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  • How to Build an Impressive Investment Portfolio | Entrepreneur

    How to Build an Impressive Investment Portfolio | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Building an impressive investment portfolio is a pursuit that requires careful planning, strategic decision-making and a long-term perspective. While there is no one-size-fits-all approach, several key principles and strategies can help investors construct a portfolio that maximizes returns while managing risks.

    Here are some of the best ways to build an impressive investing portfolio, highlighting diversification, asset allocation, thorough research and the importance of patience and discipline.

    Diversification (foundations of success)

    Diversification lies at the core of building an impressive investing portfolio. By spreading investments across various asset classes, industries and geographical regions, investors can reduce the impact of individual investment failures and potentially enhance overall returns.

    Diversification helps to mitigate risk and protect against market volatility. A well-diversified portfolio encompasses different types of assets such as stocks, bonds, real estate, commodities and even alternative investments like cryptocurrencies. The right mix of assets depends on an investor’s risk tolerance, investment goals and time horizon.

    Related: How to Diversify Investments: 4 Easy Tips to Help You Get Started

    Asset allocation (balancing risk and return)

    Asset allocation refers to the strategic distribution of investments among different asset classes. It plays a vital role in determining the risk and return profile of a portfolio. Investors should carefully assess their risk tolerance and financial goals to allocate assets accordingly.

    Generally, younger investors with a longer time horizon can afford to take more risks and allocate a higher proportion of their portfolio to equities. On the other hand, older investors nearing retirement may opt for a more conservative approach with a larger allocation to fixed-income investments.

    Regular rebalancing of the portfolio is crucial to maintain the desired asset allocation over time.

    Thorough research (keys to informed decisions)

    Thorough research is a critical component of building an impressive investment portfolio. Investors should dedicate time and effort to understand the companies, industries and trends they invest in. Fundamental analysis, which involves studying financial statements, evaluating business models and assessing competitive advantages, can help identify companies with solid growth potential.

    Additionally, staying informed about macroeconomic trends, geopolitical events and regulatory changes can provide valuable insights into the investment landscape. Investing in what you understand and conducting due diligence can significantly increase the chances of making informed investment decisions.

    Related: The Investing Strategy That Can Lower Risk in Your Portfolio

    Patience and discipline (long-term perspectives)

    Successful investing requires patience and discipline. Markets can be unpredictable, and short-term fluctuations are inevitable. Investors should resist the temptation to chase quick gains or make impulsive decisions based on short-term market movements. Instead, adopting a long-term perspective allows investors to weather market downturns and benefit from compounding returns.

    Regularly reviewing and adjusting the portfolio is necessary, but knee-jerk reactions to short-term market volatility often lead to suboptimal results. Staying focused on long-term goals and adhering to a well-defined investment strategy are crucial elements of building an impressive portfolio.

    Below are two handfuls worth of simple ways to set investors on the right path:

    1. Set clear financial goals: Define your investment objectives, and align them with your overall financial goals. This will help you determine the appropriate investment strategy and time horizon.

    2. Conduct thorough research: Before making any investment, conduct comprehensive research on the asset or company you plan to invest in. Understand the fundamentals, financial health, competitive position and growth potential to make informed decisions.

    3. Diversify your portfolio: Spread your investments across different asset classes, sectors and geographical regions. Diversification helps mitigate risks and allows you to benefit from various market opportunities.

    4. Follow a long-term perspective: Successful investing requires a long-term outlook. Avoid short-term market noise, and focus on the long-term potential of your investments. This approach allows you to ride out market volatility and benefit from compounding returns.

    5. Understand risk tolerance: Assess your risk tolerance, and invest accordingly. Be honest with yourself about how much risk you can handle, and adjust your investments to align with your comfort level. Balancing risk and return is crucial for long-term success.

    6. Stay informed: Keep yourself updated on market trends, economic indicators and industry developments. Stay informed about the companies you invest in, and monitor their performance regularly. Knowledge is power when it comes to making smart investment decisions.

    7. Avoid emotional decision-making: Emotions can cloud judgment and lead to impulsive investment decisions. Avoid making investment choices based on fear or greed. Instead, rely on research, analysis and your predetermined investment strategy.

    8. Consider dollar-cost averaging: Invest a fixed amount of money at regular intervals, regardless of market conditions. This strategy, known as dollar-cost averaging, allows you to buy more shares when prices are low and fewer shares when prices are high, potentially lowering your average cost per share over time.

    9. Take advantage of tax-efficient strategies: Be mindful of taxes, and consider tax-efficient investment strategies. Utilize tax-advantaged accounts like IRAs or 401(k)s to minimize tax liabilities. Also, understand the tax implications of different investment vehicles, and seek professional advice if needed.

    10. Monitor and rebalance: Regularly review your portfolio’s performance, and make necessary adjustments. Rebalance your portfolio periodically to maintain the desired asset allocation. Changes in market conditions or your financial situation may require reallocation to align with your goals.

    Related: Want to Make Smart Investments? Use These Expert Tips.

    Following these 10 steps can help investors make smarter investment decisions that align with their financial goals, manage risks effectively and increase the likelihood of long-term success.

    Building an impressive investing portfolio is a gradual and continuous process that requires careful planning, strategic decision-making and patience. By diversifying across different asset classes, allocating assets based on risk tolerance and financial goals, conducting thorough research and maintaining discipline, investors can increase their chances of achieving their investment objectives. While the investing landscape may present challenges and uncertainties, adhering to these best practices can help navigate the complexities and build a portfolio that stands the test of time.

    Ultimately, building an impressive investment portfolio requires a blend of art and science, combining knowledge, experience and the ability to make sound decisions in pursuit of long-term financial success.

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    Michael Stagno

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  • Creative Ways Startups Can Earn Funding in Tough Economic Times | Entrepreneur

    Creative Ways Startups Can Earn Funding in Tough Economic Times | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    In a declining economy, startups face an uphill battle when it comes to securing funding. Despite financial hardships, with resourcefulness, innovation and strategic planning, entrepreneurs can explore various avenues to obtain the necessary capital for their ventures.

    Venture-backed startups have long been the bedrock of innovation, driving economic growth and shaping industries. In recent years, there has been a noticeable decline in the number of venture-backed small businesses. Let’s delve into the reasons behind this decline, exploring the changing landscape of entrepreneurship and the factors that have contributed to this trend:

    Related: How to Access Capital in an Economic Downturn

    Why startups are losing speed

    1. Saturation of the market: One key factor contributing to the decline of venture-backed startups is the saturation of the market. The startup ecosystem has experienced an unprecedented boom over the past decade, leading to an influx of companies competing for funding and market share. With numerous startups vying for attention, venture capitalists have become more cautious in their investments, opting to support only the most promising and disruptive ventures. Consequently, startups are finding it increasingly difficult to secure funding, especially those operating in crowded markets.

    2. Risk aversion and investor preference: In recent years, there has been a noticeable shift in investor preference towards late-stage and growth-stage startups. Venture capitalists are more inclined to invest in established companies that have demonstrated a solid track record of growth and revenue generation. This risk-averse behavior has resulted in reduced funding opportunities for early-stage startups, which typically require substantial capital injections to grow and scale. The scarcity of funding options has undoubtedly hindered the formation and growth of new ventures.

    3. Changing regulatory landscape: Regulatory factors have also played a role in the decline of venture-backed startups. Governments around the world have implemented tighter regulations and compliance requirements in the wake of financial crises and scandals. While these measures aim to protect investors and consumers, they have inadvertently increased the barriers to entry for startups. Compliance costs and legal complexities have become significant hurdles for entrepreneurs, particularly those operating in heavily regulated industries such as fintech, healthcare and transportation. The burden of navigating complex regulatory frameworks has deterred many potential founders from pursuing venture-backed startups.

    4. Alternative funding sources: The decline in venture-backed startups can also be attributed to the availability of alternative funding sources. Traditional venture capital is no longer the sole option for entrepreneurs seeking funding. Crowdfunding platforms, angel investors and corporate venture capital funds have emerged as viable alternatives, providing capital and support to startups. Additionally, the rise of initial coin offerings (ICOs) and blockchain technology has enabled entrepreneurs to raise funds through token sales. These alternative funding options have diversified the startup funding landscape, reducing the reliance on traditional venture capital and contributing to the decline of venture-backed startups.

    5. Changing entrepreneurial landscape: The nature of entrepreneurship itself has evolved over time. With the democratization of technology, the cost of starting a business has decreased, making it easier for individuals to embark on entrepreneurial endeavors. This has led to a rise in bootstrapped startups and self-funded ventures, which may not seek venture capital funding at all. Furthermore, the gig economy and freelance work have attracted individuals who prefer independent work arrangements over building traditional venture-backed startups. The changing entrepreneurial landscape has shifted the focus away from venture-backed startups, contributing to their decline.

    Although we have seen a decline in the number of venture-backed, it’s important to know that there are numerous other ways for startups to garner funding.

    Related: Raising Funding in a Downturn Isn’t Impossible — I Did It (and You Can, Too).

    Creative ways to earn funding

    Below are several creative ways that startups can earn funding even in challenging economic times:

    1. Bootstrapping and self-funding: One of the most accessible and immediate ways for startups to earn funding in a declining economy is through bootstrapping and self-funding. By leveraging personal savings, credit lines or personal assets, entrepreneurs can finance their ventures without relying on external investors. While bootstrapping may require sacrifices and careful financial management, it grants startups full control over their operations and minimizes the need to dilute equity at an early stage. Additionally, self-funding demonstrates commitment and resilience, which can attract potential investors in the future.

    2. Strategic partnerships and alliances: Startups can explore strategic partnerships and alliances as a means to secure funding in a declining economy. By identifying synergistic organizations or established companies in their industry, startups can propose mutually beneficial collaborations. Such partnerships may involve strategic investments, joint ventures or co-development agreements, which provide startups with access to funding, resources, expertise and a broader customer base. These alliances can not only alleviate financial constraints but also enhance market credibility and pave the way for future growth.

    3. Government grants and programs: Governments often offer grants, incentives and programs to stimulate innovation and entrepreneurship, even during economic downturns. Startups can tap into these resources by researching and applying for grants specifically tailored to their industry or innovative projects. These grants can provide much-needed funding, mentorship and networking opportunities. Additionally, government-backed programs, such as incubators and accelerators, offer access to valuable resources, expertise and potential investors, further aiding startups in their quest for funding.

