Guidant Financial Group Blog

The number of loan-guarantees by the Small Business Administration (SBA) reportedly shrunk 57% during the last quarter (ending Dec 31) last year—YIKES!

In addition, a survey of loan officers by the Federal Reserve shows that 75% of banks have tightened their underwriting requirements and 90% were charging more for loans. Again ... YIKES!

If fewer entrepreneurs are being approved for business capital and the cost of obtaining that loan is more expensive, then how can a new business be capitalized?

Consider investing in yourself! There is a way (through Guidant’s 401(k) Small Business Financing vehicle) to invest in a business with your IRA or 401(k) without penalties. In addition, there are no underwriting requirements—you either have the money, or you don’t. Also, you can use your IRA and 401(k) funds as the down payment for a loan if you want to buy a bigger business! Lastly, you get to invest in something that you own, control and can build.

How have your stock market investments performed? If you are like most Americans, then probably not too well. A small business may be an interesting investment alternative worth considering!

If your IRA or 401(k) is heavily invested in the stock market, 2008 is likely a year you’d like to forget. The market’s performance is particularly painful for those individuals who are taking Required Mandatory Distributions (RMD). IRA holders, who have reached the age 70.5, are required by RMDs to withdraw a percentage of funds from their accounts. Unfortunately, most individuals take this distribution in November or December. In most cases this is not of great concern—HOWEVER in 2007 the market was strong. In 2008, not so much. With most accounts losing money, some individuals are still taking withdrawals based on last year’s value.

THE GOOD NEWS: Congress has taken some positive action in reference to RMDs! The President signed the Worker, Retiree and Employer Recovery Act of 2008 on Dec. 23. Section 201 of the Act temporarily suspends Required Minimum Distributions (RMDs) from IRAs and qualified plans for 2009. RMDs will be required again in 2010 unless Congress renews the suspension. It enables retirees the opportunity to reduce their taxable income for 2009 should they determine that doing so is to their advantage and helps retirees and IRA owners avoid having to liquidate investments in a down market. Without the suspension, they could be forced to sell—most likely at a steep loss due to the stock market downturn—investments in their accounts in order to take the distribution, or face a 50 percent tax penalty on the amount that should have been distributed.

While working with our 401(k) small business financing clients, we have found that the one part of the process (aside from selecting the business itself) that holds things up the most is the location selection.

As they say, it's all about "location, location, location!"

But, do you know what makes a good location? Obviously foot-traffic is important for retail, just as accessability and parking is important for the food industry - but have you thought about where you can find the best employees? What about where the best tax rates are?

A new article in BusinessWeek hilights some great websites dedicated to helping businesses choose the right place to call "open," as well as some great tips for what kinds of questions you should ask yourself before moving forward on any one location (see Where to Locate your Business).

Some great resources for you may be:

- www.ZoomProspector.com
- www.city-data.com
- www.siteselectionnetwork.com

There's no harm in studying-up early in the process. This way you'll be prepared when the time comes to sign that lease ... and you won't have any hold-ups once you do get that financing secured!

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.

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.

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.

In a recent article on MSNBC.com, Bob Cundiff, who was interviewed about taking his IRA as a distribution to pay off expenses that piled up after a lay-off, told the reporter that if his situation were to stabilize he may consider opening a new retirement account, but most likely he would use any extra cash to make real estate investments (See Mortgaging the Future in Desperate Times).

Well, Bob, do we have some great news for you!

You can actually do both!!

Although Bob may be an exception, it is amazing to think about how significant “self-directed IRAs” and “real estate IRAs” have become to this new generation of investors. As more and more account holders experience the uncertainty of the stock market, the more relevant self-directed retirement accounts become to every-day investors.

If you call in and ask any of our consultants or client coordinators what the biggest change has been in our callers during the last year, they will tell you that it’s the questions they ask.

One year ago, the most frequently asked question was “Is this legal?”

Today, the most frequently asked question is “How fast can you set this up?”

For those of you who aren’t sure of the answer to either one of these questions, they are “yes,” and “about 30 days.”

And, for those of you who read the MSNBC.com article about people who have withdrawn money from their IRA or 401(k) to make ends meet during this economic downturn, we would like to share another gem with you:

There are other options.

