Small Business Financing and Franchise Financing Blog

Actions Steps for Business Startups

Friday, June 19 recently published an article called, 7 Essential Startup Steps. For the most part, this article did a good job of pointing out steps that an entrepreneur should take before starting or even buying a business or franchise to provide a greater likelihood of success. They suggested that one:

· Do more research on their industry / market
· Develop a strong capital strategy (small business financing)
· Hire an experienced business attorney
· Find a qualified tax professional
· Choose the right business entity
· Create a strong name
· Apply for and obtain the proper licensing and permits

This information can be extremely helpful for entrepreneurs who are often overwhelmed in the early stages of their businesses development. Having helped more than 4,000 people fund a business through 401(k) small business investing, Guidant Financial has seen many different people go into business for themselves. We know that there is one step (though we are over generalizing it) that brings immeasurable value to a new small business or franchise owner - building a great team! This can include, but is not limited to, a business broker or franchise consultant, business attorney, tax professional and many others.

If you are evaluating whether to buy a business or franchise, and would like to meet a professional in any of these areas (or simply need financing) - call us. We will happily make an introduction!

Don't Sabotage Your New Business

Wednesday, June 3
Scott Halford's column, Brainy Business, was fantastic today! Found on, Scott focused on How to Avoid Self-Sabotage. He points out three very great points to consider:

  • Avoid the "yes but..." trap. Instead, try using "yes and" so that you're additive to the idea process, not a detractor. You'll create barriers for yourself if you allow "yes but" to infect ideas.

  • Create separate from evaluation. Brainstorm ideas free from evalution will allow creativity to flow. You can always go back later and try to evaluate whether it's valid or not.

  • Think first, speak second. If you verbalize a negative's more likely to become true (even if it's not in the first place).

We found this article very interesting because many individuals talk themselves out of starting a business or franchise because they act emotionally rather than logically about the decision. In addition, some of the greatest ideas never get off the ground because they are evaluated too quickly.

So what is the real lesson? Let your steak marinate for a few days before you cook it.

Potential Tax Hikes Force People to Reconsider S or C Corp

Let the debates begin!

In President Obama's recently proposed budget, there is a future tax break coming for the middle class and the cuts, enacted on upper-income taxpayers under George W. will be allowed to expire at the end of 2011. Nothing has yet been finalized - but - it has started some pretty intense chatter.

In "To Avoid Tax, Set Up as a S-Corp or C-Corp?", BusinessWeek reported that most small business are structured as an S-corporation but more are considering a C-corp status due to worries about future tax hikes. The story reports that individuals currently taxed at 33% would see a 10% hike - to 36%. Thos at 35% would see a steeper increase to 39.6%. Because an S-corp passes income onto the business owner's personal tax return and inflates their personal earnings - even if they don't take it as salary.

Karen Klein reported she has "clients that are considering terminating their S-corp election, and we have some that were contemplating going from C-corp to S-corp, and they're revisiting their assumptions." In her article she also mentioned that "what we don't know is whether we'll have higher tax rates for corporations in the future. We may make a decision now based on today's rates but in the long term if corporate tax rates change then we could find out we've actually done something that will have a negative impact."

Their are many advantages, and disadvantages to both corporate entities. The only way to be sure which is the best for your business is to talk to your qualfied tax advisor.

The Top Low-Cost Franchises

Do you think you need hundreds of thousands of dollars to buy or start a business? That may not necessarily be true! There are many low-cost franchise opportunities for individuals who are interested in owning a business.

Each year, Entrepreneur Magazine releases their Franchise500 list and subsequent lists to celebrate different franchise categories. This year, they ranked the following businesses as the top low-cost franchise opportunities:
  • Instant Tax Service
  • Jani-King
  • Jan-Pro Franchising Int'l Inc.
  • Kumon Math & Reading Centers
  • ServiceMaster Clean
  • Merle Norman Cosmetics
  • Stratus Building Solutions
  • Jazzercize Inc.
  • Vanguard Cleaning Systems
  • RE/Max Int'l Inc.

These franchisors, although not endorsed by either Guidant Financial Group or Entrepreneur, offer a way for new small business owners, franchisees and entrepreneurs to get into business for less than $50,000. A business or franchise of this size can still be financed, fairly easily, in this market. Many people are using 401(k) small business investing or unsecured loans to acquire their business. In addition, an SBA loan can still be a viable option.

Before you invest in any business or franchise it's important that you investigate the opportunity by interviewing attorneys, consultants and existing franchisees (if applicable). In addition, make sure you work with a reputable small business financing company so that you can adequately capitalize your small business or franchise investment.

