Tag Archives: Navy

New Franchise Funding Sources are Sprouting Online

*This story originally appeared on www.atourfranchise.org, a website highlighting the positive impact of franchising on communities around the country.

Franchise owners busy running businesses often struggle to locate funding options, but there are quick and simple alternatives that should be explored.

By Mark Rockefeller

Alexandra Myers, a U.S. Navy veteran, distinctly remembers her first Smoothie King visit — she was 12 at the time and her uncle insisted on taking her. The franchise was not only a staple of New Orleans, her hometown, but soon became an integral part of her childhood. Six years later, when Myers attended the U. S. Naval Academy, she instinctively knew a smoothie shop would do well on military bases such as  her campus. An idea was born.

 

Often, military personnel are isolated at work on bases and don’t have access to healthy food options. Myers saw a business opportunity and determined to run with it. After completing five years in the Navy, she combined her love for Smoothie King with her passion for putting easily-accessible, healthy options into the hands of military members. She founded Smoothie Sailing LLC in 2009 and took over three existing Smoothie King franchises.

As a young entrepreneur, Myers quickly learned that financing a franchise can be a challenge. She also discovered that banks aren’t lending the capital small businesses need to grow, especially for loans under $100,000. The number of commercial banks has significantly decreased in the past 40 years as big banks continue to consolidate. Community banks — those that are typically the biggest advocates for small-business lending — are dwindling, leaving small businesses and franchise owners, like Myers, with few financing options. So she decided to look for an alternative lending solution.

 

Putting the Community Back into Lending

With the rise of the Internet and technology has come the rise of innovative solutions for nearly all of life’s needs; business funding is no exception. One of the greatest ways the lending industry is changing is by allowing and encouraging small businesses to share their stories with potential investors in hopes of bettering their chances of securing funding. We see this model succeed time and again with the advent of crowdfunding. But what if, rather than using a rewards-based system or forcing a business to give up equity in their company, this same model was applied to traditional loans?

Lenders that allow businesses to tell their stories via an online marketplace are opening up new channels for investors to assess a business opportunity they are considering lending to. Not only will they look at the credit worthiness and financials, but they get to see the heart and soul of the business. They get to see the impact the business has on its local community and its mission and vision for growth. Allowing business owners to tell their story is re-opening the tradition of when community banks lent to businesses because they knew the owner personally and could vouch for their character.

When Myers discovered StreetShares, a peer-to-peer small-business lender, she found a way to experience how community banks used to work—by putting the community aspect back into it. On StreetShares, small-business owners have the opportunity to tell their stories to potential investors by creating a business pitch — complete with business plans, images, videos, or anything else they want to showcase about their business. Myers was able to share her business vision which led to investors competing to lend to her because they believed both in that vision and in the business.

 

Funding Sources for Franchises

With new types of financing sprouting up among online lenders, it is also important to understand what the options are, and how to interpret them. Given that banks have stopped lending the capital small businesses need to grow, here are a few options for you to consider when looking for funding:

  • SBA Loans

While the U.S. Small Business Administration is not new, it is a great place to start. The SBA is not only an advocate for small businesses in our national government, but it also works alongside local banks and lending institutions to provide financing programs for businesses looking to grow. The SBA has loan programs for businesses at all stages of growth, including general starting and expansion loans, microloans, loans for equipment or real estate, and others. The agency’s website, www.sba.gov, offers myriad resources for businesses to assist them in the process of finding funding.

  • Peer-to-Peer Term Loans

 

Peer-to-peer lending, also known as marketplace lending, is a way for individuals to lend money to their businesses without going through traditional channels, such as banks. Traditionally, investors — both retail and institutional — choose which businesses to lend to based on the credit score, perceived risk of the loan, and the financials of the business. As P2P lending has grown in the United States over the past 10 years, new contenders in the space have brought in innovative components that allow lenders to put the “peer” aspect back into P2P by allowing business owners to tell their stories directly to investors. One of the benefits of P2P term loans is that they are often unsecured, meaning the lending company won’t tie your assets up as collateral.

 

  • Factoring (or Accounts Receivable Financing)

In factoring — or accounts receivable financing — a business sells its invoices to a third party commercial company which advances the business a percentage of the invoice. The third party company then collects the invoice for the business, gives the business a rebate, and keeps the remaining percentage. Accounts receivable financing can be a good option for businesses facing a cash crunch while waiting for customer payments. This option provides a quick boost to cash flow and can help with short-term financial needs.

  • Merchant Cash Advances

Merchant cash advances offer a quick but very expensive way to get cash for your business. Even if your business has credit issues, getting approved can be fast and easy, with very little paperwork involved. Business owners pay back the cash advance by allowing the lender to take back a portion of their sales every day until the entire amount has been paid, along with a fee. While this can be a quick solution, you should be aware that the annual percentage rate of a cash advance is very expensive, anywhere from 50 percent to 300 percent.