You can invest in alternative markets to potentially yield a higher return or you can even use the funds from your IRA or 401(k) to start or purchase a business without taking a taxable distribution.

There are alternatives. Call us to find out more.

Yes - Free!

• Up to $73,000 in government funding (almost 30 percent of the property value)


• A free self-directed IRA account with industry leader Guidant Financial Group (a $3,995 value) or $1,500 off the purchase price


• Special GO Zone tax benefits (not all qualify, but the developer will pay for you to consult with a MS tax advisor prior to closing to evaluate your situation)

AND ...

If you call now - A FREE SALAD SPINNNER!!!

Just kidding. But then it would be too good to be true, wouldn't it?

For more inforamtion, visit http://www.freeselfdirectedira.org/, or click here to register for a free Webinar hosted by the developers on Wednesday, November 19th at 9pm ET/6 pm PT.

Happy investing!

Guidant's prospective clients bring us quite a few unique and interesting investment opportunities. One of the more prominent ones right now being the GO Zone.

For those of you who are unfamilar with the GO Zone (Gulf Opportunity Zone), this is an area along the Gulf Cost that is offering defined development incentives to builders/investors in order to urge rebuilding after Hurricaine Katrina.

As NuWire Investor describes, "After the devastating 2005 hurricane season, the U.S. government passed the Gulf Opportunity Zone Act (GO Zone) to encourage economic growth and rebuilding in damaged areas. The Katrina GO Zone, which includes parts of Louisiana, Mississippi and southwestern Alabama, offers particularly intriguing investment opportunities." (See Investing in the GO Zone.)

So, why are we bringing this to your attention now?

Well, as it just so happens, time is running out for those who may want to take advantage of the GO Zone's Small Rental Program. Applications are Due December 15th.

One particular property we have learned of that offers investment opportunities as a part of the GO Zone Small Rental Program, Ocean Springs Trails, is offering a Webinar on Wednesday, November 19th starting at 9 pm ET/6 pm PT, to learn more about opportunities associated with this program.

To register for this informative presentation, click here.

For more information on the Small Rental Program, see NuWire's article, Applications for GO Zone Small Rental Program Due December 15.

Check it out! Go get SMART about the GO Zone!

Today we learned that the Treasury Department is considering using the $700 billion bailout plan to …

Actually? We don’t know.

According to the New York Times, Treasury Secretary Henry M. Paulson said that the money would, in fact, not be used (as originally intended) to buy up mortgage-backed securities, but “would instead be used in a broader campaign to bolster the financial markets and, in turn, make loans more accessible for creditworthy borrowers seeking car loans, student loans and other kinds of borrowing.” (See Paulson Says Treasury is Shifting Focus of Bailout.)

That’s great! But, wasn’t that the intent of the bailout in the first place? To free up capital for borrowers?

As the NYT article doesn’t get into details on exactly how the Treasury Department is going to “make loans more accessible,” (as, clearly, the whole mortgage-backed securities thing isn’t going to work) we aren’t really sure what the plan is for the cash.

SO! Since we don’t know, and it appears that the Treasury Department doesn’t really know, why don’t you tell them what they should do?

What would you do with $700 billion dollars?

Let’s hear it – we’re curious.

Have you ever had the feeling that you should be worrying about something, but you don’t remember what it is?

We think Wall Street was feeling that during the last few days and, unfortunately, today the light went on.

Oh, yeah. The economy.

While the election hoopla had thankfully given Wall Street and Main Street a brief respite from their constant fingernail nibbling, we suppose it was inevitable that they would eventually remember to start worrying again.

But does it really have to be that way? Do we really have to return to the ambiguous, dark outlook on the future?

No – not really.

The fact of the matter is: Change is coming. Now, we are not being political here (and yes, we are well aware that the word “change” will now forever be associated with the 44th president’s campaign to the White House), we’re talking about real change – no quotation marks.

Kiplinger succinctly addressed the top 10 priorities of our new president-elect, Barack Obama, and the tasks addressed are not quite as simple as the pithy list they reside on. Among Obama’s priorities will be calming of the economic markets, clear plans of action in Iraq and Afghanistan and environmental regulation (see Obama’s 10 Big Challenges).

But here’s a secret: If everyone else is running around, confused about what to do with an ambivalent future, that means that you can give yourself an advantage. You can choose to be sure.

