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While you might encounter challenges during your journey to start a small business or franchise, those challenges can be overcome as long as you try – and don’t give up. Amazon mega-mogul and entrepreneur Jeff Bezos once said, “I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not trying.”

You can get ahead of challenges as one way to combat them and set yourself up for future success. We looked to our Small Business Trends survey for the biggest small business challenges of 2019 and found that the solutions might just be easier than you think.

Problem #1: “I Can’t Find Funding.”

The most common complaint small business owners are reporting in 2019 is the age-old issue of not having enough money to start a business or fund a franchise. In fact, approximately one-third of respondents to the survey reported this challenge.

It’s a common struggle: you’ve scraped your savings account, exhausted financial aid from friends and family, or been turned down for a loan. What’s an aspiring small business or franchise owner with a dream to do?

Solution Number 1: Lesser-Known Financing Methods

Consider different sources of capital. There are options beyond traditional bank loans or raising cash yourself. Some examples include:

Rollovers for Small Business Start-ups (ROBS), also known as 401(k) financing, is a way to use your retirement funds to start a business tax-free. Made possible by the Employee Retirement Income Security Act of 1974 (ERISA), ROBS is an option for you if you have at least $50,000 available in eligible retirement funds. Learn everything you need to know about ROBS with our Complete Guide to 401(k) Business Financing.

SBA loans are loans guarenteed by the Small Business Administration (SBA) and provided through qualified lenders. While sometimes challenging to qualify for, these loans often have favorable rates and repayment terms. Learn more about SBA loans and how to qualify for one with our Complete Guide to SBA Loans.

Portfolio loans are a quick and flexible way to gain funding by leveraging your stocks, bonds, and other eligible securities. Portfolio loans allow you use up to 80 percent of the value of your portfolio without having to liquidate your holdings.

You can even combine financing options to make a winning combination that’s best for you. For example, you could use funds from a ROBS transaction as a down payment on an SBA loan.


Funding Options, Tailored for You

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Problem #2: “I Haven’t Found the Right Business Opportunity.”

About 20 percent of survey respondents said they want to start a small business or franchise, but have had problems selecting the right business or franchise concept for them. It’s understandable – when it comes to small businesses and franchises, there’s countless opportunities. There are breweries and wineries, sandwich shops, bakeries and frozen yogurt, fitness franchises such as spas and gyms, business services and more.

Solution to the second largest problem: Do Your Research and Question Your Motives

It helps to understand what industries, trades, fields, or franchise concepts are on the rise and performing better than others in your area. Having a thorough understanding of local and national industry trends can help you pinpoint what the right business opportunity for you is.

For example, The Balance Small Business determined skilled trades such as welding and carpentry were on the rise, as well as software engineering and development – which has been consistently on the rise for some time. Meal kit sales and delivery, virtual reality (VR), home renovations, bike sales and rentals, and self-storage units were also hot opportunities to produce a profit.

You don’t have to just base what you want to do on what’s currently on the rise – some small business owners benefit from immersing themselves in a business that fuels their passion or basing their business plans on their financial situation. To get started, here are a few questions to ask yourself to from Paul Segreto, CFE and CEO of franchise consulting company, Franchise Foundry:

  • What are you passionate about?
  • What drives you?
  • What do you not enjoy doing?
  • Do you plan on involving your spouse or starting your business solo?
  • Would you be more comfortable purchasing an existing business?
  • Does franchising interest you over starting from scratch?
  • Do you plan on paying cash or will you need a loan?
  • Do you know other entrepreneurs who could mentor you?

Problem #3: “I’m Not Sure Where to Start.”

Approximately 17 percent of survey respondents said they just didn’t know where to start when it came to launching a small business or financing a franchise. Many people think that starting a business is something of a mystery, and they’re often afraid of failure. While starting any important journey can definitely cause anxiety, understanding the process and taking it a step at a time can help you feel much more confident about pursuing your dreams.

Solution number 3: Consult With Professionals and Prequalify

Don’t try to do everything to get your business off the ground all at once. Take it step-by-step!

First, consult with professionals in the business. These may include franchise consultants, business brokers, or even mentors or friends who own businesses. You wouldn’t take a new job or go on a vacation without doing your research ahead of time, and the same is true for starting a business or financing a franchise. Franchise consultants can help you figure out what you want out of the franchise, what opportunities may be best suited to you, and what you may be able to afford based on your financial situation. In fact, they can even keep guiding you through the process and stick around until you finance your franchise. Business brokers are similar, assisting you in thinking about your possible small business. Many have areas of focus in operations, marketing or sales that can be beneficial.

Another a good step to take early on is to prequaify for financing. This two-minute online tool helps you find your best financing fit. Learning early on about the funding methods and how much funding you can access can also help you narrow down the right opportunities for you and create a comprehensive business plan to help you identify what steps you need to take and in what order.

Problem #4: “I Don’t Have a Support System.”

About 12 percent of Small Business Trends survey respondents were concerned about their lack of a support system. A support system can be a major help when it comes to navigating the challenges of starting a business or franchise. But you don’t have to stress out if you don’t have a support system – there are numerous resources to help you develop one.

Solution #4: Network, Network, Network and Use SBA Resources

Getting ready to start a business or franchise is a great time to reach out to your friends, colleagues, family, and aquaintiances who run businesses or have in the past. These folks have invaluable experience to share with you, as well as contacts in the business who could be helpful to you during this process. This is just the first step in networking, which is one of the best ways to build yourself an experienced and helpful support system. Learn more about networking for small businesses with our Small Business Networking Resource Guide.

Another helpful resource are Small Business Development Centers. Provided by the Small Business Administration, these centers give you access to business, financing and marketing information – at no cost. Use the SBA’s interactive map to find the closest center to you.

Problem #5: “The Risk is Too High.”

What if Edmund Hillary never climbed Mt. Everest because it was too tall? What if Elon Musk never started SpaceX because he had no aerospace experience? Sometimes risk can lead to reward – it’s a platitude for a reason. If you back down before you even start, then you’ll never know what you’re missing out on. Fear is healthy, according to Psychology Today, which also states “The more scared you feel, the scarier things will seem.”

This risk-aversion was less common in the Small Business Trends survey, but 7 percent of respondents were still concerned about the risk of small business or franchise ownership.

Solution #5: Start Small and Find the Right Financing

You decide the size and scope of your business or franchise. By doing your research, creating a comprehensive business plan, and keeping in-touch with your small business when it’s off the ground, you can create an atmosphere you feel confident in. Few businesses are profitable in their first year, but it’s helpful to know that profitability picks up substantially the longer a business operates.

Securing financing early on can also help your confidence in your financial situation. As mentioned, you can use some (or all) of your retirement funds with ROBS and combine that with other loan options, such as SBA loans, to come up with the funding you need to get started.

This is Your Year

There will always be challenges in life, and of course in business, as with these 2019 small business challenges. But not being able to find funding, concern over the correct business opportunity, feelings of insecurity regarding where to start, lack of support system, or fear of taking a risk shouldn’t stop you from pursuing your dream. Many of these perceived problems have sensible solutions that can be implemented fairly quickly and easily.

Further Reading from Guidant Financial

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