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Finance

Access to capital is the lifeblood of franchise growth. Restricted lending policies of the past few years continue to be a challenge for franchisees, who need access to capital, whether to survive or expand. Lenders today are searching for solid franchisee organizations to do business with, but what exactly are they looking for? Learn what bankers, franchise lenders, private equity firms, and other capital sources want to see in a borrower - and make sure you are managing your organization in ways that make you attractive to lenders.

Learn more about the franchise finance and capital marketplace, and what factors are affecting your chances to borrow the capital you need to grow.

Feature Story:

Retirement Advice: Expert And Software Creator Shares Tips For Calculating Retirement Withdrawal »

Multi-Unit Franchisee

"Who has my back in retirement?" That's the question pre-retirees and retirees want answered when it's all said and done, says veteran financial planner David Zolt.
Baby boomers have been retiring in droves in recent years, and will continue to do so throughout the next decade - 10,000 of them a day, the Pew Research Center estimates. Unfortunately, the average boomer is about $500,000 short on their savings, according to a recent survey by TD Ameritrade.
We have already entered an unprecedented moment in retirement history; never have so many people, with such variability in financial wealth, retired at once, says Zolt.
"Clients want to know when they can retire, how much they can withdraw from their savings, and how confident they can be that they won't outlive their money," says Zolt, who created retirement income planning software for financial advisors...

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Ratios Rule!: But Do You Know Which Financial Ratios To Watch? »

By Steve LeFever

In earlier articles, I have discussed your two key yardsticks of financial performance: the balance sheet and the income statement. Taken together, they represent as complete a financial picture of your company as it's possible to get.
Now, it's a common practice (and a sensible one) for businesses to have at least two sets of financial statements (or maybe three): one for the IRS (with the tax rules and regulations making net profit look as small as possible); one for your banker (adjusted to present the most glowing picture of the business); and one for yourself. But remember you can't fool all of the people all of the time. And the worst possible person to fool is yourself. You need clear, concise, decision-relevant information.
Incidentally, two or three sets of statements does not imply more two or more sets of books (the general journal and the general ledger, which report all financial events that occur in the business)...

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Your Own Worst Enemy?: 5 Ways We Sabotage Our Financial Affairs »

By Carol Schleif

Investing wisely does not come naturally to most of us.
Many of the skills that support ultimate financial management success run counter to how our natural wiring prompts us to behave. Sound long-term investment decisions often require the ability to make choices that differ from near-term "prevailing wisdom." But we are social creatures, most comfortable when we fit in.
We crave predictability, but the markets are unpredictable and random. We infer short-term "patterns" reinforced by what we just read online, but don't recognize long-term sea changes that evolve with subtle nuances. We love to share stories, but often find it challenging to grasp complex financial and mathematical relationships. And we are irresistibly drawn to what is happening in the here and now, often refusing to focus on what may or may not come to pass some time in the distant future...

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Retiring To Grow: Benetrends CEO On How Franchisees Can Finance Growth »

Multi-Unit Franchisee

Retiring To Grow: Benetrends CEO on How Franchisees can Finance Growth

It's not uncommon for entrepreneurs and business operators today to tap into their 401k or other retirement accounts to seed growth and expansion. This holds true in franchising as well. If you're a multi-unit franchisee considering how you might use your 401(k) to expand your operation you probably have questions.
We asked Rocco Fiorentino, CEO of Benetrends, to explain how the process works, the pros and cons, and legal implications. Benetrends has more than 25 years of franchise industry experience helping more than 10,000 entrepreneurs to fund their business over the last 30 years. Fiorentino shares the most common questions franchisees have asked about financing growth...

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Stick To Your Principles!: 9 Tips For Maintaining Balance In Your Investments »

By Carol Schleif

A few months ago, the Wall Street Journal ran a front-page story detailing how it's legal for nongovernmental providers of key data series, such as the University of Michigan Consumer Sentiment poll or the Purchasing Managers' Index, to release customer research reports early to those willing to pay for it.
Research reports can move markets, and those who get the business intelligence in advance can make millions from receiving this information early. What's striking is that the early information is received seconds before public release--not minutes, hours, or days--and they're still profiting mightily.
This phenomenon is not unlike what's happened in the investment business over the past several decades. Daily trading activity today seems to be dominated by those with hundreds of billions in assets under management, computer-based trading systems, and media-induced "noise"; even as the average time between an asset's purchase and sale has shrunk from a couple of years to a couple of months...

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Cash Flow: The Time To Manage Better Is Now »

By Steve LeFever

Check your business for these 20 danger signals!
To most financial advisors, convincing their clients of the absolute necessity of maintaining a sound financial system and cash controls—and the need to consistently review, evaluate, and plan—is about as easy as selling first aid. Everyone knows it’s there, but we can always “do it later.” Besides, “It won’t happen to me.” Or, “So what? I don’t have any control over all that stuff.”
You’re right, you don’t. However, what does this mean for individual businesses? The loud and clear message here is “manage better.” When there’s less room for error, you must do a better job.
As business owners, we have faced the ups and downs of economic cycles—and probably always will...