Yup. That’s right. You have a choice.

Just as Obama has a choice as to how he will handle the challenges that lay ahead, you have a choice about how you wish to pursue your economic goals. Seth Godin recognized this unique opportunity in a recent blog posting (see Looking for a Reason to Hide). He believes that this uncertainty leaves room for immeasurable opportunity. “If I wasn't already running my own business, today is the day I'd start one,” he writes.

So, when you see the Dow drop 500 points after election day and you hear about more companies being “prudent” or “conservative,” remember that poem you read in high school:

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth.

Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same.

And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I--
I took the one less traveled by,
And that has made all the difference.

-- Robert Frost
(1916)

In the spirit of the holiday, we decided to highlight the ghoulish businesses that some of our clients considered.

When they tell you that there is a franchise for just about every business concept out there … they aren’t yanking your chain!

In August, NuWire Investor highlighted the five most unique franchises they could find (see Franchises for the Eccentric Entrepreneur). Guess what number one was?

1-800-AUTOPSY.

Yes, really. 1-800-AUTOPSY. According to NuWire:

“This franchise is exactly what it sounds like it is: a stand-alone service that performs autopsies. The company was founded by Vidal Herrera in 1988 and began as a one-man operation (no pun intended). 1-800-AUTOPSY franchises offer a variety of services, including toxicology and post-mortem DNA analysis, tissue procurement and, of course, autopsies. Clients include families who want private autopsies performed on deceased loved ones, malpractice lawyers seeking evidence for a trial and medical examiners, pathologists, and schools who need extra assistance."

If a private enterprise is more your style, you could always purchase a lot of land and open your own cemetery. With our ageing population, finding a desirable plot to spend the rest of your afterlife could be as difficult as finding a rent-controlled apartment in New York City (or so we hear). Additionally, there is always the opportunity to expand your services – casket sales, mortuary services and funeral services are all viable add-ons for this ground-level (or under) enterprise.

Interested in learning more? Check out another NuWire gem, Cemeteries: a Grave Business.

If real dead bodies aren’t really your thing, you can always get into the Halloween business. Like any other holiday, Halloween is a potential money-maker. One of Guidant’s existing 401(k) Small Business Financing clients used his skills as a professional ghost hunter to start a business in the Halloween industry (known to industry-insiders as the “fright” industry). He is currently planning a Halloween Expo for 2010 that will include all kinds of frightful vendors and even a zombie walk!

We hope you and your family have a safe and happy Halloween – and remember, it doesn’t have to end! At least not if you have a 1-800-AUTOPSY franchise!

It’s amazing the things you can make money from. For instance, have you ever felt like breaking something?

The Dow just closed down 733 points, the race to the Whitehouse has graduated from a friendly game of peewee football to a full-fledged rugby match (complete with mudslinging), and the Cubs’ World Series hopes have been dashed yet again.

How about now? Ready to fling that antique vase or ceramic chip-and-dip across the room? Well, maybe your 401(k) could benefit from your (and everyone else’s) rage.

In a recent post by TheBrinkTank, writer Trenton Flock explores Sarah’s Smash Shack, an innovative new business in San Diego where patrons can buy a box of smashables for $10-45 to do with what they will (hint: there’s a stainless steel wall in the establishment).

The fact of the matter is that, although things look bleak in the securities market, you don’t have to invest your money there.

You don’t have to invest your money there.

The stock market has many benefits and each investor should work with their own professionals to determine what the best investment strategy is, but a little diversity never hurt anybody (well, unless that diversification involves an even more destructive enterprise than Sarah’s Smash Shack – but we won’t go there).

We are sure that many of our clients are actually profiting from the economic downturn. While we don’t advocate it, the recent drop in stock values has led many investors to the bottle – something that has got to make Guidant client Andy Alberts, owner of Touchdowns Sports Bar, happy.

Furthermore, the drop in housing values and subsequent hike in rent has made many Guidant self-directed IRA clients a profitable return on their rental properties.

People have some pretty amazing ideas – and even more people will pay for some pretty amazing (and amazingly random) things. What are you doing to deal with this nail-biter economy? Maybe it could be the profitable investment that your IRA is missing!