    4. Crowdfunding: Crowdfunding has emerged as a popular and effective funding avenue for startups in recent years. It involves raising capital from a large pool of individuals through online platforms. In a declining economy, crowdfunding allows startups to bypass traditional funding sources by directly appealing to potential customers, supporters and like-minded individuals who believe in their vision. By offering early access to products, exclusive perks or equity shares, startups can incentivize individuals to contribute to their fundraising campaign. Crowdfunding not only provides funding but also helps validate the market demand for a startup’s product or service.

    5. Impact investment and social funding: In the face of economic decline, there has been a growing focus on impact investment and socially responsible funding. Investors and funds dedicated to making a positive social or environmental impact are actively seeking startups with a strong mission and purpose. By aligning their business models with social or environmental goals, startups can attract impact investors who are willing to provide funding in exchange for measurable social or environmental outcomes. Social crowdfunding platforms and impact-focused venture capital firms offer additional opportunities for startups to secure funding while making a positive difference in the world.

    Related: Think You Need Venture Capital Backing to Start Your Business? Think Again.

    While venture-backed startups have long been the driving force behind innovation and economic growth, their decline in recent years can be attributed to various factors. Saturation of the market, investor preference for late-stage companies, changing regulatory landscape, availability of alternative funding sources and a changing entrepreneurial landscape have all played a role. Despite this decline, entrepreneurship remains vibrant, with new models and funding mechanisms continuing to shape the startup ecosystem.

    In a declining economy, startups must adopt creative approaches to secure funding for their ventures. Bootstrapping, strategic partnerships, government grants, crowdfunding and impact investment are just a few avenues that entrepreneurs can explore. By leveraging these funding sources, startups can mitigate the challenges posed by economic downturns and pave the way for sustainable growth and success.

    As the landscape evolves, it is crucial for entrepreneurs and investors to adapt and embrace new opportunities to foster innovation and support the next generation of disruptors. Furthermore, entrepreneurs should remain adaptable, resourceful and open to exploring new opportunities as the economic landscape evolves.

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    Michael Stagno

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  • Is the Real Estate Market on the Verge of a Turnaround? | Entrepreneur

    Is the Real Estate Market on the Verge of a Turnaround? | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The real estate market, like many other industries, has experienced a series of ups and downs throughout history. It feels all too familiar — almost like a recurring cycle that we’ve witnessed before.

    In fact, when we examine our current world, it’s clear that we still inhabit the same society with a similar, if not the same, socio-economic model and structure as we did decades ago. This begs the question: Are we truly on the cusp of an impending turnaround, or are we simply caught in the ebb and flow of a recurring pattern?

    Related: Is Buying Rental Property Worth It in 2023? | Entrepreneur

    History indeed repeats itself

    As market shifts play out, I think the similarities between the past and the present become glaringly apparent, particularly when examining the 1970s-1980s and the early 2000s.

    During the 1970s-1980s, the real estate market was plagued by rising inflation and interest rates, resulting in a dreary slowdown. Shockingly, recent data shows a disconcerting similarity.

    Our data reveals that the average time required for transactions to close increased from a mere 4.32 months in 2021 to a staggering 5.57 months in 2022. This extended timeline eerily evokes memories of the sluggish market conditions prevalent in the 1970s-1980s.

    Several years later, we observe a reprise of this pattern, with rumor-mongering and frenzied market activity fueled by lax lending standards and unhindered access to credit, easing the crisis brought by a worldwide health crisis.

    Equally disconcerting, the early 2000s witnessed a meteoric rise in housing prices coupled with a dangerous relaxation of lending standards. We see history repeating itself in the recent past. Home prices have soared to dizzying heights, propelled by strikingly similar factors.

    I’m not trying to downplay anything, but while the recent data doesn’t necessarily mirror the catastrophic subprime mortgage crisis and the subsequent global financial meltdown of 2008, it stands as a chilling reminder of the potential economic perils lurking around the corner.

    How speculative should we be based on recent history?

    Our data points from the past three years reveal some tantalizing insights into the real estate market. The overall comparison between 2021 and 2022 paints the same bleak picture of a market grinding to a slow halt, as indicated by the longer time taken to close transactions.

    During this time, we confronted the harsh reality that buyers and sellers may have entered a perpetual negotiation dance.

    Taking a look at the data for January to April of each year reveals the drastic fluctuations happening in the market. The surge in paid transactions in 2022 suggests a frenzy of buyer activity, driven by low mortgage rates.

    However, the subsequent decline in transaction volume in 2023 plunges us into a vortex of doubt, hinting at a potential slowdown or perhaps the awakening of rationality.

    Related: Why Every Entrepreneur Should Invest in Real Estate

    Relating our data to national statistics

    To gain a broader perspective, let’s compare our SetSchedule data points with national statistics provided by the NAR. According to the NAR, the real estate market experienced significant growth in 2021, with a surge in home sales and increasing home prices.

    However, as we entered 2022, the market started to cool off slightly, resulting in a slower pace of sales. It appears that the real estate market, no matter how localized or segmented, is not immune from the gravitational force of national dynamics.

    Forecasting a potential turnaround

    Analyzing the historical data and observing the current trends in the real estate market, it is reasonable to predict a potential turnaround or anticipate the repetition of an upward cycle that we have already experienced in the past. The similarities in the factors influencing the market today suggest a familiar pattern that may unfold once again.

    The decrease in the total number of days before a transaction is closed and the average time closed in the first four months of 2023 compared to 2022 hints at a glimmer of hope, a flicker of optimism in the hearts of buyers and sellers. Although the total number of paid transactions decreased, it would be remiss not to consider the erratic nature of market fluctuations and external influences.

    Looking ahead, if the trend of decreasing time to close transactions persists throughout the year, it may indicate a seismic shift toward a seller’s market. As the market gains momentum and competition among buyers intensifies, sellers can revel in the prospect of more favorable conditions and potentially higher sale prices.

    Related: How Does Inflation Affect Real Estate? Here’s What You Need to Know. | Entrepreneur

    As we navigate the ever-evolving real estate market, it’s crucial to acknowledge the patterns of the past while maintaining a cautious and informed perspective. History may repeat itself, but each market cycle brings unique dynamics and challenges. Analyzing the data, drawing insights and remaining adaptable, helps buyers and sellers make informed decisions in this complex landscape. Ultimately, the future of the real estate market will unfold with its own twists and turns, and it’s up to us to navigate them with wisdom and foresight.

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    Roy Dekel

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  • Why a Franchise Is the Best Long-Term Investment Strategy | Entrepreneur

    Why a Franchise Is the Best Long-Term Investment Strategy | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    While today’s economic landscape is uncertain, making the right choices to build wealth isn’t something to take lightly. Choosing the right investment is not something that comes naturally to most people. In many cases, people save money or invest in a 401(k) plan provided by their employer. Others take on more risk by investing in individual stocks or practicing classic principles like the 60/40 rule of portfolio diversification.

    No matter the expertise, there is always a level of risk involved when investing and there are other strategies to diversify your overall investment portfolio.

    Related: 7 Things You Need to Know Before Becoming a Franchise Owner

    Investments in franchising are an alternative

    Franchising can be a worthwhile option for those who want to expand their investment portfolio in the long term. It offers advantages with numerous benefits as a long-term investment strategy. The long-term growth prospects are exciting, and there are plenty of franchises (and their respective industries) to choose from.

    Many examples of franchise investments in the food and beverage or health and wellness industries exist. Subway, Dairy Queen and Anytime Fitness, to name a few. With these particular brands, franchisees benefit from substantial brand equity and it helps that they’re built on proven business models, training and ongoing marketing and back-office support, including financial management tools and access to capital.

    Several industries have recently been recognized for strength and viability even during turbulent or uncertain economic times, including the Great Recession of 2007-08 and the Covid-19 pandemic. These franchises have been referred to as recession-proof franchises, as many of them were called to the frontline to help provide baseline human and business services.

    For example, one industry that continues to prove itself during strained economic times is commercial cleaning. Franchising opportunities in commercial cleaning are plentiful and many brands have survived and thrived during past recessions and global pandemics.

    During the Covid-19 pandemic, commercial cleaning companies were relied upon to keep businesses (including hospitals, medical testing centers, doctor offices, grocery stores, etc.) clean and disinfected. Commercial cleaning suddenly became a topline business operation process as a redefined customer expectation, and the definition of cleanliness materialized. According to industry analysts, the commercial cleaning industry is expected to hit more than $468 billion in revenue by 2027. That’s a 51.67% increase over the market’s $308.7 billion value in 2020.

    Building on an existing model

    Master franchising is an investment many are discovering due to recent economic uncertainties. Master franchising involves taking control of a region or territory to expand unit franchises under the same brand umbrella.

    As an investor looking to increase returns, the master franchisor aims to invest in an established brand through territory ownership and selling unit franchise models to local entrepreneurs looking to go into business themselves. As the regional franchisor, the investor controls high-level business decisions, such as marketing and sales, while the party franchisee staffs, manages and executes at their independent location.

    The benefits of franchising go beyond just expanding your business reach. Engaged franchise brands help their franchisees in many ways, including financial management tools, marketing technologies and cash flow. By using your established brand, you can attract potential franchisees who may not have considered starting their own business otherwise.

    In addition, the benefits of franchising as a long-term investment strategy are immense. One key advantage is that franchisees make decisions and are their own boss, allowing them to run the franchised business according to their preferences. When a franchisor welcomes a new franchisee into its system, they ensure the franchisee is well-equipped to take on this new venture. This includes extensive training, support, assistance and guidance in every aspect of the business. This allows for greater flexibility and control over one’s career path.

    One significant benefit of franchising is that it allows investors to acquire a franchise and develop their own franchise company. This approach pays off as the franchise program provides access to a proven business model, which has been tried and tested in various locations. Additionally, franchising enables investors to open more locations under the brand, increasing the business they can generate. Buying into a franchise also means lower risk, as the brand network offers ongoing expert support while operating within an established business model.

    Another significant advantage is the opportunity to invest in an established franchise business product already developed and modified for market success while operating under a recognized brand. Additionally, franchisors often modify their franchise agreements to suit individual franchisees’ markets.

    Related: The Pros and Cons of Franchising Your Business

    Is franchising safer than a savings account or stocks?

    Recent events in the banking and financial sectors are concerning for many people looking to build a portfolio that can sustain their lifestyle through retirement. With bank failures like Silicon Valley Bank and others, investors are nervous about cash sitting in savings accounts (not to mention the next-to-nothing returns) while the banks ineffectively raise investment rates against inflation. Investors are looking for other vehicles to utilize their cash where they can earn a more substantial return with lower risk. This is where franchising starts to look safe, attractive and viable, especially given the scrutiny of the franchise purchase process.

