Pandemic Spurs Innovation for Small- to Mid-Sized Businesses

Set up your business in the right entity and state. Mistakes in formation or taxation can have a lasting negative impact on business growth and viability. Before starting a new business, consider the best structure for asset protection and tax minimization. For example, a limited liability company (LLC) gives business owners time to operate at a loss for the first few months and write off the loss on their individual 1040 forms against other forms of income.

Pandemic spurs innovation for small- to mid-sized businesses

By Brandpoint

(BPT) – As COVID-19 continues to disrupt normal day-to-day operations of small- to mid-sized businesses and nearly half of the U.S. workforce hangs in the balance, employers are taking creative measures to reset their go-to-market strategies and offerings. By changing their operations to meet the demands of their customers, businesses can not only stay relevant but keep their staff employed and thrive in the new economy.

This pandemic offers business owners, investors and solopreneurs the opportunity to take a critical look at their overall business model, offerings and operations and reset the entire business structure, creating new opportunities to serve and prevail. This is the perfect time to explore new legal solutions to the most common business obstacles to help companies preserve and protect their brands and prosper for generations to come. There are great examples of resets happening within many industries.

With the pandemic closing summer camps throughout the country, ACA-accredited Adventure Links, a 23-year-old summer camp in Virginia, has found a way to replace its usual summer adventure camp programs with

The CampCloud(TM) , an experiential online alternative. The company is now offering its virtual camping programs to individuals and employers to assist employees working from home by keeping their kids engaged, learning and delighted all day from virtually anywhere. The program is being offered to other camps as a customizable, online option for their campers.

Ensuring the health and safety of employers when stay-at-home orders are lifted, and business resumes, is critical. Thanks to a team of entrepreneurs, Disinfect & Shield(TM), an FDA-registered, EPA-approved and eco-friendly disinfectant used in surgical suites for the last decade, is now available to businesses worldwide to kill SARS-CoV-2, the virus that causes COVID-19 and other dangerous organisms. It works by creating a permanent anti-microbial shield, preventing the virus from attaching to surfaces where it has been applied without risk to humans, animals or crops. With Disinfect & Shield(TM), employees, customers and visitors can feel safe knowing that their space has been properly disinfected and treated for optimum health and safety.

Clint Coons, founder of Anderson Business Advisors, offers 5 financing and entity creation tips to help entrepreneurs and small business owners:

  1. Know how to use loans: CARES Act loans have specific guidelines like having to use at least 60% of the loan within 24 weeks of receipt for payroll expenses. Concerned that money would dry up, many small business owners applied with no way of utilizing them because their business cannot reopen under the strict guidelines imposed on the industry.
  2. Alternate cash sources: Borrow from a 401(k) or IRA to keep businesses afloat, as it does not need to be paid back for at least 3-6 years. However, pulling money out of a retirement plan comes with some risk, such as if the business does not see profitability, then retirement funds were wasted on a failed business venture.
  3. Beware of increasing liabilities: Because insurance will not cover claims brought under COVID, reopening comes with risk and business owners are wondering how they will operate under strict COVID-19 related guidelines and still make a profit. Now is the time to pivot and reset.
  4. Consider restructuring: Set up your business in the right entity and state. Mistakes in formation or taxation can have a lasting negative impact on business growth and viability. Before starting a new business, consider the best structure for asset protection and tax minimization. For example, a limited liability company (LLC) gives business owners time to operate at a loss for the first few months and write off the loss on their individual 1040 forms against other forms of income. There are different entity funding options with protection ramifications.
  5. Utilize Privacy Shield Protection by creating anonymity with trusts.

COVID-19 has shown that many businesses aren’t prepared for worst-case scenarios and make common mistakes that can affect their ability to grow and borrow money. If approached strategically, small- to medium-sized businesses can take this time to implement changes and help their operations succeed and thrive.

The Franchisor/Franchisee Economic Relationship – It’s A New World!!

