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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:

Banking On Preparedness/Be Prepared: Banking Basics For Tough Times »

By Steve LeFever

In these challenging times, it pays to be as prepared as possible. Here are some suggestions from the banker's side of the desk that will help increase your chances of success when it comes time to renew or renegotiate your current loan structure.
First, it's no secret that the banking industry has taken a hit over the past 48 months. Bank performance (or lack thereof) has been front-page news for some time. Here's an overview of what's happened, where we are, and what it means to you.
A generally robust economy since 2003 lulled banks into more of a "sales" mentality and less of a "credit analysis" mentality. As a result, credit standards were lowered, documentation pared down, and the loan decision process watered down. Not by every bank, mind you, but by enough...

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Funding Growth: Deciding Whether To Use Debt Or Equity To Fund Your Growing Enterprise »

By Jenny Q. Ta

Loan financing and equity investment are two common methods of funding a new business start-up, assuming you do not have the capital on your own. Each strategy has advantages. The right choice depends on your short-term and long-term financial goals and personal preferences.
Debt financing is the better choice when you prefer to retain control of your operation, and you do not mind the tradeoff of greater risk for higher earning potential. However, if you would rather share the risk, mitigate debt obligations and bring in top-level experts, invite equity investors.
Ultimately, it will be up to you depending on your own situation.  As a seasoned entrepreneur, author, and CEO of Sqeeqee.com, the first-of-its-kind social "networthing" site, I have identified the following things to consider when making your decision...

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Retirement Planning: Knowing When It's OK To Play It Safe And When It's Not »

Multi-Unit Franchisee

As people get closer to the age when they hope to retire, traditional wisdom calls for moving into more conservative - safer - investments, such as Treasury bonds and many fixed-income mutual funds.
"The problem is, what is 'safe' for one person may not be 'safe' for another, given the amount of money in their portfolios, how their investments are allocated, and what their retirement lifestyle goals are," says financial advisor Haitham "Hutch" Ashoo, co-founder with advisor Chris Snyder of Pillar Wealth Management, LLC.
"Some investors believe Certificates of Deposit and U.S. Treasury bonds are safe investments because of their backing, but the income they generate is so low, they may not be safe in terms of producing the income you need for 30 years of retirement...

Feature Story:

7 Tips For Managing Your Banker »

By Steve LeFever

Banking basics for tough times
In these challenging times, it pays to be as prepared as possible. Here are some suggestions from the banker's side of the desk that will help increase your chances of success when it comes time to renew or renegotiate your current loan structure.
First, it's no secret that the banking industry has taken a hit over the past 48 months. Bank performance (or lack thereof) has been front-page news for some time. Here's an overview of what's happened, where we are, and what it means to you.
A generally robust economy since 2003 lulled banks into more of a "sales" mentality and less of a "credit analysis" mentality. As a result, credit standards were lowered, documentation pared down, and the loan decision process watered down...

Feature Story:

Implementing The Affordable Care Act »

By Benjamin Geyerhahn

What franchisees need to know about the ACA rollout

The Affordable Care Act (ACA) has introduced widespread changes to the healthcare landscape. It has increased the availability, quality, and affordability of health insurance for the general population, regardless of age, gender, or pre-existing medical conditions.
The ACA has also altered the guidelines for employer-sponsored insurance, which has thrown many small- and mid-sized businesses for a loop.
In 2015, the ACA employer mandate will require employers with 50 or more full-time employees (defined as an average of 30-plus hours per week) to offer a minimum coverage health plan at affordable rates (less than 9.5 percent of an employee's household income).
Additionally, companies with 200 or more employees are required to automatically enroll employees in employer-sponsored insurance with a waiting period of no more than 90 days...

Feature Story:

Fair Wage War: IFA Takes Its Minimum Wage Battle To Chicago »

Multi-Unit Franchisee

Fast on the heels of its recent legal challenge to a new minimum wage law passed in Seattle, the International Franchise Association (IFA) has now set its sights on the city of Chicago.
Steve Caldeira, president and CEO of the IFA, wrote a letter to the Chicago City Council and Mayor Rahm Emanuel last week urging them to remove a provision in a bill to raise the minimum wage that would discriminate against franchisees.
Caldeira and the IFA have been clear in their assertion that franchisees are locally owned, small businesses and not large, national businesses as the legislation suggests. Giving non-franchise small businesses extra time to increase their wages, but forcing franchisees to raise their wages along with large companies is unfair and unconstitutional, says Caldeira...

Feature Story:

Hunting For Funding: How Alternative Lending Can Boost Your Business »

By David Goldin

If you've had issues financing your franchise, you're not alone. Like any business owner, you need money to take care of everyday costs like paying property taxes, meeting payroll, or purchasing inventory and equipment. But what happens when you walk into a bank and are denied funding because of a low credit score or insufficient collateral?
This is a problem all too common for business owners these days. Following the recession of 2008-2010, government regulations forced banks and other lenders to significantly tighten their requirements. These restrictions effectively shut out many businesses from acquiring funding.
So what can franchisees do to receive the funding they want? The answer lies within alternative lending.
Since the financial crisis, alternative lending companies have begun to take the place of more traditional lending options...

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Emotional Investing: Keeping Your Emotions From Dictating Your Financial Future »

Multi-Unit Franchisee

You've probably heard of emotional eating, but financial advisor Matthew T. Shafer says emotional investing is a problem that needs to be recognized society-wide, especially since the economy has been in such sharp focus this past half decade.
"The words of an experienced mentor have proven to be spot on throughout my career; he said that no matter how smart they are, most people don't know what to do with their money," says Shafer, named one of the top 1,000 financial advisors in the U.S. by Barron's Magazine.
"It wasn't that people were ignorant, and it wasn't that they were incapable of analyzing investment opportunities. The challenge occurred when emotion clouded their judgment."
People become too optimistic and enthusiastic when their investments are on the rise, and too fearful and skeptical when they see a decline, he says...

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The Profit Mastery Road Map: Improve Your Profitability And Cash Flow »

By Steve LeFever

Mysteries are solved when we use clues to find the culprits behind the crime. Financially speaking, when the crime results in the untimely demise of a business, we often see three usual suspects: low cash, low gross margin, and low net margin.
But low cash and low margins are caused by something. The diagram presents a big picture overview, but also can lead us through a clue-by-clue, cause-and-effect deductive analysis designed to pinpoint potential financial culprits. When combined with industry benchmarks, this diagram can become your personal roadmap to success.
First, how to read it. Between any two boxes, in the direction of the arrows, insert the word "causes." In other words, "low cash" causes "high borrowing." Now, if you work against the arrows, include the words "is caused by" between the two boxes...

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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...

Feature Story:

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...

Feature Story:

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...

Feature Story:

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...

Feature Story:

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...

Feature Story:

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...

Feature Story:

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...

Feature Story:

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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