    Franchise disclosure is a critical component of the process, offering prospective franchisees the opportunity to read about the rules, laws, and requirements before investing. The Franchise Disclosure Document contains a wealth of essential information, such as crucial operating details and locations of other franchise operators. This allows entrepreneurs, both experienced business owners and first-time investors, to make informed decisions about owning their business. The franchise rule requires franchisors to offer support to keep franchise operators’ employees and provides growth opportunities for owner-established investors.

    Franchising might be an exciting option for investors looking for new and creative ways to protect their savings while putting their money to work. As with any decision, due diligence, research and learning are always recommended. Additionally, franchise investment is a topic of conversation that investors can engage with their fiduciary, wealth or financial advisor.

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    Adam Povlitz

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  • 4 Profitable Ways to Invest in Real Estate for First-Timers | Entrepreneur

    4 Profitable Ways to Invest in Real Estate for First-Timers | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    When it comes to investing, few sectors offer the level of profitability and stability that residential real estate does. For first-time investors, this venture can be a powerful tool to generate income and accumulate wealth.

    The real estate market, particularly the residential sector, has consistently proven to be a solid investment choice. According to the Federal Reserve’s report on consumer finances, the primary residence accounts for about one-quarter of all wealth among U.S. households as of 2020. Additionally, a study by the National Association of Realtors found that in 2020, despite the challenges of the global pandemic, the median sales price of houses sold in the United States still saw an increase of 6.7%. These stats underline the remarkable resilience and profitability of the residential real estate market.

    When you consider investing, it’s hard to overlook residential real estate’s dual advantages — steady cash flow through rentals and potential asset appreciation over time. Furthermore, real estate investment has a long-standing history of being a hedge against inflation. As living costs rise, so does the value of properties and rental income, providing real estate investors with a level of protection against the dollar’s declining purchasing power.

    For first-time investors, investing in residential real estate can be a powerful tool to generate income, accumulate wealth and diversify an investment portfolio. And while the venture might seem daunting at first glance, there are several accessible strategies that can maximize profitability and mitigate risk. Armed with these strategies and a solid understanding of the market, you’ll be well-positioned to reap the rewards of real estate investment.

    Related: Why Savvy Investors Prefer Investing in Real Estate Over Equities

    1. House hacking

    House hacking involves purchasing a multi-unit property, living in one unit and renting out the others. The tenants’ rent can cover your mortgage and even provide some extra income.

    For example, if you purchase a triplex for $300,000 with a monthly mortgage payment of $1,500, and you rent out each of the two units for $800, you’re receiving $1,600 in rent. You’re effectively living for free and making a $100 profit each month.

    Start with market research to look for multi-unit properties in areas with high rental demand. Financial planning is critical here; ensure you have a solid credit score to secure a favorable mortgage rate. Once you’ve acquired the property, you’ll have to be ready to take on landlord duties such as rent collection, maintenance and conflict resolution. If you’re not comfortable with these tasks, consider hiring a property management company.

    2. Long-term rentals

    Long-term rentals can provide a consistent cash flow while also building equity over time. As a landlord, you can profit from rent payments and property appreciation.

    Consider a $200,000 property that rents for $1,200 per month. After expenses (mortgage, insurance, taxes, maintenance), you might net $200 per month. Over the course of a year, that’s $2,400 in cash flow. Plus, as you pay down the mortgage and the property appreciates, your wealth grows.

    For long-term rentals, the location is key. You need to choose areas with strong rental markets, considering factors like job growth, population growth and economic stability. When it comes to financing, it’s crucial to obtain a mortgage that allows you to generate a positive cash flow. Once you have tenants, you’ll need to manage tenant relations and property upkeep.

    Related: 7 of the Most Common Mistakes Made By Beginner Real Estate Investors

    3. Fix-and-flip

    Fix-and-flip is a more short-term investment strategy. This involves buying a property in need of work, renovating it and selling it for a profit.

    For instance, you might buy a distressed property for $100,000, invest $30,000 in renovations and then sell it for $170,000. After closing costs and expenses, you could net a substantial profit.

    With the fix-and-flip strategy, your first step should be finding a good deal on a property. Look for distressed properties sold below market value. You might need to work with real estate wholesalers or scour foreclosure listings. Budgeting is also crucial. Accurately estimate your renovation costs and potential resale value to ensure profitability. Lastly, you’ll need to manage the renovation process, overseeing contractors or even doing some of the work yourself if you’re skilled in that area.

    4. Short-term vacation properties

    The rise of platforms like Airbnb and VRBO makes short-term vacation rentals an attractive investment strategy. These properties can generate higher income than traditional rentals due to their per-night pricing model.

    For example, a beachfront condo might rent for $1,500 per month long-term. But as a vacation rental, it might fetch $150 per night. If you rent it for just half the month, you’re already making twice as much.

    Location is everything for short-term vacation properties. Choose a property in a high-demand vacation area, considering factors like tourist attractions, seasonality and local regulations. Once you’ve acquired the property, you’ll need to market it effectively. Listing your property on popular short-term rental platforms and investing in professional photography can help attract guests. Lastly, be prepared to handle frequent guest turnover or consider hiring a property management company that specializes in short-term rentals.

    Residential real estate offers an array of profitable strategies for first-time investors. By understanding and leveraging these methods, you can create a robust and profitable investment portfolio. Each strategy — house hacking, long-term rentals, fix-and-flip and short-term vacation rentals — has its unique set of benefits and considerations.

    Related: 5 Proven Steps to Become a Real Estate Millionaire, According to an Investor

    The secret to success in residential real estate investing isn’t much of a secret at all. It’s about diligent research, careful planning and strategic execution. By following the actionable steps provided in this article, you’ll be well-positioned to profit from your first residential real estate investment. However, remember that every investment carries risk, and it’s essential to thoroughly understand these risks before jumping in. Start small, learn as you go and scale up as you become more comfortable and experienced. With patience and persistence, your real estate investments can be a significant source of income and wealth accumulation over time.

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    Ari Chazanas

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  • This Work Policy is Driving More Millennials to Buy a Home in Suburbia | Entrepreneur

    This Work Policy is Driving More Millennials to Buy a Home in Suburbia | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    In the grand game of real estate, there’s a new king on the board. The suburbs are not just surviving, they’re thriving, and it’s all thanks to the game-changer that is flexible work. Who needs a skyscraper view when your office is your living room, and your commute, is a mere amble from bed to desk?

    “We expect the ability to WFH to remain an incentive for young families to seek out more remote suburban and rural markets where housing may be more affordable,” a recent Bank of America report suggests. It’s like swapping a sardine-can city apartment for a comfortable, spacious home. It’s not rocket science; it’s simply the art of making work work for you.

    The five-day office week, like the dodo, is heading for extinction. Lawrence Yun, the chief economist at the National Association of Realtors, says, “A little bit of a longer commute is not a hindrance” if you’re not in the office Monday to Friday, 9-5. Not when you’ve got the flexibility to decide where and when you work. Why endure the daily urban rat race when you can occasionally roll with the relaxed suburban pace instead?

    Related: A New Remote Work Trend is Helping Employers Retain Talent Amid Labor Market Pressures

    Millennials: Not so urban after all

    Remember when we thought millennials were city slickers, with their Uber rides and brunch habits? Turns out, they’re embracing the suburban dream as eagerly as a kid pouncing on the last slice of pizza.

    Hyojung Lee, a professor of housing and property management at Virginia Tech, humorously notes, “We’ve always talked about millennials as urban people… But it turns out they’re not that cool anymore.” Indeed, some 45% of millennials now plan to buy homes in the suburbs, according to a recent Bank of America survey. That’s up from 33% in 2015. Perhaps it’s not about being “cool” anymore but about being “smart.”

    The gourmet exodus: A culinary revolution in suburbia

    This new suburban migration is not just about homes and workplaces. It’s also transforming the gastronomic landscape. Urban retail vacancies surpassed suburban ones in 2022, for the first time since 2013, according to the Wall Street Journal. Like ants to a picnic, restaurants and retailers are flocking to these thriving town centers.

    Consider the salad chain, Sweetgreen. Once a downtown staple, it’s now making the suburbs its main stage with 50% of its locations nestled there. And it’s not just salad — even big-name chefs are choosing suburban towns for their next culinary adventures. It’s as if suburbia has become the new Manhattan for the restaurant world.

    The face of suburbia is changing, too. Long associated with homogeneity, suburbs are now outpacing the national average for racial diversity, according to a Brookings Institution analysis. The stereotype of the white picket fence is slowly giving way to a vibrant mosaic of cultural diversity.

    The city still stands: A reality check

    Despite this suburban boom, downtowns aren’t ready to throw in the towel just yet. Yun reminds us that people are returning to city centers, even in the hybrid work era. And while suburbs close to cities are flourishing, demand in the far-out ‘burbs has dropped significantly since the pandemic’s peak.

    So, in this grand game of real estate, it’s not about cities losing or suburbs winning. It’s about recognizing that the playing field is changing. As we embrace the flexibility that technology affords us, our living preferences are evolving in turn. As I tell my clients whom I helped figure out their return to office and hybrid work plans, you need to go where your employees are, rather than simply trying to impose a top-down command-control structure on them — at least, if you want to retain your top talent.

    Related: You Should Let Your Team Decide Their Approach to Hybrid Work. A Behavioral Economist Explains Why and How You Should Do It.

    Cognitive biases: Unseen forces shaping our choices

    Underneath our decision-making processes, cognitive biases often run the show. They’re like puppeteers, subtly influencing our choices and judgments. Two key biases that might be influencing this suburban migration are the status quo bias and the anchoring bias.

    First, let’s consider the status quo bias. This is our tendency to prefer things to stay the same by doing nothing or maintaining our current or previous decision. With the onset of the pandemic, the status quo was disrupted, forcing us to adapt to a new “normal” — working from home.

    For many, this temporary change has transformed into a comfortable routine. The novelty has worn off, replaced by the status quo bias. We’ve become accustomed to the convenience, freedom and flexibility of remote work. The prospect of returning to our previous lifestyle — the daily commute, the rigid office hours — seems more daunting than sticking to the new status quo.