Photo by Lukas from Pexels
This specific suggestion will not be adopted by existing large chains, because it would be such an obvious reduction of the current royalty stream. However, well established franchisors could, and should, absorb more of the additional systemwide needs…

THE FRANCHISOR/FRANCHISEE ECONOMIC RELATIONSHIP – IT’S A NEW WORLD !!

restaurant, COVID-19, Roger Lipton, Franchise Money Maker

By Roger Lipton

Almost everybody has noticed that there is an increasing strain between franchisees and their franchisors. It is no accident that new franchisee associations are being formed and existing organizations are getting more militant. There are many intangible reasons, as too many franchisors do not treat their “z’s” as partners. We have written many times that the “asset light”, “free cash flow” model is not reflecting the necessary investments in the system to keep franchisees as profitable as possible. Many franchisees are especially bothered by the fact that their franchisors are spending hundreds of millions, sometimes billions, of dollars buying back stock and making acquisitions, while leaving the franchised operators without the necessary new product development, technology upgrades, marketing initiatives, etc.etc.
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With all of that in mind, the bottom line is the bottom line. Too many franchisees are suffering financially, under more pressure than ever. The typical franchise royalty is 5%, give or take a point, plus 2%, as an advertising contribution. There are often additional charges, not all that material in and of themselves, but adding to an already large burden. Let’s say the franchisee is fortunate enough to be making 17-18% store level EBITDA (and Depreciation is not free cash in the long run). Rebating 7 points out of 17 or 18 points starts to feel like a pretty big load, and there is still local G&A to be carried. Even if store level EBITDA, before royalties, is in the low twenties, 7 points gets to be a bother. Additionally: many franchisees, Dunkin’ Donuts and Burger King and Jack in the Box are just a few examples of mature systems where decent money is still being made at the store level because the store leases were signed ten or fifteen years ago, so occupancy expenses are lower than today’s economics would allow. That’s, of course, why so few new units are being built by many mature franchised systems, especially in the USA. Today’s economics do not allow it.

When Ray Kroc started franchising McDonald’s restaurants over 60 years ago, the royalty was 1.9%. By the 1960s, franchisors had started charging 2-3%, by the 1970s 3-4%, by the eighties 4-5%, and 5% seems to be the standard today, plus advertising and other fees.

Read the entire article click here https://www.liptonfinancialservices.com/2019/03/the-franchisor-franchisee-economic-relationship-this-is-not-your-fathers-world/

How Are You Handling Your Covid Financial Anxiety?

It is not worth the mental energy and distress to put pressure on yourself for what is out of your hands. Unproductive thoughts will put you on a never-ending cycle of “I have to figure it out, I have to figure it out.” That kind of spiraling activity just runs down your batteries.

Combating financial anxiety during a pandemic

Courtesy of BRANDPOINT
Photo by Aarón Blanco Tejedor on Unsplash

(BPT) – In the face of a global pandemic, financial anxiety is an everyday reality. Concerns surrounding personal finances, businesses shutting down and market volatility have us navigating new waters, experiencing more acutely than ever before how our financial lives are intertwined with our mental health. Amanda Clayman, financial therapist and Prudential’s financial wellness advocate, works with people to better understand the emotional connection we have with money.

According to Clayman, financial stress, while it may be inevitable in these times, does not have to control our lives. Even in the midst of this crisis, we can practice good financial and mental health and grow in our ability to maintain calm.

How to ease your mind and overcome financial distress

Clayman offers the below tips on how to ease your mind and overcome your financial distress during the days of COVID-19.

  • Allow yourself to feel a sense of loss: These big market changes may throw a wrench in the vision you had for retirement or your 401K. This is a scary realization, and a sad one. It is natural to have an emotional response, so let those feelings come and acknowledge them as they do. By not bottling up those sensations you are better able to say goodbye to your former plans and move forward. Additionally, looking your feelings in the face and comparing them to the reality of the situation provides valuable perspective that is key in the healing process.
  • Embrace uncertainty as part of the plan: Concentrate on the here and now, and don’t think too far ahead. It is common to try to manage anxiety by making a plan, but that’s going to be challenging when the future feels so uncertain. Try telling yourself, “I’m going to make the best plan I can based on what I know now. Then I’m going to trust that I will figure out problems as they arise and ask for help when I need it.”
  • Let go of what you can’t control: It is not worth the mental energy and distress to put pressure on yourself for what is out of your hands. Unproductive thoughts will put you on a never-ending cycle of “I have to figure it out, I have to figure it out.” That kind of spiraling activity just runs down your batteries.
  • Be intentional, not impulsive: Anxiety floods your mind with fearful thoughts of worst-case scenarios, tricking you into believing immediate action is necessary to fix the problem. It may feel like you are making progress initially, but these are not emotionally grounded decisions and can lead to costly mistakes. What you need is space for perspective, to differentiate between internal feelings and external reality. Try stepping away from the computer or going for a walk before making big moves. Remind yourself that you are safe right here, right now.
  • Don’t be a hero: You don’t have to bear this weight alone. You may feel as if providing financial security is all up to you, especially if you’re a caretaker or your kids moved home to ride out the pandemic. But this is not an individual problem, it’s a collective one we can face together. So reach out — take care of each other and ask to be taken care of in return. In addition to sharing your feelings with family and friends, be in touch with creditors, landlords and service providers about your concerns. They may be able to offer a payment holiday, partial payment or interest-only payment.

