Self-Directed IRA & Small Business Financing Blog

The Dow Jones fell below its November 20 low today. In an article called “Dow Theory: Time to Sell?” it reported that the Dow Jones Industrial Average reached its lowest level since October 2002 and at the same time the DJ Transportation Average also hit its lowest level since 2003. There is no doubt that this will put major pressure on the markets – the futures are already pointing to a lower open in the morning.

We will try to avoid a shameless plug for opening a real estate IRA and getting away from the turbulence.... (We couldn’t help it)

With the Washington Mutual Tower begging for renters and local giants Microsoft and Starbuck’s announcing significant lay-offs and cut-backs, there’s not much hope for a quick economic recovery in Seattle. However, a glimmer of hope sparkles for the Emerald City economy as Ken Griffey Jr. signed yesterday with the Seattle Mariners for 2009 season. Having Griffey back is going to create an economic bump in the SoDo area of Seattle where the Mariner’s Safeco field was nicknamed “The House that Griffey Built.”

Griffey committed to come back to the Mariners where he created his hall-of-fame career. This last minute decision shocked jock-pundits across the US. Griffey made a verbal commitment to play for the Atlanta braves just days earlier. The Braves would have been a lot closer to his family in Florida, and would have put him on a team that has a much better shot at a pennant run than the scurvy ridden Mariners. But fortunately for Seattleites the idea of “Legacy” trumped all.

It’s rumored that close friend of Griffey, golden-glover Harold Reynolds lobbied hard to get Griffey to finish his career in the city that he started in. Allegedly what pushed Griffey over the edge in returning to Seattle was a phone call from Griffey’s hero (and the reason he originally dawned number 24) Willie Mays. Apparently Reynolds talked to Mays and Mays put in a call. Although the details of the conversation haven’t been disclosed, the theme was: Legacy.

A couple of days ago, the Wall Street Journal published an article titled, Despite Slump, Some Small Firms Add 401(k)s. We thought this article did a great job of exposing opportunities for employers to add value to employees through this tough economic climate.

Guidant is an avid fan of this strategy because—as the article points out—a significant percentage of workers are unlikely to save for retirement if their company doesn’t provide the vehicle. One of our core products is commonly used for business and franchise purchases. Called 401(k) Small Business Financing, our product alllows and individual to invest their retirement funds into a business, without incurring penalties or taxes. One of the greatest benefits of the product is that we create a 401(k) for the new business.

Regardless of whether or not you use our product, we advocate that employers provide this benefit for their staff. There is a nominal cost to the employer—one that is far outweighed by the benefits—and your employees will thank you for looking out for them!

Leading provider of self-directed IRA and small business financing services, Guidant Financial Group , has reportedly (official number coming soon!) seen a 23% increase in revenues in 2008 over 2007. That is really exciting!

Wait...Wasn’t 2008 a horrible year for American small businesses?

Is now the right time to buy a franchise? Well, FranChoice CEO, Jeff Elgin believes so. In an interview with Jenna Lee, Elgin said, “You just have to pick your spots carefully. You want recession-resistant businesses, like hair care, restoration or senior care—markets that are growing rather dramatically.”

Rising unemployment, light consumer spending and retail sales—and low consumer confidence in general—has many people worried about the economic outlook. Elgin agreed that it is tough out there— particularly for a prospective franchisee looking for financing. “But everyone understands that this [small business] is where jobs get created.”

Guidant couldn’t agree more. As a leader in small business financing Guidant is very familiar with the financing troubles Mr. Elgin speaks of. But hope is not lost. Deals are getting funded. Last year Guidant helped over 1,700 people buy a franchise or small business. A significant portion of those individuals did not opt for a loan, but rather invested their retirement funds into the new venture. They used our 401(k) Small Business Financing vehicle. Those individuals chose to purchase their business by investing their retirement funds into something they control and build.

If you’re looking to buy a franchise, you might want to consider researching the franchise industry. There are many franchise opportunities that are touted as recession-resistant. I guess that even in a down turn seniors still need care and hair still grows...