    The anchoring bias, on the other hand, refers to our tendency to rely too heavily on the first piece of information we encounter (the “anchor”) when making decisions. When the pandemic hit, the “anchor” for many was the vision of a lifestyle free from daily commuting and office constraints. This initial impression has strongly influenced subsequent decisions about work and living arrangements.

    Moreover, as we have seen suburban life flourish — with burgeoning retail spaces, diverse communities, and the promise of a more balanced lifestyle — these positive first impressions have only been reinforced. The anchor has been cast, and it’s landed firmly in suburban territory.

    By understanding these cognitive biases, we can make more informed decisions about our work and lifestyle choices. As we navigate this era of change, it’s crucial to challenge our biases, question our assumptions, and remain open to all possibilities. Only then can we truly make the most of the opportunities that the future of work presents.

    Conclusion

    In the end, whether it’s the city’s siren call or the suburb’s sweet serenade that wins your heart, it’s clear that flexible work has forever changed the way we live. It’s reshaped not just our working lives, but our homes, our communities and our landscapes. The suburbs are having their moment in the sun, not as a retreat from the city, but as a compelling alternative.

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    Gleb Tsipursky

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  • 7 Essential Questions to Ask Yourself Before Starting a Franchise | Entrepreneur

    7 Essential Questions to Ask Yourself Before Starting a Franchise | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    More people than ever are curious about starting a franchise business. The potential rewards seem obvious, but the risks also seem high. Even more than risk and reward, starting a franchise requires a hard look in the mirror to decide if you really have the makeup to become an entrepreneur.

    Here are seven questions you should ask yourself before starting a franchise business.

    Related: 7 Things You Need to Know Before Becoming a Franchise Owner

    1. Do I have a future vision?

    To take action and start a franchise, you need to understand your why, not necessarily the widget. Do you have a future vision of your life you’re trying to achieve? Think of that as the destination and the franchise as the car — the vehicle to help you get to the destination.

    A clear future vision should include your involvement in the business, your career and the lifestyle you visualize for yourself. This will help you select the right franchise model that fits this vision.

    2. Do I have confidence, grit, determination and resilience?

    Every business owner in America had to deal with the impact of Covid-19. There will be unknown future obstacles when you start a franchise.

    To move forward, you must bridge uncertainty with an emotional commitment and confidence to overcome obstacles. You must also have the grit and resilience to see through difficult periods. A franchise can help you launch more quickly than starting a business from scratch and will help you navigate any difficulties through best practices from a network of fellow franchise owners.

    3. Should I go it alone or engage a franchise consultant?

    Like shopping for a house, you can certainly find franchise opportunities on the internet. However, it’s a noisy environment with thousands of brands — and like everything else, some are good and some are bad. And no franchise brand shows its business model on its website, so you’re drawing conclusions purely from a consumer viewpoint.

    You cannot easily find newer emerging brands on the internet and can waste tons of time investigating brands only to find out they’re not a fit. A franchise consultant, like a good financial advisor, will reverse this process and start with you and your goals, help you set your criteria and only then match you with franchise brands that fit. They then will guide you through the investigation with education and resources.

    Related: How to Narrow Down Thousands of Franchises to Find the One That’s Right for You

    4. Do I have the capital to start a franchise?

    You should carefully consider your financial ability when starting a franchise. To understand the specific capital requirements for any particular franchise, you can consult Item 7 of the Franchise Disclosure Document, which details the Estimated Initial Investment. These are based on actual franchises and tend to be very accurate. However, make sure to build your own estimates, as these line items can vary significantly between franchisees.

    While there are always exceptions, investment ranges can commonly be broken down into three categories. These include self-employment or work-from-home models; scalable executive service models; and semi-absentee or semi-passive models:

    • Self-employment or work-from-home models with few or no employees that do not require customer-facing real estate generally range from $75,000 to $150,000 in total investment per territory or unit.
    • More scalable, equipment-intensive service brands that do not require customer-facing real estate tend to range from $100,000 to $350,000 per territory or unit.
    • Brick-and-mortar location-based franchises require more real estate investment but tend to be more semi-absentee and can range from $250,000 to $1 million or more per unit.

    5. How will I finance the franchise?

    There are many options to help you finance your new franchise. If you have a former 401(k) or IRA, you can roll over a portion of your retirement account balances in your new business’ stock tax-free. Candidates also use personal loans, such as a home equity line of credit (HELOC) or a securities-backed portfolio loan, which have the lowest debt costs and easiest access to capital.

    You can also obtain an SBA-guaranteed bank loan, which is a popular option. Many franchisors will have prearranged financing with preferred vendors. Regardless of your financing choice, it is important to consider it ahead of time to make sure your business and personal needs are covered during your business launch.

    6. What franchise industry is right for me?

    Many of my candidates are looking for a business they’re passionate about. Of course, you need to believe in your product or service, but it doesn’t need to be your hobby. It is the business model that needs to fit. For example, I owned a fitness franchise. While I’m not a fitness junkie, the business model fit and seeing the joy in our clients transforming their health was very gratifying.

    Going through a deliberate process of investigating business models that fit your criteria and comparing them with the help of an experienced consultant is often the best way to find the right industry. By focusing on the business model and your role as a franchise owner, you will find the industry can be a secondary criterion.

    Related: Check Out the Fastest-Growing Franchises In 2023

    7. Do I believe in continuous improvement or “if it isn’t broken, don’t fix it?”

    If you have a more reactive style, franchise ownership is likely not for you. Owning a franchise requires you to constantly look at the business with an eye toward continuous improvement — making each process, such as sales, marketing, operations or customer service, continuously better for your customers. Having a proactive approach versus a reactive approach is critical to success.

    While there are many considerations in starting a new business, fundamentally it is an emotional decision that starts with you doing some self-reflection. Asking yourself the hard questions will let you know if you’re emotionally ready to take the next step.

    If you’re not ready, consider what changes or milestones in your life need to be achieved so you’re ready when the time comes. If you find you are excited and ready to move forward, seek out the resources needed to explore franchising and commit to follow through the process. This will bring you the confidence you need to find success.

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    David Busker

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  • 6 Questions to Ask Yourself Before Selling Your Business | Entrepreneur

    6 Questions to Ask Yourself Before Selling Your Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Owning a business is a big decision and choosing to sell it can be just as significant.

    Selling your business comes with many considerations, including the value of it and any financial prospects, what a potential buyer is looking for, if you’re actually done with your business and what you’ll do after it’s sold. If you’re considering selling your business, ask yourself these six questions to assess your options and identify the next best step.

    Related: Selling Your Business? Do These 6 Things Right Now.

    1. Am I ready to sell?

    Start by outlining your reasons for selling. What’s driving your decision to sell? Maybe you’re burned out post-pandemic and you need to get a fresh perspective. Maybe you feel stuck, like a hamster on a wheel who can’t find its way out. In these cases, selling may not be the answer. Consider your goals for the sale and what a positive outcome would look like. It can be helpful to write down your thoughts or list the pros and cons.

    Once you answer these questions, seek an opinion from someone you trust. Selling your business is not just a financial consideration, but it’s also an emotional one. Take time to get to the bottom of what’s fueling your feelings and then get into how it’s done (if you still want to sell).

    2. What is the value of my company?

    As a business owner, you should have an excellent (and realistic) understanding of what your business can get in the open market. My experience with many business owners has been that they value their business at least 50% higher than the actual value. It’s essential to get a third party to evaluate your business.

    You can look into programs that provide a back-of-the-envelope calculation or you can go to a professional business valuator. A back-of-the-envelope estimate typically focuses on the return on investment (ROI), a quick, practical way of reaching a selling price. Although it is universally utilized, an ROI calculation overlooks factors such as time, capital appreciation, risk, potential and inflation, among other factors.

    Utilizing a professional business valuator will provide a more accurate number, which can result from different approaches and considerations (including assets, market comparison, income, etc.). The challenge with this route is finding the right valuator for your business and industry who will charge a fair appraisal price.

    Related: 6 Proven Ways to Sell Your Business for 10x or More

    3. Is knowing the value enough?

    Understanding the value of your business includes more than just how much you should sell it for. To prepare for business transfer ownership, you should organize your finances, including your tax filings, licenses, deeds and profit and loss statements.

    It would be best if you also took inventory of your tangible and intangible assets and any liabilities. Taking the time to outline your business plan and model will benefit you and potential buyers, so they understand the full context of the company and how it generates revenue.

    4. Who will I sell to?

    It’s likely that you will have many alternatives to choose from. For example, you can sell your company to your employees through an Employee Stock Ownership Plan (ESOP), which has many advantages but some hoops to jump through; or maybe you have family members that are capable and want to take on the responsibility of running the company. If you are looking outside your circle, consider an individual investor, private equity firm or strategic buyers.

    5. What professionals will I need?

    It takes a village to sell a company. There are many components and complexities to each deal. The team of professionals you’ll need will depend on the specifics of your business, such as the industry, size and nature. Here are some professional’s business owners will want to have on their exit planning team:

    • A Certified Public Accountant. Look for one experienced in dealmaking to help ensure the sale and transfer are done correctly. There are several tax-related aspects to selling a business and you want to help ensure you’re up on the latest regulations and opportunities for saving money.
    • A Certified Exit Planning Advisor (CEPA). They can help ensure you’re getting the maximum benefits when you sell, and they’ll consider your personal and financial objectives.
    • A Certified Financial Planner (CFP). They can help with the financial aspects of the deal, including what your financial future looks like.
    • A business attorney. They will create legal plans to carry out the sale and look to keep you out of trouble.
    • An estate attorney. There are very big advantages that you can take advantage of in your pre-liquidity planning.
    • A business valuation expert. They can give a more accurate idea of what your company is valued at. That’s if you don’t want a back of the envelope number.
    • M&A advisors. They will look for strategic or financial buyers of your business. They will generally help mid-market and above companies.
    • A business broker. They will contact potential buyers and can screen interested parties for financial ability or other qualifications. They generally help the lower middle market.
    • An insurance professional. They can review your insurance and make alignments based on your needs.

    Some professionals may assist in overlapping areas, but it’s best to use a team approach to help ensure you’ve got the necessary support. Working with the right people will help achieve a successful outcome and a seamless transition.

    Related: Know When and How to Sell Your Business

    6. What will I do after I sell?

    Preparing and understanding what you want to do post-sale is essential for your mental well-being, primarily since most small business owners I know (myself included) are defined by their business.

    They are only looking at their business, growing it and looking to sell the company for the best offer. I ask them what they will do with all the extra time they will have. I get surprising answers such as “I haven’t thought about that,” and “I guess I’ll spend time with my grandkids.” While it’s great to spend time with family, they have their lives and soon you will be looking for other things to do.

