January 2007

Headlines: Employee to Entrepreneur Series – Choosing a Franchise, Use Your Home Team Advantage! | The Best Gift You Can Ever Buy For Yourself: A Business of Your Own! | Using Debt Leverage in Your IRA

Employee to Entrepreneur Series – Choosing a Franchise, Use Your Home Team Advantage!

By Jeff Levy

I normally have one or two speaking engagements a month where I talk with groups of people who are in career transition or just not happy at work and are considering self employment. Invariably, I ask the attendees what their spouse or significant other think about their pursuing self employment. The answers range from "my (spouse) is very conservative" to, "they support me 100% except when I spend money" or, "I will tell them later." My response is consistent. I tell them that now is a great time to share both of your goals, needs and objectives together. I am often surprised by the lack of communication between husbands and wives when it comes to career changes and choices. It is almost as if work is a life outside of family. It is time to bring the discussion back to your family to discuss your true objectives. Some use a coach as it will help facilitate the dialogue.

My message this month is to change the typical mindset on how career options are evaluated. I propose you meet with your spouse, talk about the current job market and why exploring self employment in a franchise model has some attractive elements. Talking does not mean making an immediate investment. Rather, it means that you can begin developing a set of criteria that you can use to evaluate options. The criteria must include your family goals, needs and expectations. Having your partner included as an active participant from the beginning is a wise approach. Even if you choose to pursue another job or stay in current position, refreshing your dream both in terms of financial security and life style is definitely a family project.

This is a win-win approach. If you were to choose a business option you most likely will find support at home as your choice will align and compliment goals you have developed together. If you identify your vision together, you will have the support you need to attain that goal. Let's call it the home team advantage.

Jeff Levy, owner/president of The Entrepreneur's Source, based in Seattle, Washington, works with individuals considering franchising as a career and businesses considering franchising as a growth strategy. For more information, he can be reached at 425-746-1950, JeffLTheESource@JALevy.com, or www.TheESource.com/JLevy

The Best Gift You Can Ever Buy For Yourself: A Business of Your Own!

By Richard Parker

It's amazing how we see an immediate increase in our business right after the December holidays and the day after every long weekend. The former may be many "New Year's Resolutioners" as I call them, and the latter is because most people dread the thought of going back to their job after an extended weekend.

If you have any desire to be in business for yourself, then now's the time to make your move! In fact, there has never been a better time to take that step. So this year, buy yourself the greatest gift of all – a business of your own!

Over the past year, I've met and spoken with thousands of people worldwide who have reached the point where they've said: "enough is enough!" Most hate their jobs. They are terribly uncertain about the future. They're tired of busting their butt with little or no thanks and they've finally realized that controlling their own destiny is what they truly want from their career.

The market itself for entrepreneurs is exploding, regardless of what the so-called "experts" may say about the economy. In prior times, when mass layoffs took place, displaced workers simply adopted the strategy of looking for another job. Unfortunately, jobs are not plentiful today. If you've spent anytime looking for a job, you know how frustrating, humiliating and time-consuming the process can be, with no results.

If you are one of the lucky ones to still be employed, instead of waiting around for your company to let you go because they had one bad quarter and now want to save their way ahead at your expense, take control of your future and fire your boss!! This is going to be YOUR year!

I can assure you from my own personal experience that, if you have the desire to be your own boss; it's something that is within your reach. Moreover, with a few right moves, you'll accomplish your goal within six months or so.

The Best Investment You Will Ever Make

When buying a business, you can and should expect to make at least 25%–33% return on your cash investment. Plus, you will have the opportunity to produce a steady personal cash flow, and you'll be building value that will pay you handsomely when the day arrives to sell the business.

Many people wrongly believe that acquiring a business is a risky investment. Personally, I think that putting your fate in someone else's hands has a heck of a lot more risk to it. While there is some inherent risk buying a business, much, if not all, can be eliminated simply by doing your research beforehand on any business you consider purchasing.

Do Something

It's funny, but "The New Year's Resolutioners" are typically people who said the same thing last year and most probably will do so again next holiday season. My father-in -law has a better name for them: he calls them: "gonnas"… they're ‘gonna' do this, they're ‘gonna' do that, yet another year passes and they do nothing.

