Have you met ROBS?
You have to admit for the financial services industry, this is a pretty cool name for financial product. But not to worry, this is nothing out of the ordinary. ROBS are not a new instrument that you have to be concerned with. In fact, ROBS or ROB is an acronym for Rollover for Business StartUp Program). It's also known for by it's more common names such as; IRA Rollover and Self Directed 401(k).
The beauty in this is that you are able to use either of these vehicles to invest in the following;
What makes this very beneficial is that you won't have to worry because you are able to utilize these funds Tax-Deferred and penalty free.
Most startup businesses rely on the use of lines of credit or start up loans called "micro" lending. But through ROBS these equity injections are not considered loans at all.
Let's Talk Benefits
Business owners, friends and colleagues can now use this financial advantage to invest or offer capital to partner, grow or sustain an existing business. In the past in order to do this you would inherit a ton of liability and fees associated with adding capital to another business.
Flexibility through diversification. By being able to take control of your retirement you can now pin point the assets or businesses that you would like to invest in. This could be your local small business coffee shop or your grandson's new start up business. You can know back your business and retirement.
You'll be surprised on how many middle age clients that we speak to who want to start a business once they leave corporate America. For many they are captured to leave their money in the rollercoaster of stock options and their ex-employer's holdings. ROB grants the opportunity to go out and bet on yourself. Start that business you always wanted.
You're now given the same ability that you had in investing as a employee to your company just like that of another corporation, franchise or small business.
How To Structure ROB
Like many things in finance, you want to make sure that you have everything structured properly. So here are some key factors to be aware of;
It is without surprise that many of us bid Toys R Us farewell. The retail giant now is in a swift liquidation process as the writing of this article.
The year of 2017 has been the bearer of so many companies that have filed bankruptcy. Here is a condensed list:
If you look closely there is a trend to majority of these "Fortune 500" companies going bankrupt. Most retail giants have great store fronts that are apart of their of the business model. This business model highly revolves on the ability and habit of the customer. These customers have a great interest in visiting a store to feel, touch and try various products before purchasing.
The number one lesson that any business owner can learn from Toys R Us.
Because of this business model many people believe that these retail giants are falling. But this is not the primary reason of their downfall. In fact, the biggest catalyst of their downfall is that of their operating expenses. For many retail giants they are the anchor tenants in various shopping malls and centers.
A large retail giant with supurb credit as a retail renter consist of;
- Verizon etc.
Operating expenses is what is needed for every business to operate. The average fortune 500 company has the following view of operating expenses from Toys R Us.
As you can see the rent liabilities have crippled Toys R Us and many retailers because they lose the ability to scale small when needed for tough times. How can we learn from this? It's important that if you plan to grow a brick and mortar business to do one of the following:
1. Purchase your office location do not lease.
2. If you must lease, then you should agree to a short term lease. A short term lease may be a higher monthly rate, however it will allow you to have a definite exit without the need of bankruptcy.