    Asking yourself these six questions will likely raise additional questions. Taking time to consider your answer to each question is an excellent opportunity to explore the next steps — whether that’s selling your business or not. Answering these questions honestly and engaging the right professionals at the right time will help ensure that you get the most value for your life’s work.

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    Mark Kravietz

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  • 3 Common Myths About Real Estate Investing Debunked | Entrepreneur

    3 Common Myths About Real Estate Investing Debunked | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Successful people know the value of investments. There are several ways to become extremely wealthy in life, but few carry the same track record as investing in real estate. Real estate investing is one of the best wealth generators in the world. There are arguably more millionaires in the field of real estate, than any other category of business. So what is a “real estate investor” and how can you become one?

    The term “real estate investor” often refers to individuals and businesses that buy, sell and renovate houses. However, you don’t have to be a professional house flipper to hold the title of real estate investor. Anyone in any industry that actively chooses real estate as an investment option is a real estate investor. Some individuals choose real estate as an alternative to stocks, bonds and mutual funds and others choose to add real estate to their existing portfolio of investments. The question often asked: Is it obtainable to everyone?

    Here are three of the most common misconceptions about investing in real estate.

    Related: 10 Reasons Why Every Entrepreneur Should Invest in Real Estate

    You have to be wealthy in order to invest in real estate

    When most people think of real estate investing, they think of mega-rich celebrities and their massive real estate portfolios. Just because you don’t drive a Lamborghini or draw a salary from a multi-million dollar trust fund doesn’t mean that you can’t invest in real estate. There are numerous ways to start investing that require very little out-of-pocket expenses.

    Traditional wholesaling and joint ventures are just a few methods that require little to no capital. Hard work and dedication are really all that is required to become a very successful real estate investor. With the right methods, you can flip your first property with very little money and possibly without ever spending a dime.

    You need good credit in order to finance real estate deals

    If you’re applying for a traditional bank loan, then you’ll need an adequate credit score for the approval process. However, there are a variety of other ways to secure financing for your real estate investments. Let’s take a look at two of the most common financing options that require little to no credit approval.

    Transactional funding aka flash funding

    Transactional funding is a short-term loan that is borrowed and paid back within 24 hours in most cases. This type of financing is common during a double closing that occurs back-to-back. It allows an investor to secure the A to B side of a real estate transaction. Then, once the investment is secured, the investor can sell the property on the B to C side. After they collect the funds from that closing, they immediately pay back the initial flash fund loan. In most cases these loans are secured by the asset being purchased and not the investor.

    Hard money financing

    Hard money financing is another popular strategy that real estate investors use to acquire investments. This type of loan is known as a bridge loan. It’s a short-term loan that allows the investor to purchase a property without a lengthy application or approval process like the ones required from traditional banks. Hard money loans are asset-based, which means they are not contingent on the investor’s creditworthiness. They are normally used in rehabbing projects where the investor purchases a property at a discount, then remodels the home and resells it at a profit, at which point they repay the loan. These loans rarely exceed a 24-month period.

    Related: 3 Ways Entrepreneurs Can Save on Real-Estate Costs

    You need experience to invest in real estate

    The fact that you’ve never invested in real estate, should not stop you from investing. A little research can go a long way. Experience is gained by actions. After all, to become an experienced driver, you have to drive. That doesn’t mean you should get into a sports car and hit the race track. It means you begin with driving around your neighborhood, your town, city, highways and eventually interstates, etc. It’s no different with real estate investing. Your first attempt at investing shouldn’t be a 500-room condominium with a 60-page purchase agreement. It should be an affordable single-family home in areas that you’re familiar with.

    There’s no question that you can begin investing with little to no previous knowledge or experience. However, if you are looking to fast-track your learning curve, you may want to seek out the assistance of a seasoned professional as a mentor. A successful investor can not only teach you what to do but more importantly what not to do. Being able to bypass costly rookie mistakes is a huge benefit and will increase your chances of success. Many successful business professionals have mentors and real estate is no different. Just make sure you do your research to ensure that you’re seeking counsel from a qualified advisor with years of real estate investing experience.

    Conclusion

    There’s a reason so many people turn to real estate as a vehicle to generate wealth. Simply put, it works. Don’t get discouraged by false information and myths about what is required to get started. The only thing stopping you from becoming a real estate investor is you. One of the world’s most famous investors Warren Buffett once said, “Be certain of your success, even when no one else is“. Don’t procrastinate, do your research and begin your journey.

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    Michael Ligon

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  • How to Raise Funds for Your Business in an Economic Downturn | Entrepreneur

    How to Raise Funds for Your Business in an Economic Downturn | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Concerns that the U.S. is headed for a recession have been mounting for a while, especially among business owners. One survey found that eight out of 10 small business owners anticipate a recession will happen sometime this year.

    Recessions affect most businesses in two ways — first, revenue takes a hit as consumers start holding onto their cash instead of spending. Second, tightening credit conditions limit the number of financial resources available to help businesses weather economic challenges.

    Some businesses consider taking out a loan or line of credit when economic hardship is on the horizon, but is this the right move for your business?

    Related: How to Fund Your Budding Small Business During a Recession

    Should you get a loan during a recession?

    You may not like the idea of taking on additional debt and wonder if applying for a loan during a recession is a good plan, but there are situations where taking out a loan or line of credit is the smartest option.

    You should start by considering how much cash you have on hand. If you’re heading into an economic downturn with little cash, a business loan can provide a financial buffer. Access to cash will give you options for solving challenges, making staying profitable and committed to growth that much easier.

    This is especially true since no one knows how long a recession will last. You may have enough cash to get you through the next six months, but that won’t help if the downturn lasts two years or more.

    Waiting until you desperately need money can significantly reduce your options. As a downturn approaches, lenders tighten their guidelines, and you may be unable to meet their inflated eligibility requirements amid economic hardship. If you think you may need additional capital, it’s best to act sooner rather than later.

    Lending standards are starting to tighten

    Many companies struggle during recessions as demand falls and uncertainty about the future increases. They’ll start to look for ways to increase capital, like taking out a business loan or line of credit, but this becomes a challenge since most banks will tighten their lending standards during an economic downturn.

    As the economy worsens, banks face a higher risk when lending money. Most banks will only lend money to established businesses with strong credit histories and limited industry exposure to mitigate their risk of financial loss, which inflates eligibility criteria and makes it harder for entrepreneurs to qualify altogether.

    Fortunately, banks and credit unions aren’t the only lending institutions. Non-bank lenders don’t follow the same guidelines as traditional lenders, so they can extend credit to a wide range of businesses, even during a recession.

    Related: Worried About Raising Capital in a Recession? Give Your Company The Edge By Doing What Other Entrepreneurs Often Overlook.

    Consider using a non-bank lender

    A non-bank lender is a financial institution that isn’t a bank or credit union. They lend money like traditional lenders but don’t have a full banking license, and they don’t offer things like checking and savings accounts.

    There are advantages and disadvantages to going the non-bank route. While this type of lender tends to charge higher interest rates than banks or credit unions, they offer numerous quality-of-life improvements and specialized benefits, including online communications, streamlined underwriting processes, fast funding times, alternative financing solutions and more.

    What you lose in the cost of capital is gained through speed and efficiency. For example, you can complete the application in as little as 15 minutes at some institutions, and many lenders provide same-day or next-day funding.

    These loans also come with fewer stipulations about how you can spend the money, and the cost of capital can be offset with revenue-driving opportunities. For example, spending $10,000 on interest charges won’t matter as much if you increase your revenue by $50,000.

    Plus, as you continue to build a relationship with that lender and improve your business credit score, you’ll be eligible for better rates in the future.

    Start looking for business financing now

    After the Silicon Valley Bank collapse in March, some economists lowered their economic growth forecasts for the year. The lending environment was already starting to weaken following numerous prime rate hikes, but the SVB crisis caused many banks to tighten their lending standards even further.

    In particular, small banks have to be more cautious about lending money in an effort to preserve cash. Small to medium-sized banks account for roughly 50% of commercial and industrial lending, so this will impact a number of businesses.

    Federal Reserve documents predicted that the fallout from the banking crisis would likely lead to a recession later this year, and it’s unlikely that we’ll see any significant improvements for at least two years.

    If you anticipate needing funds in the coming year, you should start looking for business financing now. Although you might be apprehensive, a loan or line of credit can tide your business over until the economy improves and give you the capital you need to continue growing.

    Related: 5 Ways to Protect Your Business From a Recession

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    Joseph Camberato

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  • 3 Stakeholder Relationships Your Business Needs to Nurture | Entrepreneur

    3 Stakeholder Relationships Your Business Needs to Nurture | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    A startup’s brand — both the company and the founders’ brands — plays an important role in shaping how investors perceive their business and, ultimately, how much they are willing to invest. Building a strong brand for the startup and founder, can help differentiate a company, emphasize its unique benefits and increase its perceived value, leading to a higher valuation in the eyes of investors

    A company’s brand is composed of various persistent actions done online and offline. One component that affects a startup’s brand lies in their relationships. Let’s shed light on this component and present the three types of relationships any startup founder should focus on to increase their growth, brand value and, ultimately, their valuation.

    Related: From Customers to Investors to Employees, Here’s How to Connect With Every Company Stakeholder

    1. Board members and advisers

    Having board members or advisers who are industry experts can provide significant value to a startup’s brand and valuation. Those with the right industry knowledge, connections and reputation can help a startup navigate the competitive landscape, identify new opportunities and open doors to potential customers and investors. In fact, a KPMG study called the “2019 Global CEO Outlook” found that board reputation is the second most important factor considered by investors when evaluating a company. While this may not come as a surprise to many, the truth is that finding and harnessing the right board members or mentors is not easy, as they are usually sought-after people.

    To establish relationships with industry experts for potential board members, it is important to first plan out the ideal composition of expertise, knowledge, connections and reputation that your board needs. For example, one board member could be highly connected within your industry, while another may have a Ph.D. in your area, and another may have advised the President of the United States. Additionally, you may want to define diversity goals for your board, such as having an equal number of women and men. Once you have established the necessary structure and profiles, start brainstorming potential candidates for your board.

    The best way to reach out to such individuals is through warm recommendations and referrals from existing board members, investors, or other industry contacts. Startup founders can also attend industry events, participate in online forums and groups and join industry associations where the right profiles of board members may be present.