Don't join that crowd; it's a one-way ticket nowhere. You can set everything in place to right now and, with a few simple steps, you'll be on your way:

Step One: Educate Yourself – no matter what type of career you have, nothing you've ever done has prepared you for this process. Even if you're in charge of corporate acquisitions, you're now playing with your money and future and it's a whole different mindset. Many people wrongly confuse their confidence to run a business with their inexperience to buy a good business. As such, devour as much information as possible about buying a business. Personally, I am biased about how you can become a business buying expert so please excuse this shameless plug for my course How To Buy A Good Business At A Great Price© at http://www.diomo.com. Truthfully, it's an incredible tool, so check it out. Regardless, you must get educated!

Step Two: Take the time to properly assess your strengths and weaknesses. Take an honest inventory of yourself. Your goal is to buy the right business. The guiding principal is this: "whatever it is that you do best must be the single most important driving factor of any business you consider purchasing". Don't try to be something you're not. It's fine to learn a new skill when you're working for someone, on their dime, but not at your expense.

Step Three: Put together your "laundry list" of what you want in a business. Be specific. Don't say: "I want it to make a lot of money" - instead, identify the characteristics it must have. For me it's simple. Any business I buy must be: sales/marketing-driven, contain an element of exclusivity (either in product or territory), have high margins (I don't want to sell a product or service based on price), and there must be demand for the product or service the business offers (creating demand is way too expensive). Assemble your five-point list, and do not stray from it. This must be the litmus test that you put every business through. If any business does not subscribe to your rules – don't buy it!

Step Four: Get the word out – you may not want to tell your boss, but let everyone else in your circle know your plans. This serves two purposes: it will generate leads, and it will put a little pressure on you to make it happen.

Step Five: Set a timeline: sticking to a timeline is critical. Each year seems to go faster than the last one. Don't allow yourself to be in the same position next year. Six months from today you should be in your own business. Take a blank sheet of paper and write on it with a big black marker: "I'm buying a business this year!" Post it in a place where you will see it every morning, and if possible, throughout each day. I would even suggest that you make it the personalized message on your cellular phone.

Step Six: Above all, get into the game. Search businesses for sale listings. Don't get overly analytical in the early stages. Arrange meetings at potential businesses. Don't be afraid to make offers.

Step Seven: Enjoy your success!

Richard Parker is President of The Business Buyer Resource Center and author of How To Buy A Good Business At A Great Price©. Richard can be reached via email at rparker@diomo.com.

Using Debt Leverage in Your IRA

By Forrest Moore

Investors are often unaware of the possibility of using IRAs as debt leverage when they start learning about self-directed IRAs and real estate investments. Many investors don't believe they can afford properties in their real estate market without access to leverage. It is great news for investors, then, that it is possible to use debt leveraging in self-directed IRAs when making real estate investments.

IRA accounts can make use of debt as long as the credit history, income and/or assets of the account holder are not used to acquire or guarantee the debt. A non-recourse loan meets the requirements to be used as leverage. The loan must be guaranteed solely with the value of the property acquired with that debt. Account holders will likely need to go to a specialized lender, such as North American Savings Bank or Absolute Mortgage Corporation, to acquire a non-recourse loan for their IRA.

Specific qualifications must be met in order to acquire a non-recourse loan. Lenders typically require the IRA to have 30 to 50 percent of the down payment and a small reserve amount at the time of closing. Since the IRA holder cannot cover the mortgage payments or other expenses of their IRA, the lender will also need to be assured that the property can produce the rental incomes needed to cover these expenses. A portion of the income, equal to the ratio of debt, is subject to UDFI tax calculation. Thus, when the IRA borrows 70 percent of the purchase price, 70 percent of the income is subject to a tax calculation. The IRA's direct ownership of 30 percent of the equity results in 30 percent of the income being completely tax-deferred and free from any tax calculation. Normal tax deductions apply at the same ratio as the ratio of debt, further reducing the potential tax burden.

The greatest benefit to having access to debt financing is that it makes more real estate properties available to the IRA account holder, increasing the potential for investment opportunities that could yield higher returns. This has enabled many investors who delayed investing in real estate with their IRAs to take advantage of the real estate market and the power of debt leveraging through setting up self-directed IRAs.

Forrest Moore is a recognized expert on self-directed retirement plans. For more information visit www.guidantfinancial.com or call 1.800.472.4455.