Millions of jobs were lost in 2008 and unemployment levels are expected to rise throughout the coming year. Many Americans who have found new jobs have accepted drastic paycuts. A CNN Money article published earlier this month addresses this increasingly common situation, but those who were interviewed all seem to agree that having a job—any job—is better than having no job at all. The article also cited a recent poll by the National Employment Law Project:

"63% of unemployed workers said they would be willing to accept a job offer that pays less than their previous job...Still, only 37% of respondents expressed high confidence in finding a job in the next four months despite being willing to make such a sacrifice."

One can expect these figures to change as unemployment and desperation rise. However, individuals who do not wish to return to the workforce earning a fraction of their former salary may want to consider going into business for themselves. With the right plan—be it a franchise, a small business or an entirely new idea—there are many ways to thrive even in a troubled economy. The hardest part for many is finding the financing to get a project started.

One of our last blog posts addressed some ways for entrepreneurs and franchisees to find financing. First and foremost we recommend 401(k) small business finance, can be a phenominal source of investment capital. Many entrepreneurs believe an investment in a business they control is one of the best they can find.

Looking for work can be a full-time job in itself, and many people will focus on finding a job without entertaining the possibility of creating their own job. It's a big commitment to start a business or a franchise, but more people are trying it every day and the fact that 90% of Guidant clients who take that route are still in business a year later is reason for optimism. Those who find the prospect appealing and who take control of their own employment may ultimately look back on being laid off as the start of a new, more satisfying career.

Yesterday, The Entrepreneur's Source (E-Source) announced a new strategic partnership with Guidant Financial Group. This alliance adds to E-Source Coaches' arsenal of services for the aspiring entrepreneur. With this partnership, E-Source Business Coaches will not only help individuals find the right business for their lifestyle, goals, needs and expectations, but also assist clients through the challenging aspect of financing a new venture.

We are proud that E-Source chose Guidant Financial Group as their preferred funding source. Over the past five years we have worked extremely hard to build a reputable and reliable set of services. This partnership validates those efforts. While we dominate the market for 401(k) Rollovers (investments in a business using retirement funds), Guidant also helps individuals secure financing by means of SBA loans and unsecured loans and provides equipment financing.

We look forward to helping even more entrepreneurs invest in themselves, create jobs and keep American small business moving! Learn More about Franchise Financing.

The stimulus package backed by President Obama passed the House without any Republican support last week, and it is now being debated in the Senate. Many parts of the package are controversial, and Republican leaders say that it will likely not pass in its current form. It could be a while before the President signs off on any stimulus plans.

Though we must wait for any outcome to be certain, it is never too early to examine parts of the bill and how they may stimulate businesses and the economy. One of the less controvesial initiatives is explicitly designed to do just that: an allocation of $430 million to the Small Busines Administration to revive its ailing loan programs.

According to an article last week in the Washington Business Journal, "The bill would increase the government guarantee on the SBA's 7(a) loans, and empower the agency to make loans directly to small businesses, a function that now is performed by private-sector lenders."

As credit has tightened, jobs have disappeared and fears have risen, lenders have been cutting back on ditsributing loans—even ones deemed far less risky than the toxic investments that have caused major losses in the last year. Loan activity has dropped dramatically from the beginning of the fiscal year with no sign of slowing yet. However, "The legislation would encourage lenders to start making 7(a) loans by temporarily increasing the amount guaranteed by the government from...[which] would make the loans less risky for lenders and free up capital for additional loans." President Obama also has called for the SBA to make direct loans and for lower fees on SBA loans.

Costly program fees have driven away lenders, many of whom have been forced to draw back loans across the board in the wake of the subprime mortgage crisis. To make these loans more profitable, the SBA has allowed lenders to charge higher interest rates. This could be bad news for borrowers, but the weakened economy has also lowered demand for these loans and competition will still exist between lenders for creditworthy businesses and entrepreneurs.

For those interested in obtaining SBA loans, Guidant Financial Group is an excellent place to start. Of course, many business owners are still only just learning about financing their business debt-free using their own retirement funds through 401(k) small business fianancing. Both options may be worth exploring.