Self-Directed IRA & Small Business Financing Blog

Guidant has brought together subject-matter experts from the franchising industry to create a webinar series called 5-Steps to Franchise Ownership. “Each expert plays a pivotal role in helping individuals start, acquire, fund and grow a franchise,” says Guidant cofounder David Nilssen. Brian Miller, President of The Entrepreneur’s Source; Jack Santaniello, a partner in the law firm of Shumaker, Loop & Kendrick, LLP; Reg Byrd of Direct Connect Ventures; Lori Block, a widely recognized franchise executive; and Nilssen will serve as presenters in their field of expertise.

5-Steps to Franchise Ownership begins on November 17th and will include a free, weekly webinar to the public, culminating in a final presentation scheduled for December 15th. The purpose of this series is to provide individuals with the information needed to determine whether franchising is right for them. This includes, but is not limited to, finding a franchise, franchise financing, and building a strong business plan.

For more information – CLICK HERE!

Guidant Financial Group's co-founder, David Nilssen is conducting a small business and franchise financing webinar on Thursday, November 12 at 10:30 AM (PST). He will candidly discuss the most common way that a new small business or franchise owner is a financing or funding these transaction. Learn about:

• SBA Loans
• 401(k) Small Business Investing
• Unsecured Loans
• Home-Equity
  

Learn how to layer financing options and understand the most common mistakes people make when applying with lenders. If you want to learn more about small business or franchise financing - REGISTER FOR THIS WEBINAR.

We are excited to announce that Guidant Financial has made the 2009 Inc.5000 list for the second year in a row!

For those of you who are unfamiliar with the Inc. 500/5000, this is a compilation of the fastest growing private companies in America. To be named to the Inc. 5000 list is a great honor, and to be named number 945 is outstanding!

In addition to being ranked number 945 overall, Guidant was ranked number 41 in the Top 100 Financial Services Companies category, and number 26 in the Top 50 Businesses in the Seattle-Tacoma-Bellevue area category.

We hope you can tell how excited we are about making this prestigious list. Being recognized as one of the country’s top entrepreneurial companies means there are only bigger and better things to come from the leader in small business financing and self-directed IRAs.

Read the full release here.

Last year, Guidant Financial Group ranked #385 in the Inc. 500.  While it is harder to continue growing at such a torrid pace, we are very excited to be recognized in the top 1,000 small business in America.

Interview with a Franchise Consultant
By David Nilssen
Co-Founder Guidant Financial Group

On a recent business trip to Arizona, I had a chance to sit down with Steve Valentine – a franchise consultant. A franchise consultant helps individuals investigate franchising and they identify and acquire a business concept. Over the years, Steve Valentine has referred us many clients who have gone on to buy a franchise or small business. Steve and I met in Phoenix where we enjoyed some southwester food and good conversation. Here are some excerpts from our discussion:

Nilssen: Tell me about how you got into franchising?

Valentine: I was a co-founder of a commercial real estate based franchised concept. After selling my interest to my other partners I took about 4 months off from working all together to explore my next direction. During that time I was introduced to a consulting firm by the founder of Sylvan Learning Centers. That was 5 years ago and one of the greatest experiences I have had the privilege of being a part of.

Nilssen: What do you do for a living?

Valentine: As a [franchise] consultant I help people accelerate their attainment of financial independence through business ownership.

Nilssen: What is a typical day look like for you?

Valentine: If summarized from the outside looking in-pretty boring until you realize how rewarding the interaction with people is for me. Lots of time on the telephone and in front of a computer, but also a ton of time to think and visualize how to help my clients while keeping track of progress that clients are putting into their investigation. I keep myself to a Monday through Friday 8:30 to 6 work schedule but do make compromises outside that time line when a client requests. I’m also not afraid to work in the evening after my kids are in bed but almost never lose time with them on weekends and at the dinner hour to bedtime period. Working from home is the best part of my day! If my 4 year old wants me to eat macaroni and cheese with him for lunch I can usually say Yes, no problem!

Nilssen: What are the minimum requirements for buying a franchise?

