TES Insights
Financial Wellness and Funding Your Franchise
Financial wellness is defined by having financial security and financial freedom of choice, in the present and when considering the future. It is about feeling confident and in control of your financial future. At The Entrepreneur’s Source® (TES), we believe one pathway to achieving financial wellness is through franchise business ownership. Buying a franchise provides an opportunity to own and operate your own business, build equity, and potentially earn a higher income than you would as an employee. Franchises come with established systems, processes, and support from the franchisor, which can help minimize the risk and increase the chances of success.
We are dedicated to providing our clients with the resources and support they need to make informed decisions about their finances. One of the ways we have done this is by teaming up with Guidant Financial to help guide you through what can be a daunting task of funding your small business. They offer funding options and services that cover all stages of business and franchise ownership. Ralph Nilssen, Director of Sales with Guidant Financial says, “Figuring out how to fund your small business can be a challenge because people aren’t aware of all the options that exist. That’s where we come in. We assess your current financial situation, understand your goals and help you find the best path to get there.”
Even before you begin your exploration into franchise opportunities it is important to start preparing. Ralph says, “In addition to maintaining a good credit score and having collateral for your loan, one of the most important things you can do to prepare for this journey is to have a conversation with your spouse or partner and make sure you are both on the same page.”
From there Ralph suggests to begin looking into funding as soon as possible. “Look at your assets, collateral, credit score, capital on hand, all the things that matter to the bank. This will help you have a clearer picture of what you can afford. Guidant Financial can help you come up with a funding strategy that will best fit your situation and goals,” adding, “Once you get closer to making your decision, the faster things accelerate so having done this groundwork will benefit you later in the process,” says Ralph.
One of the primary funding sources TES clients utilize is ROBS, or the Rollover to Business Startup strategy. “Interest rates are high, the stock market has gone nowhere recently, and retirement savings have taken a hit,” says Ralph, “Starting a business and investing your retirement funds into the stock of your business is a great way to jump start your retirement investments. As the value of your business goes up so does the value of your stock. Essentially you are taking control of your retirement and betting on yourself. It also mitigates your loss because you only owe yourself the money, not the bank. And best of all, the money is tax and penalty-free. It’s a great option to use in your funding strategy.”
Another funding option available is Small Business Administration loans. “SBA loans are a wonderful tool,” explains Ralph, “It allows us to access capital that wouldn’t otherwise be available to us. They are a lifeline to small business owners.” SBA loans are usually ten-year loans with a variable rate of prime plus 2.75%. The variable rate resets quarterly and you can finance up to $5 million. “Many people use ROBS in conjunction with SBA loan to come up with the required down payment of 10%-30%. There are various strategies, and it is important to work with a lending partner who understands franchising and what strategies to employ to help you reach your investing goals,” says Ralph,” And if you are a veteran, you can be eligible for a discount with an SBA loan. While it doesn’t relax qualifications for the loan, many fees are waived.”
Ralph notes there is a tremendous amount of paperwork associated with these loans. “I have never known an entrepreneur go into business to do more paperwork, but there is a ton of it when you are a business owner. One of the benefits of working with Guidant Financial is that we help you with a lot of that financial paperwork. We have invested internally to create an ecosystem to support the entrepreneur through every phase of business ownership, making their job easier.”
Guidant Financial is more than just funding. In addition to helping guide you through the funding process and maze of red tape, they offer comprehensive and ongoing services that help you through the life of your business to help you maintain and grow long after you’re funded. If you are looking for ways to start off your journey towards financial wellness and independence, Ralph suggests starting with the online resources on the Guidant Financial website. “Everything you need to learn how to fund your business is there. Check out our Learning Center. We offer everything from complete guides to calculators.”
One of the biggest problems Ralphs sees new business owners make is not having enough money. “No one has gone out of business for being overcapitalized. Make sure you have enough capital to have a cushion when getting started,” he explains. “Post lending liquidity is important. Banks want to make sure you are solvent and will require that they have about 10% of loan amount held back as cash. So, plan accordingly.”
Even with high interest rates and economic uncertainty, Ralph says this shouldn’t stop people from considering business ownership. “It’s never the wrong time to go into business for yourself. Through all the ups and downs of the economy and world events, franchises are in business,” explains Ralph, “Being a business owner is making the decision to believe in yourself and getting started and not knowing what is going to happen.”
Building a business with the support of a franchisor is a solid pathway to financial wellness. And with the right funding options in place, our clients are able to hit the ground running and achieve success on their own terms. Starting a business is easier than you think when you have the right people to guide you and that is why we work hard to provide you with all the resources you need, along with a funding partner that offers you comprehensive solutions to all your funding needs.
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