    One of my career hacks when it comes to finding board members is to approach the “formers” in your industry, such as “former founder of a Fortune 500 company,” “former dean of Harvard Business School” and so on. These former seniors often have a wealth of knowledge, connections, and reputation, and are looking for their next exciting endeavor, and to be a part of the new generation’s work. If you approach them with passion and resonate with their values, they could be your best-kept secret to help drive your company toward its goals!

    Related: Make Sure Your Business Aligns With Your Stakeholders’ Worldview…And Your Own

    2. Industry investors, founders and leaders

    Establishing a robust network of industry investors, founders and leaders can significantly benefit a startup’s growth and brand and valuation. Such connections can provide access to capital, mentorship and strategic advice, which can prove invaluable. It is essential to build relationships based on trust, mutual interests and authentic friendships. When founders are well-connected and valued in their industry, within their network they can support and recommend one another, which ultimately strengthens their personal brand. Additionally, a national research study by Brand Builders Group reveals that 82% of all Americans agree that companies are more influential if their executives have a personal brand that they know and follow.

    To build relationships with industry investors, founders and leaders, startup founders must be visible both online and offline, even if they prefer to be in the office managing the company. They can attend networking events, participate in accelerator programs, and join relevant online communities. By connecting with industry leaders on social media, and posting engaging content, initiating meetups with other industry leaders or having one-on-one meetings, they can gradually build authentic relationships. The key is to be proactive, authentic and intentional in building these relationships.

    3. Co-founders and team

    Investors focus on the relationship between co-founders specifically, and the company culture when evaluating a startup’s potential. The ability of the startup’s leadership to work together and foster a positive culture is crucial to executing on plans, navigating challenges and driving the company forward. In turn, it impacts the startups’ brand and valuation. Additionally, a distinct workplace culture is believed to be important for business success by 94% of executives and 88% of employees, according to a study on partnerships and relationships in the workplace by Deloitte. Ultimately, investors want to see that the startup’s leadership and team have the ability to work together and create a culture that supports innovation, growth and success.

    To establish good relationships among co-founders, it is recommended to foster open communication and collaboration to build a positive and productive work environment. Startup founders can create a strong company culture by defining their values and mission and promoting an open culture that supports individual growth, offering employee benefits, and encouraging work-life balance. They can also organize team-building events and activities to promote team cohesion and foster a positive work environment, among many other ways.

    Related: 3 Social-Intelligence Methods for Building Strong Stakeholder Relationships

    In conclusion, forming the right relationships with industry experts, investors, founders and leaders, as well as prioritizing the management team and company culture, can significantly impact a startup’s growth, success, brand and valuation. It is advised for startup founders to focus on building a strong personal brand by following the above actionable tips and building strong relationships, among other brand-building components. This can increase their success factors and perceived value and, ultimately, support attracting the funding they need to grow their startup.

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    Lirone Glikman

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  • 4 Signs That Your Small Business Needs Funding | Entrepreneur

    4 Signs That Your Small Business Needs Funding | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Every small business can agree that securing funding is vital for a small business to grow. Whether you are a fledgling start-up business launching a new product or service, or an established small business striving to maintain profitability, cash is king when it comes to driving the progress of operations.

    Every day, small businesses face unforeseen challenges, with shrinking margins and economic competition making it crucial to allocate sufficient cash flow for a business’s financial health. According to a study by U.S. Bank, 82% of all failed businesses are due to poor cash flow management or a lack of a grasp of cash flow and its importance to its business.

    As a business owner, how do you avoid these catastrophes? With a staggering 90% of all start-ups failing, how can you proactively identify the signs that indicate the need for funding and stay ahead of these warning signals? Here are four signs indicating that it’s time your small business needs funding.

    Related: 10 Expert Tips on Managing Cash Flow as a New Business

    Experiencing gaps in cash flow

    A cash flow gap clearly indicates that your small business requires a funding boost, which occurs when a business pays out cash for expenses but does not receive the expected inflow of money within a reasonable timeframe.

    A prime example of a cash flow gap is a business that needs to purchase supplies to create its products to generate an inventory. After spending the cash on supplies, there is a delay in receiving payment from customers, creating a gap between the outflow and inflow of cash. For instance, if customers pay for the inventory after 30 days (or even worst late payments), the period between the purchase of supplies and the receipt of payment creates the cash flow gap. Consistent widening cash flow gaps can leave your business strapped financially, potentially putting it in a dangerous position if not addressed.

    Related: 80% of Businesses Fail Due To a Lack of Cash. Here are 4 Reasons Why Cash Flow Forecasting Is So Important

    Seasonal downturns in the business

    Seasonal fluctuations pose significant cashflow challenges for many businesses. A typical example is a restaurant operating on a beach in Cape Cod, Massachusetts. During the summer peak months from Memorial Day through Labor Day in September, the restaurant can encounter an endless stream of customers fleeing to the restaurant. Despite an influx of cash coming in, your business could face cash flow challenges between a surge in profits during peak seasons but struggle to maintain financial stability during off-seasons.

    With seasonal downturns and limited cash flow, the challenges of paying overhead costs with employees, rent, utility costs, etc., can create financial instability. Without proper cash flow forecasting, how can your business maintain operations and overcome these financial challenges during the off-season?

    Related: 3 Cash Flow Mistakes to Avoid at All Costs

    The business needs to change

    Every business needs to evolve and adapt to new challenges, as they cannot continue to operate with the same employees and equipment indefinitely. At some point, you need to invest back into the business to promote growth and development.

    For instance, a landscaping company has an initial upfront cost of purchasing equipment before it can hit the ground running. As the company progresses, the equipment may deteriorate and require upgrading to continue serving existing customers or expanding into new areas. Hiring skilled employees or investing in new equipment upgrades will be needed to help expand your capacities. In order for your business to meet these needs, It’s essential to reserve sufficient funds to meet these necessary investments.

    Opportunities happen

    Expecting the unexpected and be ready no matter what is the heartstring of all business owners. It’s unclear what the next card in the deck will reveal, especially when exciting opportunities arise. Hence the need for agility despite the size of your businesses. Small business owners must be particularly vigilant about having enough capital to invest in new opportunities that arise.

    In this constantly changing landscape, your business needs to be in a strong financial position to take advantage of opportunities as they arise. Whether it’s purchasing another business, opening a new location, launching a new product or the immediate need for available capital investment, the ability to act quickly can make all the difference. Without sufficient cash, your businesses can struggle to capitalize on these exciting opportunities, resulting in missed opportunities or financial losses.

    Related: How This New Accounting Feature Can Save Businesses From Fraud and Financial Mishap

    A loan is not the only answer

    The immediate response of a business owner is to reach for a loan application to obtain an injection of cash. However, a business loan isn’t always the best or only solution. One approach to improving your business’s financial situation and reducing the reliance on loans is to implement effective cash flow management tools.

    Cash flow tools can help small business owners track their cash flow, identify high-risk indicators and accurately forecast future financial health. These tools can determine precisely how much capital is needed and how an influx of cash would impact the overall health of your business. By maintaining a healthy cash reserve and minimizing unnecessary expenses, small business owners can make smarter financial decisions, reduce their reliance on loans and improve your business’s financial stability.

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    Nick Chandi

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  • Why Selling a Business Is the Next Use Case for AI | Entrepreneur

    Why Selling a Business Is the Next Use Case for AI | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Artificial intelligence has quickly become the most talked about technology in recent years. While generative AI like ChatGPT and AI-powered search engines like Google Bard and Bing are getting lots of attention, there are also some powerful innovations bringing AI to a surprising range of use cases and industries. One example is using AI to help sell your online business.

    A big trend right now among online business entrepreneurs is that when business owners get to the point of deciding to sell a business, they don’t want the process to take too long. They want to quickly, painlessly and efficiently find the right buyer. This need for speed also works for the opposite side of the transaction. Prospective buyers of online businesses don’t want to get lost in the clutter of too many choices and irrelevant listings; they want to quickly zero-in on the right businesses that are relevant to their expertise and a good fit for their investment goals.

    AI can be the missing link for more efficient online business exits and acquisitions. With the power of AI, online business sellers and buyers can get a more precise sorting and matching process to help prospective deal partners get connected faster.

    Let’s see a few reasons why AI can be the next “killer app” for selling online businesses.

    Related: Does AI Deserve All the Hype? Here’s How You Can Actually Use AI in Your Business

    Expectations are rising for online business mergers and acquisitions

    Small online businesses, such as ecommerce stores, content-based websites and blogs, mobile apps and software-as-a-service (SaaS) solutions, have become a larger part of the “Main Street” of the digital economy in recent years. As these business categories have grown, there has been increasing interest from investors and rising expectations for how to make M&A deals for these businesses.

    Selling a business is a huge decision, both financially and emotionally. It’s kind of like selling a home; you’ve poured years of time, work and effort into this asset and you want to get the best price that the market will bear. When you list your online business for sale, you don’t want it to linger on the market or attract a bunch of tire-kickers who are not serious buyers. When online business owners decide to exit, they want to quickly and efficiently connect to a shortlist of qualified buyers who are genuinely interested in buying a business and who are ready to talk about details and advance to a deal-making stage.

    For investors, the process of buying online businesses has traditionally been too full of friction and clutter. If you’re an online business investor, you don’t want to have to sort through a bunch of irrelevant listings or get spammed by sales pitches. Your goal as a business buyer is to quickly find relevant, high-potential acquisition opportunities that are a good fit for your investment goals and expertise.

    AI can help meet these rising expectations for both sellers and buyers. With AI-powered recommendations and smarter search capabilities, online business sellers can quickly get their business on the radar of qualified buyers, while prospective buyers can use AI tools to meet their unique investment goals and get access to high-potential deal flow on tap.

    Related: AI and ChatGPT Are the Future of Business Growth — But They Still Have Limitations

    Institutional investors want to find relevant, profitable online businesses

    Online businesses are not just for solo tech geeks working out of their garages anymore. Digital Main Street businesses are attracting increased interest from sophisticated institutional investors, such as family offices, private equity firms and aggregators. These larger investors have more complex needs than first-time online business buyers or solo entrepreneurs.

    For example, if you’re an institutional investor looking to buy online businesses, you typically will have a larger portfolio of online businesses that you want to match or expand. Your team will likely have a certain industry vertical or space that you prefer to invest in, as that fits your expertise and experience. You might also have certain deal size parameters or other unique data points that you’re looking for to help determine whether an investment is a good fit.

