Guidant Financial Group Blog

Forbes magazine recently published an article about a fitness franchise that has seen huge success in recent years even while many other clubs are feeling the burn of a slowing economy. Potential franchisees may want to take notice. The franchise is Snap Fitness. It operates on a no-frills concept that might make it more accurately termed as a fitness pit-stop (or "fit-stop" if you will) rather than a gym. Locations are small and offer limited machines, provide no classes or child care and few locations even have shower facilities. Customers are in and out quickly—a benefit for both them and the minimal staff.

Bulked-up gyms such as Bally’s—which has filed for chapter 11 bankruptcy twice in the last year—are seeing declining membership numbers and major losses as consumers tighten their belts...or perhaps their belts are just getting tighter from lack of exercise. In either event, those who still want a place to work out and who don’t need abundant staff to motivate them and whip up wheatgrass-infused protein frappe are moving to discount clubs such as Snap, which charges only $35 a month for dues.

Founder and CEO Peter Taunton, “believes Snap will attract more franchisees with so many people looking for work. He's also betting Snap will attract 300,000 new members this year as fitness buffs ditch costlier gyms,” according to the article.

Here are a few excerpts from the article about the company and franchising options:

Snap in 2008 had operating income of $10 million, almost double what it did the
year before, on $30 million in revenue, up 67 percent. The company sold 483 franchises in the first 11 months of the year.

Franchisees can break even on 275 members in as little as three months. Once a lease is signed, a club can be outfitted and opened in ten days.

Most of the 820 [franchise] owners paid $175,000 to open a Snap Fitness club, and many are in rented space. The capital outlay includes $120,000 for equipment, TVs, a card key system, a surveillance camera and a one-time $15,000 license fee.

Franchisees pay Snap a royalty fee of $400 a month plus 50 cents for each membership. Snap, the parent, also collects a one-time $5 fee for each security card issued; it gets another $5 for ‘billing setup.’ (Curves, the women's chain, charges a $30,000 license fee and a monthly royalty fee of up to $800.)

Franchisees also pay $255 per month for insurance, bringing fixed monthly fees to $655. Though the facilities are open to members 24/7, many locations are staffed only 25 to 40 hours, minimizing payroll costs.

Some franchisees run the gyms as a side business; 60 percent of them are
absentee owners with other full-time jobs. Franchisees have online access to
revenue reports and visit counts. They can view live footage of their clubs
remotely. "Running these gyms is a breeze," Taunton tells prospective
franchisees in a weekly conference call. "All you need is an Internet browser."

The modest start-up fees and minimal effort required on the part of the owner make this an attractive option for potential franchisees—particularly those who find fast-fitness more appealing than fast-food. The economic crunch will put added pressure on other gyms, whose extra overhead make it harder to provide competitive prices for what is still essentially a luxury good. Beyond that, Snap Fitness may appeal to those who resent socializing and just want a convenient place to run in, run in place and then run out.

One thing seems to be clear: in a slow economy, efficiency and affordability are of paramount importance. Guidant can help on both counts with 401(k) small business financing and SBA loans, which can help interested individuals set up their own franchise...in a snap!

BusinessWeek had another article this week that piqued our interest (yes, they are our fave at the moment). This one had to do with the most profitable start-ups in 2008. And when we say "profitable" we mean "venture-capital worthy." Not exactly the same thing - but close.

Actually, not even close. Remember those dotcom days? Venture captial did not really mean profitable during those years, but we are thinking they've learned their lesson and are diversifying a bit more.

Or not!

BusinessWeek's list of Venture Capital's Favorite Startups seems to have the same undeviating focus on certain industries as it did in 2000. Let's see what made the list:

- Biotech
- Technology
- Pharmaceuticals
- Medicine and Medical Research

Hmmmm. We see computers and doctors. Looks to be about it!

So! What about the rest of us out there who need capital for our business start-ups? Well, we have some great news for you!

Guidant has expanded its services to include Unsecured Loans, Equipment Leasing and SBA Loans. Yes! You can now explore your options for several different forms of financing in one place!

Of course, our most popular financing method is 401(k) Small Business Financing; however, we have heard from our clients and partners that additional options can help make the difference between realizing your dreams and, well, just dreaming.

To learn more about our new financing options, call in and ask to speak with one of our Client Coordinators. They can find out more about your situation and schedule a time for you to speak with one of our Senior Consultants or other financing experts about the financing options that may best meet your needs!

Call us at 888.472.4455.

Happy Holidays from Guidant to you!

Business Week recently published an article "The Franchising Way to Grow" which discusses some of the pros and cons of turning your small business into a franchise. Many small business owners believe that the best way to expand is to open and run multiple locations themselves, but the business owners in this article have achieved incredibly fast growth and more profits by letting franchisees do some of the work.

Some of the positive points of franchising include:

• The franchisees bring in their own capital in opening the new locations.
• Franchisees are invested in the success of the business, which isn't the case with some managers hired to run new locations without franchising.
• Several franchises can be opened in the time it takes to open one new location without franchising.