Advanta to Freeze Small Business Credit Cards

Last week Advanta Corp. said they will freeze nearly one million small business credit card accounts to preserve its capital reserves. In an article posted on May 23rd, The Philadelphia Inquirer reported that the company has recently eliminated 300 jobs, cut its dividend by 88% and posted a first-quarter loss of $75 million. In addition, it was said that industry analysts described the move as unprecedented and indicative of severe financial stress.

Many small businesses rely on credit to manage cash flow or invest in growth initiatives. Having business credit eliminated or frozen can significantly impair a business’s ability to survive. If you find yourself in a position where you need to gain access to unsecured business credit, please contact us.

In order to qualify you much have a credit score (FICO) above 680, have credit utilization under 50% and own a home. Recently we helped a client obtain $106,000 in unsecured loans...perhaps we can help you next! If you want to submit for more information, please CLICK HERE.

Considering a Small Business or Franchise?

Many of our Guidant 401k clients are either current franchisees or seriously considered purchasing a franchise during their due diligence process. Why? Because franchises offer a lot of benefits to any entrepreneur.

Earlier this week, The Wall Street Journal published an interview with experienced franchise consultant Britt Schroeter (see The Franchise Decision), which includes many insights into who franchising works best for, why it is so prolific in a down economy and what to keep in mind when considering a franchise.

As Ms. Schroeter, who has worked with Guidant in the past to obtain financing for her clients, tells the WSJ, “franchising is entrepreneurship with training wheels.” And, during these uncertain economic times, when the entrepreneurial itch comes along, many prospective new business owners take no issue with starting something with some extra safety rolled in.

We definitely think that the interview with Ms. Schroeter is a very useful resource … even for those who are considering purchasing an existing business, and not necessarily a franchise.

Some suggestions Ms. Schroeter has for prospective franchisees, which (we think) are helpful for anyone considering a business purchase:

“As for general guidelines, I advise my candidates to always shop within
their means. People assume that it takes a lot of money to make a lot. Not true.

“There are franchising opportunities with low investments that have some of the strongest [returns on investment] around,” she tells the WSJ.

“The emergency-restoration industry [that services flood, fire and other catastrophe victims] is one. Commercial cleaning also can be a very low-ticket business.”

“Consider options where you can keep your job and start a franchised business on the side. That way you have the security of your job and can move into your new business full time when it’s financially viable.”

“I’ve always taken “fast growth” with a grain of salt. You need to make sure you select the franchise based on reality, not hype. Climbing on board a fast-moving train is great, as long as the track is solid. Rapid growth can be a sign of a healthy system—most of the time.

"But because a lot of others are getting into a franchise doesn’t mean you need to be any less careful. Do full diligence. Do your homework. Think for yourself.”

100 Best Places to Launch a Business or Franchise

We love the Top 100 Places to Live and Launch by! It confirms what we've known all along - Bellevue, WA is the best place to launch a business.

Why is Bellevue listed the best city? Thanks for asking! Bellevue is the home to many HUGE corporations. Within a stones throw of downtown there is Microsoft, Costco, Amazon, Coinstar, Expedia, Paccar, Puget Sound Energy, ShareBuilder (now ING DIRECT), T-Mobile and Vulcan. The talent pool for hiring is very strong...and why we think Guidant Financial Group is the largest and most successful company in small business financing and self-directed IRAs.

The excellent living conditions in Bellevue and the surrounding areas are also strong contributors. This area is known for having a high level of education in the local population, great infrastructure (including a strong supply of quality office space and the proximity to a major international airport) and the local economy is becoming increasingly diversified.

We thought we'd take a moment to share why we call Bellevue, WA home and then share what other cities made the top 10 list. If you want more - see the article!
  1. Bellevue, WA
  2. Georgetown, TX
  3. Buford, GA
  4. Marina del Rey, CA
  5. Bethesda, MD
  6. Portland, OR
  7. Denver, CO
  8. Charlotte, NC
  9. Fort Worth, TX
  10. Franklin, MA
If you are considering opening a business - call us! We know many great franchise consultants and business brokers who specialize in helping individuals find the business for them.

Franchise Sales Down in Recession

On April 27th, 2009, the Wall Street Journal reported that franchising sales have declined due to the recession. Really??? Duh!

It really shouldn't shock anyone but we decided to write about it anyway because there was a great point made...and then missed.

In the article, the CEO of FranChoice, Jeff Elgin partially blames the credit crisis. He said that is because many aspiring franchisees "who nine months ago would have gotten financing very easily are being held up." Well, that is true. What was missed in the story is that although there has been a decline in SBA and other lending products - there has been a significant increase 401(k) Small Business Financing vehicles. More and more individuals are seeing the value of investing in a business that they control and increase value in.