Explore new types of self-care

One of the most important lessons in combating any anxiety is to remember that you will not feel this way forever. In the meantime, let’s use these moments to explore new forms of emotional and financial self-care. With thoughtful reflection, we can foster a relationship with money that promotes mental health in even the most challenging circumstances.

MATTO FRANCHISE
A Revolution is Brewing
LEARN MORE HERE:
https://www.mattofranchise.com/

Restaurant Industry In Turmoil, But There Is A Way Out!

Photo by Benjamin Davies on Unsplash

In short, most operators, with a great deal of effort, should be able to generate enough sales, on premise and off, to satisfy their landlords, who will have become their partners, dependent on sales. Store level expenses will be largely variable, including rent, and there should be less upward pressure on the fixed costs at store level.

RESTAURANT INDUSTRY IN TURMOIL, BUT THERE IS A WAY OUT!
By Roger Lipton
restaurant, COVID-19, Roger Lipton, Franchise Money Maker

The world, as we have known it, is seriously changed for the foreseeable future. Restaurant and retailers will have to cope with lots of new requirements that deal with social distancing and testing.

PAYROLL PROTECTION?? NOT QUITE!

One of the current priorities is to access the Payroll Protection Program. Unintended consequences are already coming into focus. Restaurant operators realize that business will be slow after opening, which is still weeks or months away. If they spend 75% of the money, mostly for payroll and rent, in the next eight weeks to qualify for loan forgiveness, they will not have the resources to carry the predictable losses when they first reopen, and those losses will likely last for months at least. They have the option of holding the money, which will then remain a loan rather than a “grant. However, while the two year term, at only 1%, seems cheap enough, there is no way that cash flow will be sufficient to pay back the loan that quickly.

MATTO FRANCHISE
A Revolution is Brewing
LEARN MORE HERE:
https://www.mattofranchise.com/

Some operators will therefore let their ex-employees remain on unemployment insurance for the time being, use the government capital to cushion losses after reopening, and deal with the ramifications two years from now. Other operators, will take the money, never reopen, and walk away. There are no personal guarantees, after all.

At the least, therefore, the program must be changed to allow for a sufficient payback period to recoup losses. We suggest this will happen, because the problem, and the fix, is so obvious. There are, predictably, other unintended consequences of this huge program that was implemented with such a rush, but we will leave that for another day.

RENT – THE BIGGEST FIXED COST

We are all reading about various companies, small and large, holding back rent. It’s understandable under the circumstances, and landlords realize that their world has changed as well. At the end of the day, we believe that percentage rents will be the new normal. The lessors have no real option. Yesterday’s rent structure is gone, and their alternative in almost all cases is to have empty space for perhaps years.

OFF-PREMISE CONSUMPTION BECOMES CRITICAL

Even after vaccines and treatments are in place, it is going to be quite a while before consumers are comfortable in close contact with strangers. We can be assured that dine in traffic will be at a lower level than previously. It therefore becomes critical for restaurant operators to do everything possible to build their off premise activities. Drive-thru locations, where applicable, can help a lot, but delivery (with or without third parties), catering, curbside pickup, packaged products to go are all brand building alternatives that can help to carry the physical overhead.

OVER-STORED NO MORE

Stated most concisely: there will be more closures than we have seen in at least fifty years (from today’s huge base). Far fewer chains will be expanding. Survivors will have less competition.

LABOR COST PRESSURE WILL ABATE

When the stores open, there will be less upward wage pressure than we have seen in the last few years and that we were anticipating would continue.

The cost structure will be more variable than ever before. It will take a while for negotiations to take place but rent will be based on a percentage of sales. Cost of Sales is variable and Labor is largely variable. Other Operating Costs at the store level (waste removal, bank fees, insurance, property taxes, etc.) can be negotiated lower. (It happens that I am affiliated with a Company that can help in this regard, with no up front cost.) Corporate Overhead can be scaled for the new world we are all living within.