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Beware Of IRAs And Annuities »

Multi-Unit Franchisee

Experts share tips and warnings for investors

IRAs and annuities are growing in popularity as retirement investment options, according to recent surveys, but three financial experts warn they can have serious disadvantages.
"Last year, four out of 10 U.S. households had IRA accounts-that's up from 17 percent two decades ago," says CPA Jim Kohles, chairman of RINA accountancy corporation, (www.rina.com), citing an ICI Research survey. "But they can be bad for beneficiaries if you have a very large account."
Investment in annuities, touted as offering a potential guaranteed income stream, also continue to grow with sales up 10 percent in the second quarter of this year.
"Annuities have several dark sides, both during your lifetime and for your beneficiaries," says wealth management advisor Haitham "Hutch" Ashoo, CEO of Pillar Wealth Management, (www...

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Integrity And Rewards: Former Partner Shares Life Lessons From The Rise And Fall Of Arthur Andersen »

Multi-Unit Franchisee

Larry Katzen made partner at Arthur Andersen by the time he was 30. The "Big 8" accounting firm had a long reputation for innovation and integrity. The firm continued to soar, with an emphasis on continuing education for employees and meticulous attention to detail, it was one of the most trusted accounting firms in the industry.
Katzen enjoyed a fast-paced rise through the ranks, all the while learning, traveling, and parenting quadruplets with his wife and college sweetheart, Susan. It all came crashing down in 2002 when the company was indicted based on false accusations having to do with the scandals at Enron. With the firm's survival in question, Katzen moved quickly to encourage employees to carefully complete all remaining assignments...

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Can Money Buy Happiness?: 3 Tips For Changing Your Attitude Towards Wealth  »

By Doug Vermeeren

Although we live in the richest and most advanced society the world has ever known, many of us say we need more money in order to be happy, notes best-selling author Doug Vermeeren.
"Even some of those in the top percentile of earners often feel like they don't have enough money," says Vermeeren, an international speaker who consults with celebrities, business executives, and professional athletes.
"The math is simple: More money does not equal more happiness. It's our attitude toward money, not the amount, that influences our happiness the most."
Happiness researchers Elizabeth Dunn and Michael Norton, professors at the Harvard Business School, recently published research indicating that it's not money that makes people happy, nor the things people buy with it...

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Get It In Writing: Do You Have A Written Income Plan For Retirement? »

Multi-Unit Franchisee

"Age 85 is a bad time to go broke," says retirement planner Jeff Gorton. Personal savings, various investments and, yes, Social Security may prove to be short of what you'd expected.
"Budgeting how you spend money before retirement can often be a misleading measurement of how you'll actually spend it during retirement," says Gorton, a veteran Certified Public Accountant and Certified Financial Planner, and head of Gorton Financial Group (www.gortonfinancialgroup.com).
"Spending 40 hours a week at work not only earns you a paycheck, it also keeps you from spending money on more vacations, matinee screenings at the movie theater, extra trips to the mall, or shopping online. You need to be exceedingly realistic in your planning, and the five years before retirement are actually the most crucial in solidifying post-employment stability...

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Don't Loosen That Grip: Resist The Urge To Relax Financial Controls »

By John Tschohl

The economy is improving, bringing with it a sense of optimism. That optimism, however, can be dangerous. All too often, it brings a tendency to breathe a sigh of relief and loosen your grip on the financial reins.
While it might be human nature to relax when things get better, it is not good business practice. The measures you put into place to control costs and reduce waste during the past few years helped you to survive; it would be foolish to discontinue them now.
While you certainly deserve to celebrate your survival of the recent economic downturn, if you want to continue that celebration into the future, it's imperative that you maintain control of your finances. Competition at every level--from price to product to service--continues to be stiff, bringing with it the necessity to keep a watchful eye on spending...

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Are You Building For Success Or Failure? »

By Steve Lefever

90 percent of SMBs fail from poor financial management

You say you want to own a business and make your own decisions? You say that owning a business is one of the few remaining ways to build net worth today? You say that building a business is one of the greatest personal challenges you can face? That success makes the clearest possible statement about your perseverance, ingenuity, and skill?
Well, ladies and gentlemen, you're right. And you're right no matter how you became an independent business owner. You probably didn't volunteer for the job. Perhaps you married into it, or inherited it, or got fired from another job and just fell into it. No matter. There it was, and you did it.
It wasn't easy, either. I know...

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Hidden Fees In Your 401(k)? »

Multi-Unit Franchisee

Financial advisor explains 3 fees?to look for under new rule

You wouldn't authorize a company to dive into your checking account at will to withdraw money for undisclosed "services rendered"? That would be crazy.
"But that's what many people are unwittingly doing with the retirement plans," says financial advisor Philip Rousseaux, a member of the Million Dollar Round Table association's Top of the Table forum for the world's most successful financial services professionals.
"While a new law now requires disclosure of previously hidden fees applied to 401(k) plans, it's up to you, or your financial advisor, to find and review that information and determine whether the fees are reasonable," says Rousseaux, founder and president of Everest Wealth Management, Inc...