Your story

When Alexandra Myers chose her lender, she studied which options worked best for her and her growing business. She borrowed $30,000 to expand and cover operating costs for a new store location. Currently, she manages seven franchise locations on military bases throughout the United States. Her vision of providing healthy meal options to members of the armed services continues to advance.

What about you?

Franchise owners like you are busy running a businesses, which can make it hard to dig into all the available funding options. But next time you think about financing your franchise, consider exploring some of the alternatives.   You’ll be surprised at how quick and simple it might be.

How will your financing advance the story of your business?

 

Mark Rockefeller is CEO and co-founder of marketplace lender StreetShares. Find him at fransocial.franchise.org.

Heroes Among Us: The Quiet Success of Veterans In Franchising

Veterans are positively impacting franchising, their strong leadership and tireless can-do spirit is an inspiration for all.

By Eric Stites, CFE

*This story originally appeared on www.atourfranchise.org, a website highlighting the positive impact of franchising on communities around the country.

Veterans’ impact on franchising is significant. There are more than 66,000 veteran-owned franchise businesses in the U.S. today, which provide jobs for 815,000 Americans. Yet franchisees who are veterans stay out the limelight, quietly working hard behind the scenes building successful businesses. They don’t consider themselves heroes and don’t want any special recognition, but we owe them so much.

The International Franchise Association’s Veteran’s Transition Franchise Initiative, known as VetFran, is celebrating its 25th anniversary of supporting veterans interested in franchising. It salutes the brave men and women who have served our country and the franchising industry. They are our friends, our colleagues and team members. Here are just a few of their inspirational stories:

 

Steve Carey: Air Force Veteran and CertaPro Painters Franchisee 

As a fighter pilot, then colonel in the U.S. Air Force, where he served for 30 years, Steve Carey relished strategy, leadership and taking calculated risks. When it came time to retire from the military in 2007, he was drawn to business ownership because it required those same skills.

“My wife and I went through a multitude of options on what we could do as business owners. Should we start our own niche store somewhere? Or did we want to go to corporate America? Or did we want to follow along with a franchise?” Carey explained. “We came to the resolution that we didn’t want to start a brick-and-mortar business where we were tied to it from eight to five. We wanted something that was engaging, where we could connect with people, and where we had the decision-making ability to grow the business to whatever level we chose.”

That something was franchising, the Careys decided. Soon, a franchise headhunter introduced them to several opportunities and they quickly settled on CertaPro Painters, even though they hadn’t been looking specifically for a painting business.

“I saw things in CertaPro that paralleled my vision, both at the corporate level and franchisee level. They were focused on ensuring success for franchisees, and they were a people-oriented organization in which it was very easy to connect with people at the corporate level. They were really focused on trying to grow a culture of good businessmen and women.”

“What I learned in the military has been very helpful in running my business. I learned you have to prioritize and you have to be pretty organized with tasks and tasks management. As I grew in rank, I took on more leadership positions that developed my people management, task management and strategizing skills,” added Carey.

When speaking about the CertaPro business model, he said, “CertaPro is not about painting, painting is what we do, it’s about running a good business, listening to customers, delivering extraordinary experiences and that takes a lot more than just paint.”

Carey’s advice for prospective franchisees: “I would recommend when you choose a path, don’t focus on the exact nature of the industry; focus on what you have to do in that industry. Be sure that the industry represents the things you enjoy doing.”

 

Josh Lien: Army Veteran and Mosquito Joe franchisee

Not a lot of people can say they met their spouse while salsa dancing in Afghanistan, but Josh Lien can. He retired from the U.S. Army as a captain in 2007, then spent three years in Iraq and Afghanistan doing government contract work before meeting and marrying his wife, then having their first child. He split his time between Texas and Afghanistan until their second child arrived, then Lien decided it was time to find something local. That something was a Mosquito Joe franchise.

“Purchasing a franchise seemed like a logical next step because I wanted to have the flexibility in my schedule that business ownership provides, without having to develop a business from scratch,” Lien said. “When I came across the Mosquito Joe franchise opportunity the original thing that hit me was the fact that I’m really an outdoors person but my wife absolutely hates mosquitoes. One bite and she doesn’t want to be outside anymore. It wasn’t a service I was familiar with before, but I definitely felt it was a need I could fulfill in the community.”

Running a franchise requires many skills: the ability to follow the franchisor’s established process, lead under pressure, and work with many types of people. In many ways, the military cultivates the ideal franchisee.

“There are a lot of intangible skills that military service imparts, and I rather like to distill this package of skills down a single phrase: the ability to make things happen,” said Lien.

Lien has been making things happen with his business in the Lone Star State. Since launching his Mosquito Joe franchise in Round Rock two years ago, he has expanded his service area to cover Austin, Cedar Park, Round Rock, Pflugerville and Georgetown areas.

“When I originally decided to go with Mosquito Joe, I started out with one territory and then about halfway through the first season, after I saw the kind of growth and the income potential, that’s what really led me to expand. It was a really great fit with the market.”

While mosquito control services aren’t always an obvious choice for a prospective franchisee’s consideration set, Lien explains finding the right fit in a specific franchise model involves looking at a variety of factors.