In short, most operators, with a great deal of effort, should be able to generate enough sales, on premise and off, to satisfy their landlords, who will have become their partners, dependent on sales. Store level expenses will be largely variable, including rent, and there should be less upward pressure on the fixed costs at store level. Store level cash flow may not approach previous levels but should be adequate to support, if not enrich, a reasonable level of corporate overhead. Regional operators will have an advantage, with their proximity to the store level and their ability to respond quickly and efficiently to changing circumstances. National operators should decentralize to whatever extent possible for the same reasons. Dedicated corporate management should be able, in most cases, especially if not burdened by excessive debt, to lead their companies to survive, and even prosper over the long term.
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About Roger Lipton
Roger is an investment professional with over 4 decades of experience specializing in chain restaurants and retailers, as well as macro-economic and monetary developments. After earning a BSME from R.P.I. and MBA from Harvard, and working as an auditor with Price, Waterhouse, he began following the restaurant industry as well as the gold mining industry. While he originally followed companies such as Church’s Fried Chicken, Morrison’s Cafeterias and others, over the years he invested in companies such as Panera Bread and shorted companies such as Boston Chicken.

Lead Generation, Franchise Sales and Reality

This approach is terrible not only because you have empty spots in your pipeline but also because an ebb and flow in the advertising plan sometimes may cause the “brand” to disappear for awhile and send the franchise buyers a less than confidence inspired massage. For a start-up or emerging brand, this is the equivalent of a jet airliner “pumping the brakes” to save fuel while attempting to “take off.” It usually leaves a mess at the end of the runway.

Lead Generation, Franchise Sales and Reality
By Gary Occhiogrosso – Managing PartnerFranchise Growth Solutions, LLC.
Photo by Kees Streefkerk on Unsplash

The best way to get results in franchise lead generation is to remember that NOTHING works a lot, but everything works a little. What does that mean? It means for a start-up or an emerging brand (under 50 units), you need to try various lead sources to test which “streams” bring in the type of leads at the rate necessary to make your sales plan.

Look at all the factors in the game
Cost Per Lead and Cost Per Acquisition are only two KPI’s to look at when monitoring your program and its results. It is not as straightforward or revealing to limit your decision based on “how much did I spend and how many units did I sell.” The Reality is; it takes numerous elements to gain success. Such as time to build your pipeline (5-8 months), consistent follow up by a competent, highly trained, and relentless sales staff. As well as accepting the reality of the selling cycle
(about 120 to 180 days) and a realistic lead generation budget to pursue a professional and sustainable franchising recruiting effort. Your brand will NOT “sell itself.”

The Reality is that consistency in lead flow is also essential. I have seen many start-ups and emerging brands take a hiccup approach to franchise lead generation. This approach is terrible not only because you have empty spots in your pipeline but also because an ebb and flow in the advertising plan sometimes may cause the “brand” to disappear for a while and send the franchise buyers a less than confidence inspired massage. For a start-up or emerging brand, this is the equivalent of a jet airliner “pumping the brakes” to save fuel while attempting to “take off.” It usually leaves a mess at the end of the runway.

Royalties will make you the King or Queen
For me, the most important thing for a start-up or emerging brand to remember is the “value” of your franchisee over the lifetime of the franchise agreement. The Reality is; if you calculate the royalty return over that period, you will see the real reward of consistent lead generation and awarding a franchise. Calculate your Royalties on your AUV’s by the number of years you expect your franchisee to be in business, and it’s obvious. Do the math. Keep that in mind, and you won’t think the “Cost Per Acquisition” is too high unless you are attempting to “fund” your new franchise company from the upfront franchise fee collected. Funding your growth solely with the Initial Franchise Fees is never a good idea.

You should be in the franchising business for the royalties and the eventual exit, not the franchise fee. News Flash, focusing on the collection of Franchise Fees doesn’t work and often puts not only the franchisor in jeopardy of failure but also the franchisee. When you focus on the franchisee’s success, you will build a better organization, better equipped to support your franchisee. Successful franchisees paying long term, residual income from ROYALTIES is the way to BUILD YOUR BUSINESS.

A bigger “kiss” at the end
The Reality is; the sale of franchise companies (especially to Private Equity firms) have proven time and time again, that multiples paid on Royalty driven EBITDA at exit are more significant than the multiple typically offered on EBITDA derived from company operations. That’s because it’s scalable at a faster pace and with a lower cost.

Building a franchise business as a Franchisor requires a great concept, a comprehensive system, manuals and training, proven results, capital, planning and patience. If you remove any one of these components the journey may be an endless winding road with no clear direction.Talk to us to get started.