Valentine: From a non-monetary perspective I believe you must have an incredible passion and coachable attitude towards achieving your goals and constantly seeking personal improvement. It’s so important to utilize the framework of others who can share how they followed a system and used the same resources provided to minimize mistakes and more effectively achieve the desired outcome. One other requirement is the absolute determination to never consider failure as an option. The tenacity and perseverance factors are more important than education and work experience or background.

Nilssen: What are the more common businesses you're seeing people buy these days?

Valentine: [There are a] large number of people who still buy the wrong franchise. Even with best intentions to generate or provide great information via the internet or through seminars or books about finding the right fit, most people use a flawed and emotionally based evaluation process to make a significant decision of this magnitude. The flaws and ineffectiveness isn’t intentional or because these resources mentioned aren’t with best of intentions but going from being the employee or even manager to becoming a successful owner and entrepreneur require more transformation that usually anticipated or acknowledged. [To directly answer] your question are businesses that are resilient to economic ups and downs and has a long term growth strategy for building equity. Services and products alike can fall into this group with real strength in healthcare, education, employment and personnel, maintenance, personal services.

Nilssen: What are some of the most common mistakes you see new business owners make?

Valentine: Having unrealistic expectations of how much effort and energy they need to put forth for more than the 1st year or 2. Another common mistake is to stop seeking out help and advice from both the franchisor and other owners when things aren’t going well. The last mistake might be the most dangerous mistake-deciding to abandon the system because they have now decided that they know more about how to run the business than the management team or founders used to build success. If they invested the right due diligence into picking a great concept that offered what they wanted the most then they should stick with the processes and methods that worked before they became an owner and are the foundations for building a really successful business even when results aren’t delivered or realized immediately.

Nilssen: How long does it take to find a franchise?

Valentine: If given appropriate attention and focus without pushing out of the way other important issues in your life the timeline could easily be completed in about 6-10 weeks. I’m a believer that if you really want to change what you are doing in life the time factor will take care of itself fairly quickly.


If you would like to contact Steve Valentine – click here.

By Todd Taskey

I really hate to be so negative, but if we look at a couple simple facts, the entire ARC (America's Recovery Capital Loan Program) is a $350 million mess waiting to happen. This entire process is flawed from top down. It sounded good on the campaign trail (it always does), but 9 months later, what do we know?

1 - We have about 14 million small businesses (9 employees or less) in the US that collectively employ about 43 million individuals. President Obama is hoping they can help lead the way out of the current recession by providing a minuscule fraction of them small business loans up to $35,000, provided it is used to eliminate other debt.

2 – Many banks do not have the capacity to make these business loans, but more importantly, they do not want to make the loans as there is no ability to charge any fees or generate any income. It sounds great from the podium to say "no fees" but without incentive, it is just a distraction while many banks are trying to heal their balance sheet.


3 – The SBA doesn’t really want to make these small business loans. Publicly they will say differently, but the SBA loans default rate in 2006 was 2.4%, which jumped to 4.8% in 2007. 2008 saw a record of 12% default which would be a complete disaster for a lending company charging 25% interest. The typical small business loan through the SBA loan program has a current interest rate around 6%. They (we) cannot afford more losses, regardless of the rhetoric.
So, the SBA can’t afford to make these small business loans, the banks do not want to make the loans, it is not a solution for the business owner’s problem or a solution to the recession. So, why develop and promote the ARC program? Well, it allows our government to show they are responsive and the Democratic Party can appeal to the small business owner in advance of the next election. It is a shame they are willing to blow a third of a billion dollars in that pursuit.

So, that is the problem. Let's talk about solutions for business owners who need working capital or a small business loan to really grow their company. My next post will outline four real world options that usually result in a small business loan or working capital: Business Cash Advance, Equipment Lease, Secured Small Business Loan and SBA loan program.

If you have any experience with these programs, I welcome your comments.

