For new and existing franchise owners, financial fitness should be top of mind. There are lots of available financing options, but not all of these options provide even footing to grow while staying financially fit. By Diane Rosenkrantz
For new and existing franchise owners, financial fitness should be top of mind. There are lots of available financing options, but not all of these options provide even footing to grow while staying financially fit.
To be financially fit, a business should have the money it needs to stay open, pay employees and suppliers, and build a long-term strategy for growth. Tactics such as making and sticking to a budget, reducing debt, building a cash reserve and tracking cash flow are just a few. But one strategy that many entrepreneurs don’t always consider comes into play at the very inception of the business: What financing method is used to fund the purchase/startup of the franchise.
How ROBS can keep you financially fit
Perhaps the biggest benefit of choosing a Rollover as a Business Startup (aka ROBS) is that it’s a form of debt-free funding. You can choose how much of your pre-tax retirement savings to invest into your franchise and you are able to access it quickly. It’s not a loan, so you won’t need to worry about including debt in your overhead or meeting a repayment deadline.
ROBS funds can also be used to pay salaries (employees’ and your own), equipment, supplies, property and more. You can put your money to work where you need it most, rather than go into debt to purchase your business’s location or get the startup supplies you require. This can free up a lot of cash each month that you can put into a cash reserve or invest back into the business. And, should more working capital be needed in the future, additional funds can be rolled over in the same manner again. ROBS has been around since the 1970s and is IRS-approved provided correct setup and compliance is maintained. At Tenet Financial Group, we follow the letter of law in plan design, installation and administration, and we don’t take any shortcuts in the process. With that, comes significant peace of mind.
For more small business tips, visit the Tenet Financial Group blog at tenetfinancialgroup.com/blog.
– Diane Rosenkrantz
Diane Rosenkrantz has been a Senior Consultant with Tenet Financial Group for more than a decade, specializing in 401(k) Rollovers, SBA Loans, Unsecured Lines of Credit and more. Her career includes 30+ years in consulting, customer service and the pension/insurance industries. Diane can be reached at diane@tenetfinancialgroup.com and 413-754-3298.