For more information, visit our YouTube channel and watch the videos titled:
“Using Digital to Sell More Franchises.”
“Private Equity and Franchising.”
https://www.youtube.com/channel/UCy6HZTtVYfsO9o8fBFMnZww

Contact us at [email protected]
Explore our entire website: www.franchisegrowthsolutions.com

TOP 10 REASONS TO INVEST IN RIKO’S NOW!

RIKO’S THIN CRUST PIZZA…Franchise opportunities abound in every business category, but entrepreneurs interested in the fast-casual space, and pizza, in particular, should have Riko’s Pizza on their radar as a brand poised for growth and success with ground floor opportunities for franchisees.

Franchise Money Maker
CLICK HERE NOW: Franchise your company, expand your brand, collect your royalties!

1. Pizza is a $50.7 billion dollar*1 American passion
The pizza industry was designated as the fastest-growing segment of fast-casual restaurants in 2017.*2 A Riko’s franchisee buys into a growth business with high consumer demand and a track record of solid growth year-after-year. The opportunity to bring America’s favorite comfort food to a franchisee’s local market ranks high among Riko’s attributes as a new franchisor in this extremely, profitable business category.

2. A proven business concept
The Riko’s business model has been refined over a 7-year period prior to expanding into franchise offerings. Riko’s founders have continually tried and revised products, systems, and operations as they evolved into a turnkey operation. Those hard-earned systems are passed to franchisees as easy-to-follow, foolproof guidelines for consistent results. The simplicity and ease of operations hold opportunity for owners with or without previous restaurant business experience.

3. Flexibility for Franchisees
Franchisees can choose from a flexible footprint that suits urban or suburban venues. The flexible business model is designed to work and succeed in any space. Riko’s fast-casual operation features take-out, dine in and delivery. Riko’s full-service casual restaurant features a family dining experience with a full bar and table service. Owners can purchase single units or multi-unit options that are commensurate with their experience and finances.

4. Multiple revenue streams
Diverse revenue streams including lunch, dinner, and late-night business with takeout, delivery, and fast casual dine in and full-service restaurant and bar options, gift cards and rewards programs offer multiple growth opportunities within a franchise.

5. Quality, quality, quality
Attention to details has made quality a hallmark of Riko’s brand. High-quality ingredients — nothing artificial — proven recipes, simplified menu, first-rate equipment, comfortable, contemporary venue design, staff training ensure business growth and a consistent brand image. Entrepreneurs are buying into a brand associated with quality at every level.

6. Streamlined, state-of-the-art business operating model
Riko’s has set standards and developed systems that are easy to follow and easy to replicate over and over. Pizza franchisees can produce consistent, great results. Both franchisees and their future customers are assured of the quality food and service that launched Riko ’s original success in three Connecticut locations. Pizza franchisees are armed with the tools and knowledge to produce consistent, great results. Riko’s is a turn-key business model that works across all processes. The goal: keep things simple and do them the best they can be done.

7. Traditional family values that resonate with consumers
Riko’s core philosophy: respecting family, serving great simple food with a family-friendly ambiance, offers an appealing alternative in an ultra-fast food world. The Riko’s guest experience is warm and casual, fast without being harried. It’s a comforting experience that engenders customer loyalty and on-going, multi-generational business.

8. Comprehensive training & support
A good franchise offering includes support and training . That’s why Riko’s consulted and hired industry experts to develop a first-class training program. A five to six-week long training program — with modules at the company modern training center and owner’s location — takes franchise owners through all phases of the business; covering all the components necessary to effectively and efficiently manage a Riko’s Franchise business. A full suite of manuals provides on-going reference and instruction for owners.

9. Owners with passion
As a franchisor with a passion for growth and quality, Riko’s future is guided by passionate, involved owners with a hands-on approach to day-to-day business as well as an eye on long-term growth strategies. The active 360º business outlook ensures Riko’s is prepared to adapt, adjust, and seize new opportunities as they arise. The formula is set, but it’s constantly fine-tuned for success.

10. Community-centric focus
The success of the Riko’s original locations is grounded in community involvement. Riko’s mission in all franchise venues is to be part of local family life. Franchisees are trained to be local in their location and engage in sponsoring local youth sports teams, supporting school events, donating pizza to community events and more as a means to building relationships and thanking customers for their loyalty.

For more information please visit: www.rikosfranchise.com