The article does point out some of the negatives of franchising, including:

• the initial time investment required to detail and refine operations for a training manual
• the initial monetary investment for preparing the franchise, attorney fees, etc.

Of course, not every business and business owner is a good candidate for franchising; businesses that require specialized knowledge or training and business owners who want to have complete control over their brand may not find what they are looking for in franchising. Simple concepts work better, such as newly launched fast food franchise Orange Tree Hot Dogs, one of the businesses profiled in the article. The existing popularity of the brand and the relative ease of training has made finding enthusiastic and capable partners very easy for the owners. Of course, there are exceptions to this rule, and even the quirkiest businesses can be franchised with the right savvy. An example would be 1-800-AUTOPSY, which was profiled in a NuWire Investor article on franchises for eccentric entrepreneurs. Then again, autopsies and hot dogs both involve formaldehyde and things that died in a questionable fashion, so perhaps the two concepts aren't so different after all.

Business owners who are interested in expanding may find that franchising is an excellent way to test new territories and increase their own profits with less expense and hassle than would be required in opening a new location of their own. Good candidates may want to consider 401(k) Small Business Financing to fund the preparations. And of course on the other side of the transaction, franchisees may want to consider financing their venture with their 401(k) as well.

It is currently snowing at Guidant's Seattle (well, Bellevue) headquarters!

Our offices are officially closed due to hazardous road conditions, but we are checking the company voicemail regularly and many of our employees are working from home (at least that's what they tell us).




Keep it coming! It's a nice change-up from rain!

According to a recent article on Entrepreneur.com, green business is booming (see The World Awaits your Green Business). Now, we know that it's hard to believe that anything is booming right now (well, other than our securities investments - but that's more of a "ka"-boom, as in "ka-boom! My stock portfolio just blew to pieces!"), but as green technologies advance and prices become more competitive, environmentally friendly businesses may be one bright spot in this cloudy economy.

Regardless of cost, environmentally conscious products and initiatives are very popular, even during these tough times. It's true that mega health-food stores like Whole Foods and Wild Oats (are they still around?) are suffering, but American's are still calling for more practical "green" products.

"Now is the time for entrepreneurs to look at starting a green business," writes Entrepreneur "Green Columnist" Bill Roth. "Even in a down economy consumers are looking for ways to save money. And going green is now the path for also saving green."

Some examples of businesses that can both be green and money-saving? Here are a few:


- Installing roof-top solar panels to augment a roofing business

- Developing green and cost-effective products for other business - i.e. cleaning supplies and to-go containers for restaurants

- Use your business as a test center for new green products - companies out there are looking for real test cases to provide feedback and marketing ideas

While most of these are not "new" businesses, they have a green twist that can give them an edge in a flailing economy and can play off of Americans' new-found environmental concerns.

So - for all y'all entrepreneurs out there - think green! It could save/make you some green!

BusinessWeek recently featured Guidant in an article about 401(k) Small Business Financing (See Need a Loan? Tap Your 401(k), Without Penalty).

In the article, reporter Brian Bunrsed talks to two 401(k) Small Business Financing clients and explores the opportunity to finance a business venture with existing retirement funds.

Guidant clients Tim and Terry Madden told Burnsed that they decided to use retirement funds because they "didn't want to rack up huge piles of debt in a turbulent economy," even though they qualified for a traditional loan.

Many prospective clients are in the same boat as Tim and Terry. While there are still loans out there (yes, really!), the terms are not nearly as attractive as they once were and, for many people, investing in their own business provides the opportunity for greater gain than investing in the stock market.

As with any business, there is risk. What is unique about 401(k) Small Business Financing, though, is that it caps your risk at a specific amount. What many financial experts don't realize - or don't want to realize - is that using retirement funds can actually be less risky than a traditional loan. While there still is the possibility of losing the business and your retirement savings, many people would agree that this can be a more attractive risk than losing your business, still owing the bank principal plus interest, and having to declare bankruptcy and suffer the mark on your personal credit for 7-10 years.

Don't get us wrong, 401(k) Small Business Financing is not for everyone. But, as you can tell from the 16 comments and counting on this recent BusinessWeek article, there are still a lot of skeptics out there who haven't truly compared 401(k) financing with other vehicles.

This is a viable, allowable and logical way to finance a business. And in times like these, why not investigate all your options? Your 401(k) may really be the source of your future financial freedom.

Want more information? Call us! 888.472.4455.

We announced today that current numbers are projecting a 30% increase in self-directed IRA accounts opened with Guidant this quarter. This is over fourth quarter 2007.

This is pretty exciting news for us as, like most other financial companies, we weren't sure where we would end up the end of this year.

Not surprisingly, though, it appears that Americans are taking this economic downturn as a sign that having a retirement account that allows for more control over what they invest in, and how those investments are managed, is a more attractive alternative to trusting their financial futures exclusively with Wall Street money managers.

For more on this, please read our press release on Yahoo! News (see Self-Directed IRA Accounts Growing at a 30 Percent Rate).