenges they couldn’t have imagined, and many continue to face relentless disruption while managing through recovery and planning for growth. Despite the current economic outlook, one particular segment of business owners is hopeful.

Thanks to a partnership with the U.S. Hispanic Chamber of Commerce (USHCC) and Reimagine Main Street, a project of the Public Private Strategies Institute, we recently had the opportunity to talk to Hispanic small business (HSB) owners and found that 69% remain optimistic about the future of their businesses in the face of recent economic headwinds, yet many may be missing the resources and relationships they need to manage risk through the next unexpected event.

This result didn’t surprise me as of the son of a former Mexican migrant worker whose family went on to create multiple businesses that are still successful today. The ability to problem-solve and remain positive in the face of adversity enabled my family to achieve the American dream, and I think this trait remains prevalent among Hispanic Americans across the country today.

However, as businesses grow and potential risks become more complex, even the savviest owner needs advice from subject matter experts who can help them plan for the unexpected. As we celebrate Hispanic Heritage Month, I encourage you to consider how you can help address the needs of this fast-growing segment of business owners.

Across the country, Hispanic Americans and five million Hispanic-owned businesses help contribute over $800 billion dollars to the U.S. economy each year. This growth is poised to accelerate as Hispanic entrepreneurs start businesses at three times the rate of the general population, presenting a huge opportunity for advisors and financial professionals to expand relationships.

Here’s the great news for you: this group wants your help. The survey indicates that almost all (94%) HSBs are open to seeking guidance about ways to make their business more resilient, however, nearly half (44%) struggle to find the right partners.

Become a risk management consultant for your business clients

Small business owners wear many hats. They are stretched thin and are often focused on the most pressing needs of the day. Advisors and financial professionals have an opportunity to add value by helping business clients assess their existing protection strategies and identify gaps or blind spots that could trip them up in the future, such as:

• People risk – What happens if a business loses its most valuable asset or fails to attract the talent it needs to grow? What are best practices and offerings for helping businesses retain their talent?
• Financial risk – Does the business have a strategy in place to weather the next financial disruption, including available lines of credit?
• Liability risk – Is the business at risk of being sued; does its insurance coverage cover all it should?
• Technology risk– Is the business protected from rising cyber threats?
• Partner risk – Does the business have trusted partners who are invested in its success and are leaders aware of the potential consequences of aligning with the wrong partners?

The outcome of this discussion may point to solutions you can provide directly or open the door for you to recommend new partners who can help the business address gaps.

Additionally, our survey data highlighted a few areas where HSBs may have some immediate opportunities:

Funding needs and sources

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 building a plan to access capital in the event of a new, unexpected disruption. This could involve helping clients build a stronger relationship with a bank or financial institution – or understanding solutions like Securities Backed Lending as a source of liquidity.

Benefit offerings

Only 14% of HSBs worked with a consultant to explore new employee benefit offerings. While HSBs indicated that they are hiring, only 18% have increased benefit offerings and more than half (55%) offer no benefits at all. Add value by connecting clients with a benefits pro to address this opportunity.

Operating costs

One of the most common steps HSBs have taken to prepare for future shocks is reducing operating costs (55%), highlighting a desire to find cost savings.

Help your business clients control expenses by considering self-funding their employee health insurance plan, including medical stop-loss solutions that protect them from the impact of large claim activity.

Low or no-cost actions

Some HSBs have taken steps to shore-up their risk management profile, including:

• Enhancing their company’s risk management strategy – 18%
• Conducting a formal risk assessment – 14%
• Creating a business continuity plan – 28%
• Creating a succession plan – 19%

While these involve an investment of time, most involve no or limited costs and can go a long way in helping the business build resilience. As a risk management consultant, you have an opportunity to highlight these opportunities for your business clients.

Additional Resources

Providing holistic counsel may include enlisting the services of other professionals such as insurance agents, attorneys, cyber security experts, benefits consultants, creditors, and other experts. Leverage your personal or professional connections to bring the right partners to the table.

Nationwide has created a risk management checklist to help you have conversations with business owners to identify opportunities to enhance their business’ resilience and position you as their risk management consultant.

For more information on the findings of this survey, view this infographic or complete survey results.

Learn more about important considerations for advisors and financial professionals looking to expand their Hispanic client base.