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The Entrepreneur’s Source Reviews Creative Ways to Finance Your Franchise: Tap into Your 401K
The Baby Boomer population just doesn’t want to quit working, and are changing their path by leaving their past positions to become entrepreneurs. According to the Small Business Survey, 84 percent of new businesses in America are opened by individuals who are considered part of the Baby Boomer generation. It’s no secret that investing in a franchise takes a substantial amount of money, but in reality, when a franchisee invests in a franchise, they are actually just reallocating their investments. The cost of a franchise can vary widely, ranging from below $10,000 to upwards of $5 million. Just how are these Baby Boomers affording to open their own business later in their lives?
The Baby Boomer population has gotten creative by using their well-developed 401Ks to invest in and finance their franchises. The Entrepreneur’s Source reviews the common tactic of investing an individual’s 401K in their franchise.
How Does Investing my 401K in my Franchise Work?
Many people don’t even know that the option to fund a new business with your 401K exists. Using your 401K to fund in your franchise isn’t as risky as it sounds. Utilizing your 401K to invest in your franchise, also referred to debt-free funding, can give a franchisee more control over his or her retirement. Instead of someone else controlling your assets, your assets are connected to your franchise, oftentimes making investors put their all into their franchise because everything is on the line.
There are many benefits to debt-free funding for franchisees. As it’s implied in the name, this method minimizes business debt so that all of the cash flow once opening the franchise can be invested back into the business. Similarly, as your franchise grows and prospers so does your retirement funds. For Baby Boomers who started with less money in their retirement funds upfront, this could be beneficial because you can end up with more retirement money, thanks to your franchise.
Because there are oftentimes specific requirements that investors need to meet and very strict processes along the way, it’s recommended to consult with a business coach before opting into this process. With careful organization and attentiveness, you can mitigate the risk of investing in your 401K.
401K Franchise Funding Success
After spending 18 years with one company, it became apparent to Mike Caccavale that he needed to go in a new direction. The Entrepreneur’s Source’s interactive discovery experience helped both Mike and his wife Michelle outline their Income, Life, Wealth and Equity (I.L.W.E) goals and their current skills that would help them succeed as franchise owners.
They decided to invest in a Brain Balance Achievement Center franchise. After considering the different routes they could take to finance their franchise, they ultimately decided to move forward with a 401K conversion plan and have achieved success with their franchise. Today, they’re the proud, independent owner operators of a franchise business that is helping them achieve their I.L.W.E.™goals.