Historical wisdom has it that now is the time to bunker down and wait for the economic storm to blow over. But a new article in BusinessWeek (see Starting a Business in a Downturn) points out that if you’re willing to put on your galoshes and grab a strong umbrella, you may be among the first to see the rainbow through the raindrops.

It is true that any business starting up right now has some unique challenges to face. But, surprisingly, starting a business now has some particularly appealing advantages, too.

According to Peter Justin of MyBizHomepage.com, entrepreneurs who won’t let a little rain bother them may find that economic showers bring financial flowers (okay, dorky, we know).

Some of the advantages of starting a business now are:

• Inexpensive real estate
• Good employees looking for work
• Less competitive market
• More media coverage for new businesses

“It’s always a matter of perspective,” Justin told BusinessWeek. “There’s always a way to prosper during a downturn … We’re Americans. Entrepreneurship is in our DNA.”

Worried about the financing you’ll need for your business? Give us a call! We have several financing options available to help you get your start. Plus, we’re in Seattle – we never let a little rain ruin our fun!

Monday, Jim Cramer, CNBC’s host of “Mad Money” shocked investors by stating he saw the potential for the market to pull back another 20%. In an interview with Ann Curry, Cramer expressed concern about being overly invested in the stock market. “Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now.” He also warned that Europe is right behinds us.

Last Friday, the government’s $700 billion bailout plan passed which increased the insured rate on bank deposits from $100,000 to $250,000. Cramer was quoted as saying “Your money is safe” but he also warned that stock market investors may not be so lucky.

To be fair, he also suggested that if you have the assets and stomach to ride out the ups and downs for the next 5-years, you may not want to pull out.

All this came from a guy who is best known for helping people to invest in stocks. There is no doubt it’s a scary time. Is Jim Cramer right? The truth be told – Jim knows as little as anyone else what the future holds.

Over the past few weeks Guidant has been flooded with calls from clients and prospective clients asking what we think about this crisis, trying to move money quickly and asking for help. I will refrain from giving any advice but I will share some thoughts that may resonate with you.

For over five years we have talked about the benefits one can enjoy through a self-directed IRA – most importantly, true diversification. Markets are cyclical – they all are. It’s how you perform and react under pressure that defines the level of success you will realize. Right now the stock market is in crisis. The real estate market has its challenges. There is concern about the dollar. Fears of inflation. Rumors of more wars. No doubt – it’s a scary time.

Is it possible that there is unique opportunity as well?

Right now credit is tight. Small businesses, homeowners and investors need access to cash. Credit runs this economy. Could self-directed IRA holders originate loans from their retirement plans to these people for income and profit? Absolutely. Are their people in distressed situations that need to avoid a foreclosure or possible bankruptcy? Yes. Are tax defaults creating opportunity for tax deed or tax lien investments? No doubt. Are there foreign and domestic real estate opportunities that are not affected by the US economic conditions? And will rents go higher when it’s more difficult to apply for a loan? They always do.

I’m not advocating that you need to rush in and buy. I’m always concerned that people make healthy investments. If you believe there is opportunity in the stock market – great. If you feel that real estate has unique opportunities and you prefer secured assets over paper – perfect. It really is up to you. The reality is that unlike an account with a traditional financial services company, a self-directed IRA will provide you the choice as to when, where and how that is invested.

My heart goes out to those that feel panicked today. It is challenging time but I believe in this Country and resiliency. I believe in YOU.

The Wall Street Journal published an article today about the growing trend in self-directed investments for retirement accounts (see When Stocks Tank, Some Investors Stampede to Alpacas and Turn to Drink). The reporter, Jennifer Levitz, explores some of the unique investments people have directed their IRAs into - believing that these investments, although outside the box, will provide more stable and lucrative returns.

Tim Boykin, a Guidant client since July, was highlighted in the article for his self-directed investment into a construction company in Lima, Peru, which is currently erecting condominiums. Tim's sentiment toward alternative investments is very similar to that of the prospects we have been getting calls from over the last few days.

"I can see pictures of the land. I can see steel. I can see people working," he told Ms. Levitz. "When I put my money in a fund, I see a big list of things that don't sound good."

As the article points out, many investors are now wary of the stock market. The reality is sinking in that you don't really know what you're investing in when you buy a bond or invest in a fund. Conversely, real estate, an alpaca farm or even a parking space are investments that epitomise the old adage "what you see is what you get."