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There's A New Environment Dawning: Time To Be Nimble As Markets Continue To Change »

By Carol Schleif

There's an old adage on Wall Street: When someone says, "It's different this time," run as far and as fast as you can.
After surveying today's overarching trends, however, an important tipping point seems close at hand; one that tees up an investing environment vastly different than the one we've known for decades. Survival and success will require different thought processes, strategies, and investment tactics than those we've relied on before.
When I started my investment career in the 1980s, the marginal income tax rates for top earners had fallen from 70 percent to 50 percent, and a mere 5 percent of the population owned equities. Bond yields stood in the upper teens/low 20s, and scores of wizened industry veterans declared they'd wait to invest until dividend yields exceeded bond yields...

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A Clean Transfer: Key Considerations For Succession Planning »

By Gerald Marks

A franchise is not an ordinary business asset. You don't really "own" a franchise outright as you do a traditional business. What you own is a right or license from the franchisor to operate the business under the franchisor's name for a period of time (the franchise term). More important, when retirement, disability, or death requires a sale of the franchise, you cannot change ownership unless you meet the franchisor's requirements.
This difference becomes even more complicated when it involves multi-unit franchisees, who may be area developers or subfranchisors and who may have more than one unit in two or more unaffiliated brands or sectors (think donut or burger franchisees who are also hotel and convenience store franchisees). Not only are there different franchise terms for each of the franchises, there may be different franchisor requirements in the franchise and area development agreements controlling transfer upon retirement, disability, or death of the managing member or members of the multi-unit franchisee...

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Know Thy Bookkeeper: 14 Red Flags For Preventing Fraud »

By Steve LeFever

I've often heard this comment by franchisees: "I keep my own books to save money, but I really hate the process!" Just as often, I've made the following response: "Business owners/managers should do what they do best; focus on making it and selling it."
If you really do hate bookkeeping (and I know I do), there's a predictable outcome: at 10 p.m. on the last day of the month, you'll still have 3 or 4 items you're not sure where to put--so you'll just "shove them in somewhere."
After a few months, your books and records will be riddled with inaccuracies. Since all of my previous articles have focused on using the powerful tools of Profit Mastery to make better, more strategic financial decisions, the lack of accurate financial information will render these financial tools useless because the data you're using is not accurate...

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Are You Financially Literate? »

By Steve Lefever

Review financial statements like a real pro--even if you're not

In our line of work, we see a lot of ugly financial statements. Not ugly in the sense that the business is performing poorly (well, we see some of those too!), but ugly in the sense that they contain glaring bookkeeping errors. We suspect there are several reasons for this. One is the proliferation of software that makes "doing the books yourself" attainable for almost anyone with basic computer skills. Answer a few interactive questions, choose from the drop-down list of industry choices, and you're off and running with your very own profit-and-loss statement. Press a few more buttons, and voilà, instant balance sheet!
The other reason is that many business owners consult accounting professionals only at year-end to figure out how to reduce taxes...

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Scaling The "Wall Of Worry": Taking Stock Of 2013 To Strengthen Your Portfolio »

By Carol Schleif

October marked an infamous anniversary on Wall Street. Twenty-five years ago, the unthinkable happened when the Dow Jones Industrial Average dropped a record 106 points to end the trading week at just under 2500. The following Monday, now known as "Black Monday," the index shed an additional 508 points in one session. While the day's decline was widely blamed on a newfangled process called "portfolio insurance," it didn't help investor psyches that U.S warships started shelling an Iranian oil platform in the Persian Gulf that very same day.
At the time, given the multitude of concerning events, many high-profile economists, strategists, and media outlets immediately began predicting a global recession and bear market. Interestingly, neither happened...

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2013: Year Of "Crisitunity": Opportunities Abound Amidst Ongoing Change »

By Carol Schleif

In an episode of "The Simpsons," Lisa tells her dad that the Chinese use the same word for both "crisis" and "opportunity"--to which Homer replies, "Yes! Crisitunity!" While many Chinese language experts dispute those prime-time linguistics, I think Homer is onto something.
From a macro standpoint, we're in the midst of massive change everywhere. Laws are being rewritten, regimes are being upended, new technologies are displacing the old, and societal norms reworked at a dizzying pace--much like the systemic shocks induced by such events as the invention of the printing press around 1440, or the driving of the Golden Spike in 1869 that connected West to East through the Transcontinental Railroad.
But in those changes as well as those we face today, opportunities abound...

Feature Story:

Capital Access: Charlie And Judy Divita Have A Second Career In Franchising »

Multi-Unit Franchisee

Charlie and Judy Divita operate six Firehouse Subs in the greater Columbia, S.C., area, including one nestled in the heart of the USC campus.
The couple is now knee-deep into their second career and is making the most of it. Charlie, 69, is a former university full professor and consultant, and Judy, 65, boasts a corporate background of organizational development, training, and human relations. Instead of relaxing into the world of retirement, the couple launched Divita Concepts Group in 2003, eager to put their skills to work as business owners in a way that would offer them more control of their future.
With projected 2012 revenue of $4.5 million, Judy and Charlie always look for novel ways to build business. “The franchise gives you the basic things to put you in business pretty quickly,” says Charlie...



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