Guidant Financial Group is the only Inc. 500 business that allows individuals to invest their retirement funds into a business without paying taxes or penalties. Many of these clients are buying these businesses in cash (from the retirement plan) so that initial cash generated can go back into the business as apposed to being sent to a bank in the form of an interest payment! In Q1 2009, Guidant announced nearly 30% growth in it's business from 2007 to 2008.

A Great Time to Buy a Business or Franchise

Buying a business is 17% cheaper than just one year prior according to an article published yesterday on called, It's a lousy time to sell your business. This article suggested that the volume of business transactions fell 36% from Q1 2008 to the same quarter in 2009. It also reported that median price point of transactions through BizBuySell was $165,000.

Sadly this article focused on the fact that you may not want to sell right now but BizBuySell reported that they listed more than 38,000 business last year meaning there is still tremendous inventory available for purchase. With so many willing sellers and prices depressed by 17%, could it be a great time to invest in a business? We believe there are many businesses for sale today that have significant upside!

Guidant's flagship business investment vehicle, the Guidant 401(k), allows investors to invest in a business or franchise without taking a taxable distribution or incurring penalties. Our average client has $180,000 in retirement funds. This means they have enough to buy the median price reported in this article in cash - not encumbering the purchase with any debt. You can also use small business financing methods like unsecured loans, equipment leasing and/or an SBA loan.
If you need more know who to call.

Attention Small Business and Franchise Owners

If you are a small business owner and are looking for new and innovative ways to save money - we might have something in common. Guidant is a leading provider of 401k small business financing. In addition, we are also a business filled with employees, cubicles and filing cabinets. Like most business, especially given our current economy, we continue to look for ways to save money.

The examiner recently gave us three more ideas to save including: cheap business space, bulk office supplies and…the next generation of employees? Unfortunately robots were not included...maybe next time.

Here are their big three:

1. Business Space - work from home or think about sharing an office with a company which may have extra space.
2. Supplies - buy in bulk at your neighborhood warehouse store.
3. Employees - can’t afford to hire a full or even part time employee? Look into virtual employees. There are many individuals who can help via remote location for a few hours a week.Looking for another big idea?

If your business needs money, and you see strong upside potential, you might want to think about investing some of your floundering retirement funds into your business. Maybe it can be used to purchase new equipment that is long overdue, provide growth capital for new infrastructures or expand your sales operations.

Check out our other business financing options.

Laid Off? Start A Business or Franchise

Guidant Financial Group is a leader in small business financing. The rise in unemployment can certainly be attributed to the spike in interest we have seen in small business ownership. Yesterday, published an article called, Laid Off? Start a Business. The article does a great job identifying that there are many opportunities in small business both big and small. An SBA economist, Brian Headd, was quoted as saying, "Non-employer firms have the highest growth when the labor market struggles and the lowest growth when the labor market is doing well."

We were also excited to see that they gave exposure to SCORE. SCORE is a tremendous organization that Guidant has supported for years. In fact, we sponsor the Seattle Score web site. SCORE helps counsel individuals who want to get into business for themselves - but need a little extra help. While SCORE is great as entrepreneurship counselors, other firms can help those who want more information on franchising. Companies like The Entrepreneur's Source, Frannet and FranChoice help individuals identify, evaluate and purchase franchise opportunities. Franchising is particularly attractive to those that have years of business experience and just need a semi-predictable system to follow.

How do you finance a business? Kiplinger pointed out the obvious in SBA Loans. But unsecured loans, peer-to-peer lending and equipment leases are all acceptable financing options. Additionally, if you expect the business to be extremely successful, there is a way to invest your retirement funds into a business without taking a distribution. The Guidant 401(k) is the leading small business investment vehicle.

10 Ways to Cut Business and Franchise Costs recently published a very relevant story called, 10 Ways to Cut Business Costs. There is no doubt that many small businesses are looking for ways to cut costs and improve profits during these turbulent economic times. This article identified great ways to save money by:
  1. Reducing energy use
  2. Allowing staff to telecommute
  3. Ask for discounts from suppliers for paying invoices early
  4. Curb your travel expenses
  5. Renegotiate your office lease OR move
  6. Don't buy new
  7. Barter services
  8. Only hold pertinent inventory
  9. Clear your books of assets you no longer have to reduce your insurance bills and taxes
  10. Take advantage of tax deductions
Our version would have included a #11. If you believe your business had significant growth potential, you might consider investing in it's future by investing your retirement funds into the business without taking a taxable distribution....and eliminate the debt. Again, it's only prudent if you think the upside is significant. It is possible through the Guidant's 401(k). It's an interesting option to consider instead of small business financing!