It is true, as the article mentions, that panic can lead to unwise decisions. And unfortunately some questionable investments are being hawked at wary IRA holders. Everyone should always think very carefully about what they invest their money into but, as the article points out, self-directed IRAs open up a whole new world of (sometimes more stable) options.

The reality is hard to face: The country has been hit by a severe economic calamity. We know this not only by depressing media reports but by the number of calls we’re receiving from worried clients. Please be assured that we are here to support you in any way we can during this crisis.

Even though credit is extremely tight and the financial stability of some of our favorite companies and institutions is “iffy,” Guidant offers you options that could be particularly useful at this time.

To help you face the crisis armed with good and reliable information, below are some of the most common questions we are hearing from clients, along with our answers to them. As always, we are available at any time to aid you in understanding your opportunities (and challenges) and to offer insights that will help you weather this economic storm.

Q. I was getting ready to roll my funds into one of your products, but now my account isn’t worth as much. What should I do?
A. Many people are simply choosing to wait until the turbulence subsides before making any moves with their funds. This, however, begs the question: Is the potential loss or gain of staying put greater than the potential gain of rolling your funds into a self-directed vehicle? Although this is a question that only you can answer, here are two important factors to consider:

• Through a Guidant self-directed IRA LLC, you can take advantage now of investments like foreclosures, property auctions, and hard-money loans. These have a reputation for being solid investments during recessionary times. Every day we hear the stories of clients who are growing their retirement accounts by purchasing foreclosures at incredible prices or assisting friends and small businesses with personal loans.


• The matter of personal control is another important consideration. No matter how the markets are behaving, if you don’t choose your own investments, then those choices are made by others – oftentimes by firms or institutions that have little or no concern for your financial welfare. Whether you use a self-directed structure to invest your retirement funds into alternative investments or into a small business you own and run yourself, the success or failure rests completely with you.

Q. Should I start a small business at this time?
A. If your goal is to own a business, you may find that now may actually be the best time to use your funds to buy your own business via our 401(k) small business financing solution. Predictions are that credit will be significantly harder (maybe even impossible) to secure in the near future. SBA loans, home equity lines of credit, unsecured loans, bridge loans – all debt-related products – may soon be unobtainable. Consequently, if you are planning to use your retirement funds as a down payment on a loan, those funds may go farther now rather than later. Additionally, we are hearing encouraging reports of Guidant clients who are buying existing businesses at greatly reduced prices from overextended owners eager to sell their enterprises.

Q. I already own a small business I purchased through your 401(k) financing vehicle, so how will I be affected?
A. By using Guidant’s 401(k) small business financing plan to buy/invest in your business, you have already given yourself extra financial security. By using your own funds to buy the business, you will not have to worry about a lender closing your line of credit, raising your interest rates or demanding early payment. This also means that (in the worst scenario) if your business fails, your personal credit will not be affected.

Q. I’m in the midst of setting up my Guidant rollover accounts, but my bank looks like it’s going under. Should I roll my funds into a temporary IRA?
A. If this is your situation, call us immediately. Rolling your funds into a non-Guidant IRA/401(k) could delay your funding process by several days or weeks because we would need to begin the setup process over again. We will work with you to find a solution that will serve you and your business goals best.

401(k) small business financing made the Small Business section of the New York Times today (see Betting Your Retirement on Your Startup). Although we do think the title is a bit misleading (you are always betting something on your startup - whether it is your life savings, your home or your familial connections), we do see this article as a great resource for anyone looking to start or purchase a business.

And prominantly featured in this story is Guidant's own client George Richards, owner of Darwin Liquors with his wife Marlies. George has been a Guidant client since 2006 and is still happy he decided to use retirement money to finance his own business. As he told the New York Times, "I would bet on myself and my abilities any day,” he said. “I don’t know who I’d rather bet on than me.”

We know that right now is perhaps the most unstable time in the history of the American economy. With that comes uncertainty about all things financial. The New York Times recongnized that and sought us out for examples of people who used our 401(k) small business financing solutions to invest in themselves (and not the CRAZY stock market) and to side-step the volitile lending environment (at least partly).

Even though you may be seriously reconsidering your entrepreneurial goals, know that Guidant has options for you that could not only provide you with the capital you need for your business, but that could provide you with a way to invest in something you have control over - your own business.