Todd Taskey has over 20 years experience helping small business owners be more effective financially. After 17 years as a Certified Financial Planner, Todd is now a Principal at Potomac Business Capital, an independent firm that helps arrange working capital and business financing through SBA loans, private equity, business cash advance, equipment leasing, traditional loans and other creative financing. Located in Bethesda, MD, he serves clients natiaonally and also blogs for Business Management Daily and Wrong Question.

By Todd Taskey

Why Small Business Loans Don't Work for "Real" Small Business Owners

There are multiple reasons, and if you have every looked for working capital or a small business loan for your business, you know how frustrating the process is. Today is even more difficult.
However, once you become a business owner, the challenge becomes even greater. Your credit score typically drops, debt load increases and your attractiveness to traditional lending and credit companies drops like a rock. that, combined with a very tight credit market is putting the squeeze on millions of business owners.

My last post discussed why you can not rely on the ARC program, however, you need capital to take advantage of an opportunity or get through a rough patch.
So, let’s ask a better question: What really works?

Access to small business working capital is constantly changing and two of the most popular form initial equity capital that fueled small business growth are now effectively closed. Business Credit Cards and Home Equity loans have all but dissapeeared durning this credit crunch. Access to small business capital was a problem in September 2008 and working capital is still a problem in July 2009.

As business owners are forced to become more creative, there are effective options that are getting working capital into the hands of small business owners.

Funding Program Required Credit Time in Business Potential Funding
Business Cash Advance: 550+ 1 year + up to $150,000
Streamlined Business Loan: 690+ 2 year+ up to $125,000
Equipment Collateral Loan: 660+ 1 year+ up to $1,000,000
SBA Guaranteed Loan: 675+ new + up to $1,000,000+
Business Credit Cards: 650+ Effectively Closed
Home Equity Line of Credit: 600+ Effectively Closed

Business Cash Advance is a great solution because it really works and will over look tax liens, debt load, “credit issues” and other problems traditional banks can not get past. Business cash advance offers funding without any personal guarantee or collateral, and, given they are taking 100% of the risk in the financing transaction, the cost of capital is significant. If you get a $50,000 you can expect to repay about $65,000 – $70,000 and payments will come directly from your credit card processing or bank statement. Expensive capital, but effective, quick and often successful.

Streamlined Business Loan is an evolution of business cash advance (also known as merchant cash advance). This program allows you to use a personal guarantee and cut the cost of your working capital loan significantly, perhaps as much as 40%-50%. They funding is quick (two weeks) and easy to apply for though you’ll need to have a credit score of 690+ and 2 years worth of tax returns to qualify. In many cases this option is cheaper and easier on cash flow than the business cash advance, but you need better credit and must feel comfortable with a personal guarantee.

Equipment Collateral Loan is an effective way to get a well priced loan if you own equipment (completely paid) or will be buying some soon. Either will require a personal guarantee and the equipment will act as collateral for your loan. If you are buying new equipment you can finance almost all your purchase. If you are using equipment you already own, expect to borrow about 50% of the current value of the equipment. Rates and terms are typically better than the two options above due to your good credit, collateral and personal guarantee.

SBA Secured loans (both 504 and 7A) are great loan products if you have strong credit, lots of collateral and plenty of patients. These loans are made by your local bank and the SBA will guarantee the loan in the event you default. The process is long (60- 90 days) and frustrating at times. In today’s environment they are even more difficult to qualify for but represent the best pricing you will likely qualify for.

Business Credit Cards are very difficult to acquire today and many that have been issued over the past year are being withdrawn. They are not a very good option for small business working capital in the summer of 2009.

Working capital today requires thinking outside the box, a trait traditional lenders are not know for. If you have had success with a working capital loan, please share your comments.

Todd Taskey has over 20 years experience helping small business owners be more effective financially. After 17 years as a Certified Financial Planner, Todd is now a Principal at Potomac Business Capital, an independent firm that helps arrange working capital and business financing through SBA loans, private equity, business cash advance, equipment leasing, traditional loans and other creative financing. Located in Bethesda, MD, he serves clients natiaonally and also blogs for Business Management Daily and Wrong Question.