    AI for buying online businesses is an essential development for sophisticated institutional investors. Machine learning and AI-powered recommendations can help these investment teams quickly surface and hone in on a list of potential M&A targets that fit their parameters and investment goals, with higher accuracy and at scale.

    Related: Thinking About Starting an Online Business? 2023 Is the Right Time to Do It. Here’s Why.

    AI will become a ‘personal assistant’ for online business M&A

    There’s been a lot of hype and chatter about AI and what it means for the future of humanity and how people work. Will AI replace all human knowledge workers? Will AI make people obsolete? I believe that these fears are overblown. AI will be like any other technology that humans have developed: as we learn how to interact with these tools and build them into our workflows, AI will help people work better and faster. It might eliminate a few jobs in the short run, but it will ultimately create many more new opportunities for humans to do more of what they do best.

    Here’s how that might look for online business M&A. Think about the traditional process of buying or selling a business in the pre-digital era. You had to work with a business broker. You had to set up a listing. You had to market the business and look for qualified buyers. Some deals might have happened by word of mouth or within a known universe of investors, but the process took much longer and was unnecessarily complicated and costly.

    Today, as AI capabilities continue to improve, we’re going to see AI become a kind of “personal assistant” or digital intern that helps online business buyers and sellers do their deals faster, more efficiently, and with greater precision. AI will be a friendly digital helper that is with you at every step of the way — offering up smarter searches, better recommendations and more accurate results, leading to more constructive conversations for business sellers and investors.

    AI is going to drive big changes in how every industry operates, and the online business M&A space is no different. But the future is bright. By eliminating friction, clutter and costs from the process of buying and selling online businesses, entrepreneurs can do more of what they do best: building successful companies and delivering value for customers.

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    Blake Hutchison

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  • The Financial Literacy Basics Entrepreneurs Need to Know | Entrepreneur

    The Financial Literacy Basics Entrepreneurs Need to Know | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Like most of you, I grew up with virtually no formal training on money. I learned that we definitely need money to get the things we want and one way or another, we have to work for it. Short of getting my passbook savings account back in the ’80s, I was taught very little about how to be financially literate.

    What happened? I got a job, paid bills, saved a little (but not really) — and then, when I got to college, I went into credit card debt in exchange for a free T-shirt. By not getting the proper education on money, it controlled me instead of the other way around. We all know how that feels! But it doesn’t have to be this way. Financial literacy won’t happen by accident; it happens by design.

    Money, for most of us, can be a double-edged sword. Some days we are in love with making it, some days we dread having to work to get it. As a dad, CFP and fintech entrepreneur, I’ve learned that a high level of financial literacy is key to one’s success. To have a great relationship with money, we must understand what it is, how to use it and how to manage our risks when we use it — so here’s what you need to know.

    Related: ‘Financial Illiteracy’ Cost Americans an Average of $1,819 in 2022 — Here Are The Most Common Mistakes People Make

    Understanding money

    Money is a tool. It helps us accomplish what we want and need in life and business. We all have a relationship with money, and how it manifests itself through our spending is based upon our financial literacy — or lack thereof.

    The first step for increased financial literacy is to understand that money is a tool created out of an idea and need for us to exchange things of value, be it goods, services, etc. You don’t want more money — you want more of what it does for you.

    So how do you understand money? Understand how you spend it by mastering your cash flow. Show me how and where you spend your money and I can tell you if you understand it or not and what’s important to you. Knowing your cash flow helps you understand what you actually do with your money which can be very insightful and helpful on how best to use your money. I didn’t understand money or my cash flow at all after graduating college, but I eventually mastered it by creating and using a simple yet robust cash flow worksheet. This will help you learn how to properly use money.

    Using money

    Money should be thought of as a tool of precision that can help us accomplish whatever it is we want. We earn money by doing or creating something of value. But what are you using your earned money for? Once you understand your current cash flow situation, you can assess some simple yet important things. Are you cash flow positive every month? If not, why? Are you spending (using) money on mainly assets or expenses? Assets ultimately put money in your pocket, while liabilities (expenses) take money out.

    Once you understand your money and where it’s currently going, you can leverage this information into how best to use your money. Instead of spending X dollars a month on coffee every morning, which can easily add up over time, what if you took that money and used it on something that made you money? You could spend it on marketing your business, investing in a savings plan, paying down debt and so on.

    Taking it a step further, you can now determine the ROI on where you’re using your money. If you’re paying down debt faster with your excess cash flow, you’re saving interest — and that’s real money. Investing your excess cash flow into marketing your business and seeing increased sales because of it? Now you have a direct correlation with what happens when you understand and use your money.

    A best practice is to balance how you use your money. There’s nothing wrong with spending some of your money on things that you want, but it also makes sense to deploy your money into things that can work for you. Where will your money work hardest and best for you?

    Related: We Owe it to Consumers to Foster Financial Literacy

    Managing risk with money

    Virtually everything in life has some level of risk. Risk is basically uncertainty about the future. When it comes to our finances, whether it’s personal or business, we have an opportunity to protect ourselves against uncertainty and manage risk. As an entrepreneur, we are prone to and arguably seek out risk since we know it can lead to a lot of rewards, but that doesn’t mean that we should blindly take on risks and just hope for the best. Planning for the worst and hoping for the best is a sound practice to help manage your risk.

    Some simple guidelines to manage risk with your money are:

    • Spend less than you make (positive cash flow).
    • Keep a solid cash cushion liquid in case of emergency; somewhere between 6-12 months of your expenses from your cash flow worksheet.
    • Consider appropriate types of insurance to protect against large but unlikely risks like death, accident, illness, security, etc.
    • Don’t invest all your capital into one thing, and with any investment you do make, ask yourself first, “What happens if I lose every penny of this investment?” If you don’t like or can’t live with the answer, then it’s probably too much risk for you.

    If we know what money is, how to use it and how to manage risk with it, we end up empowering ourselves to be the master of not only our money but — to an extent — our future. Life happens and curveballs will fly, but controlling these variables to the extent we can gives us a much better chance of being successful with our money.

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    Derek Notman

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  • 4 Reasons Why Investing in this Niche Industry Will Make You Money | Entrepreneur

    4 Reasons Why Investing in this Niche Industry Will Make You Money | Entrepreneur

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    Investing in emerging music artists might be the perfect opportunity if you’re looking for an innovative and rewarding move to diversify your portfolio.

    The music industry has always been a lucrative and exciting space for investors. Music can captivate an audience, evoke emotions and inspire us in ways no other art form can. Putting money into emerging musicians is an opportunity to get in on the ground floor and potentially reap large returns, thanks to the power of discovery.

    Whether you’re a music industry veteran, a fan, or just someone looking for a savvy investment, investing in emerging musicians will diversify your financial portfolio and have fun doing so.

    Here are the top benefits you can expect from investing in emerging music artists.

    Related: 3 Key Entrepreneurial Lessons I Learned While Working for P. Diddy and Bad Boy Entertainment

    1. Passive income with unstoppable growth

    Investing in emerging music artists is a great way to generate passive income with unstoppable growth. You may have never thought this way, but every time you hear the most overplayed song, its songwriters and artists get a payout.

    Luckily, the power of the internet and the ever-changing landscape of the music industry has made it easier than ever to find and invest in upcoming music talent. Simultaneously, new artists have more possibilities to reach a larger audience and build a successful career with the rise of streaming services like Spotify. That’s why investing in emerging music artists is such an attractive option.

    Once an artist has established themselves and their music is being streamed or purchased, they can begin to generate revenue — and you’ll get a share of the profits. Music royalties can also bring in a consistent stream of income and potential performance royalties.

    Investing in emerging music artists is your chance to enter the protected asset class in a market known for record-high content creation and exponential growth. The music industry seems to have finally found a technology-based model that works for artists, consumers, and businesses.

    As an investor, you can use your influence to help your favorite artists grow and become successful. For example, you can introduce them to new contacts, help them with their marketing strategies, and generally be a support system—and yield great rewards in return.

    Related: Rise Above The Noise: 5 Tips to Stand Out as an Independent Artist

    2. Larger return on investment

    The music industry is constantly evolving, so investing in emerging music artists can be a great way to stay ahead of the curve and capitalize on new trends. With this approach, you can get in on the ground floor of a potential breakout and enjoy a larger return on your investment than if you had waited until the artist was an established star.

    Investing in an artist early can help them develop their sound and build their fan base while also financing their career. This can result in a much bigger pay-off down the road.

    Emerging music artists often have the potential to become superstars, and when they do, their music sales and streaming figures can skyrocket. Ultimately, the return on your investment could be significantly higher than that of more established artists.

    3. A true sense of fulfillment

    Investing in emerging music artists isn’t just about money. It is an excellent way to support the career of an artist you truly believe in and help them reach their full potential.

    When you invest in emerging music artists, you help create a platform for them to share their music with the world. You give them a chance to be heard and make a real impact in the music industry. You are ultimately enabling them to make a living doing something they love.

    As such, it’s safe to say that investing in music can be an act of true passion and advocacy. The experience can be incredibly rewarding, as you can be part of an artist’s journey and watch them grow and develop their art. It’s a great way to support the arts, help new artists get their start and contribute to shaping the future of the music industry. It will give you a feeling of pride and satisfaction that goes beyond any financial gain.

    Related: The Benefits of Investing in Talent: How It Impacts the Music Industry and Beyond

    4. Portfolio diversification

    With the new wave of digital music streaming and the ever-evolving music industry, more and more individuals and businesses are looking for ways to diversify their investments and maximize returns.

    Investing in emerging music artists offers a unique opportunity to do that. It can provide a great hedge against market volatility, opening the door to interesting diversification opportunities.

    For starters, you can benefit from the financial growth of your chosen artist. As the artist’s visibility and success increase, so does their financial value. This means your investment can grow alongside the musician’s success, generating a steady and reliable income stream.

    More importantly, investing in emerging music artists can provide you with a level of diversification that other investments may not offer. Music is an ever-changing and ever-evolving industry, so the success of any one artist can be unpredictable. By investing in different music artists, you can spread the risk across multiple assets and ensure that if one artist fails, the other investments will provide you with some support.

    The bottom line

    As the music industry continues to expand and evolve, so do the opportunities for investors to benefit from the success of up-and-coming artists.

    Investing in emerging music artists can be a smart move for investors looking to reap the rewards of a growing industry. Not only can investing in music be lucrative, but it can also be a great way to support and empower the artists you believe in.

    In addition to diversifying your portfolio and getting involved in something you are passionate about, you can get in on the ground floor of a potentially lucrative venture.