“Potential franchisees need to look at the type of industry they want to work in, an initial investment level they’re comfortable with, the strength of the specific location they’ll be operating in (demand, competition, demographics, etc.) and overall financials.”

 

Eric Stewart: Army Veteran and Window Genie Franchisee

After retiring as a master sergeant from the Army in 2008 and returning to Iraq and Afghanistan to serve the troops as a contractor until early 2014, Eric Stewart returned home for good. He sent his resume to almost 70 employers. “I think I was only called in for two interviews,” Stewart said. “I had no idea how hard it would be for me to get a job.”

Veterans nationwide are struggling like Stewart to find jobs after serving in the military. Possible reasons are that many don’t know how to market themselves in a civilian space and not all employers understand how to read a military resume or how it’s relevant to positions they are looking to fill. According to a 2015 U.S. Bureau of Labor Statistics report, there were 573,000 unemployed veterans in 2014: 59 percent were age 45 and over, 37 percent were age 25 to 44, and 4 percent were age 18 to 24. The unemployment rate for male Gulf War-era II veterans (6.9 percent) was higher than the rate for male nonveterans (6.2 percent) in 2014.

Shortly after beginning his job search, Stewart was contacted by Bruce Krebs, a franchise coach with The Entrepreneur’s Source. Together they were able to discover which franchise opportunities best fit Stewart’s strengths, weaknesses, interests and goals. Stewart said, “Bruce helped me realize business ownership was the best opportunity for me to be both successful and happy; I wouldn’t do well behind a desk. I was excited immediately at the prospect of being my own boss and creating a future and legacy for me and my family.”

Among the franchise options Krebs presented to Stewart was Window Genie, which Stewart and his wife, Nydia, quickly decided to invest in. “I liked Window Genie’s proven business model and felt that the corporate office genuinely cared about my success. I felt it was a business I could successfully manage while still maintaining a life for myself and my family,” said Stewart.

Stewart has been so pleased with his experience as a Window Genie franchise that he recommended purchasing one to his good friends Barry Ellis, an Army veteran and his wife, Mazie, an active duty Army sergeant. Before deciding to invest in a Window Genie franchise in Fayetteville, N.C., which the Mazies did in 2015, Bill Mazie paid a visit to Stewart.

“I went to see Eric at his home office and saw the trucks, the equipment, how he had everything set up. It helped me see into the real day-to-day life of a Window Genie owner,” says Mazie.

Stewart’s advice for prospective franchisees is, “Do extensive research and talk to business owners who are not just in the field you want to pursue. There is a wealth of knowledge out there and you’ll be surprised how many people will share the secrets of their success with you.”

 

Chris Parker: Air Force Veteran and Sport Clips Franchisee 

On the surface, Chris Parker’s life as a Sport Clips franchisee seems worlds away from the 22 years he spent in the Air Force, primarily flying. The differences however, are not as significant as they initially appear to be. That’s because Sport Clips founder and CEO Gordon Logan, was a pilot like Parker before starting the franchise, and the sports-oriented hair business is run more like a fighter jet than a barber shop.

“Gordon and his team did a great job making sure that everything was planned out. He was a pilot like I was, and our lives depended on checklists. Everything was dictated to us. If regulations say we can do something, we can. That’s the type of thinking that Gordon put into this franchise,” Parker said.

Parker and his wife and business partner, Karen, opened their San Antonio-based Sport Clips franchise in 2008. Although they had no previous experience in hair care before buying the franchise, they liked the way it was set up and felt it would be easy to run.

“For us to do this, we needed to make sure we were comfortable enough to execute the game plan. It is a very simple concept — it’s one thing,” Parker said. “We liked that it was an owner-investment and that we were building equity in the future.”

Even with a simple concept, Parker said the early days of running his franchise were scary. He and his wife spent many hours in the store and when they weren’t there, they were

thinking about it.

“Basically what you’re doing is marrying the franchise, and your kid is the store. You’re always checking to make sure it’s well and fed,” Parker said. “If you don’t like being a parent, you shouldn’t be a franchisee.”

Parker recommends prospective franchisees take their time to find a franchise that will provide the support and guidance — or in Parker’s case, the checklists — that will make the early days of business ownership less stressful.

 

It is clear from the success that Carey, Lien, Stewart, Parker and many others have achieved, that franchising is a good career option for many veterans. They are provided with a blueprint — a proven system — for how their franchise needs to be run in order to be successful. Franchise ownership also enables them to be part of a team and in a leadership role, which may give them the sense of belonging they grew accustomed to while in active service as well as meet their mission-oriented nature.

On behalf of IFA’s VetFran program and the entire franchise community, we thank not only the veterans who are positively impacting franchising, but all veterans. Your strong leadership and tireless can-do spirit is an inspiration for all.

 

Eric Stites, CFE, is the CEO and managing director of Franchise Business Review, and Chair of the VetFran Committee. Find him at fransocial.franchise.org.