    That said, successful investment in music talent requires having a good understanding of what’s hot and what’s not, along with a keen eye for potential. Any individual or entity looking to make their first investment in an up-and-coming music artist must perform a risk analysis and determine an ideal time horizon, meaning how much they can safely invest and how long they’ll be willing to get a return.

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    Eric Dalius

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  • How Cognitive Biases Can Impact Your Trading Career | Entrepreneur

    How Cognitive Biases Can Impact Your Trading Career | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Are you a trader looking to improve your trading skills and increase your profits? Did you know that cognitive biases can have a significant impact on your trading decisions? Cognitive biases are inherent thinking errors that occur as humans process information, and they prevent us from accurately understanding reality, even when we are presented with the necessary data and evidence to form a more accurate view.

    Let’s see some of the cognitive biases traders and investors are prone to, and then I’ll tell you what you need to do to limit them.

    Negativity bias: This bias refers to the tendency to give more weight to negative information than positive information.

    Loss aversion bias: This refers to the tendency for traders to prefer avoiding losses to acquiring equivalent gains. In other words, the pain of losing is psychologically about twice as powerful as the pleasure you get from profits. And this bias can cause traders to behave irrationally.

    Gambler’s fallacy: This bias refers to the belief that future events are affected by past events when, in fact, they are independent.

    Confirmation bias: This bias refers to the tendency to seek out information that confirms preexisting beliefs and ignore information that contradicts them.

    Hindsight bias: This bias refers to the tendency to believe that past events were more predictable than they actually were.

    Anchoring bias: This bias refers to the tendency to rely too heavily on the first piece of information encountered when making decisions.

    Bandwagon effect: This bias refers to the tendency to do or believe things because many other people do or believe the same.

    Overconfidence bias: This bias refers to the tendency to overestimate one’s abilities or the accuracy of one’s beliefs and judgments.

    Recency bias: This bias refers to the tendency to weigh recent events more heavily than earlier events.

    Self-serving bias: This bias refers to the tendency to attribute positive events to one’s own character or actions and negative events to external factors.

    There are many more cognitive biases, but those are just some that are relevant in a field like trading. They come into the picture and structure the way we perceive market information, very often in ways that aren’t helpful to our bottom line.

    Related: How to Account for Cognitive Biases as an Entrepreneur

    Why you can’t completely eliminate biases

    Cognitive biases are intrinsic to human thought and perception, and it’s important to remember that just knowing about these biases doesn’t necessarily free you from them. As a trader, your trading approach has to include mechanisms to limit such biases, or else you’re just going to repeatedly shoot yourself in the foot — and you won’t go anywhere in terms of consistency.

    Once again, you cannot just rid yourself of biases. Some people appear to think you can, but to that, I’ll say this: Not seeing your biases is itself a bias (blind spot bias — the tendency to recognize biases in others, while failing to see biases in ourselves)

    Biases dumb down for us the complexity of the world — they’re just how we see the world and think. They’re inevitable. That being said, they can be mitigated. For instance, it is useful to remember that our brains have evolved these biases to deal with information overload.

    The world is a complex place, and we’re constantly bombarded with all kinds of information coming to our five senses. The best estimate I’ve read on this is that there is about 11 million bits per second worth of information available to our senses on a moment-to-moment basis. The research also tells us that our brain has a limited amount of information it can perceive at a conscious level, and that number is about 50 bits per second. That’s a big difference, isn’t it? 11 million are available, and only 50 get in …

    So, unsurprisingly what this means is that there is a huge amount of filtering going on in our brains, and that takes the form of habits in the way we perceive and think about things. We are constantly filtering information and selecting the ones that already fit our worldview.

    And that’s not all. Within that mess of information available to our senses, there’s uncertainty. What do I mean by this? Well, there are many deep and important questions about reality that we don’t know the answers to, and that lack of “knowing” and lack of certainty is confusing; it troubles us, so we fill in the gaps with our own stories and map it all to our existing mental models.

    But some of the information we filter out is actually useful and important, so what does the mind do? Well, it fills in the gap with information it already knows, and sometimes this is good enough, but often it’s not.

    In order to act fast in a world fraught with all sorts of dangers, our brain needs to make split-second decisions that could impact our chances of survival. But quick decisions and reactions are often counter-productive because most of the time they’re rooted in short-term emotional gratification. And short-term emotional gratifications often go against our long-term goals — what we know rationally is better for us.

    Related: 13 Cognitive Biases That Really Screw Things Up For You

    How to limit the effects of cognitive biases

    Now, there are ways to limit the consequences of cognitive biases and improve your trading performance. The keyword here is “limit.” Once again, biases are an inevitable part of human thought and perception, and we can only mitigate the extent to which they impact our results as traders.

    You can use tools like meditation to become more aware of your inherent biases, thoughts and emotions. I’m really big on meditation, given my background as a meditation teacher, and I’ve found it to be very impactful in helping us develop self-awareness and emotional maturity. Living an examined life like that also helps us better accept that we are permanently biased creatures and that despite that, there’s room for improvement. We can get better … not be perfect, but better.

    So, meditation is one way to limit the role of biases in your trading process. Another way is to adopt a rule-based approach to trading. “If X happens, I’ll do Y;” “if Y happens, I’ll do Z.” You don’t need to have hard rules for everything — just for the hard decisions where there’s a lot of uncertainty and potential risk. Examples of hard decisions would be in terms of your position size, stop-loss placement and what you need to do in case of a gap below your stop-loss.

    Soft rules will generally do for all the other lighter decisions, like your profit target or when to trade.

    In conclusion, by understanding the ways in which cognitive biases can impact your trading decisions, you can develop effective strategies to mitigate their effects and improve your bottom line. Just keep in mind that our brains have evolved these biases to deal with information overload and the complexity of the world. But by coupling self-awareness with a rule-based approach to trading, you can make more informed decisions based on objective criteria and increase your chances of success in trading.

    Related: Trading Psychology 101 — How Traders Can Manage Their Emotions and Achieve Success

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    Yvan Byeajee

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  • Do You Know How to Make Your Real Estate Investment Last? | Entrepreneur

    Do You Know How to Make Your Real Estate Investment Last? | Entrepreneur

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    Everyone knows that location is a critical factor when it comes to investing in real estate. Purchasing any property requires a litany of considerations and due diligence before any assets or resources can change hands, but the location is paramount.

    Neighborhoods with low crime rates, excellent school systems and up-and-coming communities are the regions where property values tend to increase at the highest rates. When you make an investment into a hot new part of town or a city that offers stability and growth, these neighborhoods are far more appealing and the price tags for both sales and rentals tend to reflect the high desirability of these locations.

    Location isn’t just about the dwelling itself, it’s about the positive growth of the surrounding areas in which your real estate is located and the trends that demonstrate an upswing in the contributions of the community at large that make the area more desirable. Hopefully, those trends continue on an upward trajectory to make your investment a profitable one.

    Related: 5 Proven Steps to Become a Real Estate Millionaire, According to an Investor

    Improving value

    Whether it’s the purchase of a standalone home or buying a rental property, you want the value to increase over time. When that happens, you can sell the home for more than you initially paid for it and rental prices can rise as residences in the area become more valuable. That return on investment is the goal for homebuyers and property owners who are looking to develop some passive income channels.

    But the important thing to remember is that your value is not determined by the physical dwelling in which you or your tenants reside. Buildings depreciate over time and renovations require more investment of capital. The greater impact on improving the value of real estate is the cost of the land and the community surrounding it.

    That’s right, the lot upon which you’ve built that house or apartment complex is where the value really lies. A gorgeous home or brand new building in a community that is otherwise depressed or rundown tends to suffer in a resale or setting the price for rent. Why is that?

    It’s due to the very simple and obvious fact that people don’t want to live in a neighborhood that doesn’t have a lot to offer in terms of a safe, functional and welcoming community. In big cities, there are so-called “good” blocks and “bad” blocks. One area may be safe, while another just a few blocks away may be infamous due to a higher crime rate and a slew of empty storefronts with “For Lease” signs in the windows. It makes you wonder why those businesses have left the area and buyers and renters alike may also decide it’s time to look elsewhere when choosing a place to call home.

    Related: Market Knowledge Is Vital In Making Efficient Real Estate Investment Decisions

    The importance of community

    When a region becomes more attractive to homeowners and prospective tenants, the value of your real estate increases. Some locations offer stability in terms of increased value because they are situated in a community that isn’t likely to see any major shifts in the future.

    A good example of this is a college town. The institution around which these neighborhoods are situated is highly unlikely to move, shut down or suffer any real significant, negative changes any time soon. This is particularly true in towns where the college or university has been in existence since the 1700s. We know that the school isn’t going to suddenly relocate, we know that the school will offer admission to a limited number of applicants and the students, faculty and administrators will need a place to live, eat, work and play when classes are not in session. Therefore, these communities are going to be bustling and popular, safety will be a priority and homes and apartments will be in demand.

    The only thing to consider that might be a negative is the seasonal aspect of buying real estate in or near a college town. Students and faculty may leave for the summer. But it’s just a three-month shift and when everyone returns in the fall, the community returns.

    Real estate and renovations

    Don’t get me wrong, it’s important to maintain the asset that sits on the plot of land you own. A shoddy apartment building or a home that’s falling apart are depreciating assets that can also bring down the value of the neighborhood as a whole. Buyers and renters know they can find somewhere else to go. If enough homes and buildings start to look dilapidated or neglected and desperately in need of repair, people tend to migrate away from these areas.

    One vital way to keep the value of your investment from falling is to make the repairs you need to make as soon as you can make them. A highly desired location can make some potential buyers or renters overlook the less-than-perfect condition of the dwelling because they can live, work and play in a hot neighborhood. But location is key for getting them to make the deal. Depressed areas will drive them away. It’s tougher to move a tract of land than to demolish a dilapidated home or dwelling.

    So you can do your part by keeping your property values up and helping the neighborhood thrive by maintaining what you own. New homes and businesses move into the area and the cost of your home and the land on which it stands goes up.

    Related: 7 Tips for Managing Your Real Estate Business Like a Pro

    Wrapping up

    Land can become a premium commodity when there isn’t enough of it to go around. Choosing a location that is desirable and fully developed means that space is at a premium, with prices to match when people want to live in that area. This is true in the big metropolitan cities and even smaller, more rural towns. When there is room to expand, prices tend to be lower. Location matters and when there is less of it to go around, people are willing to pay for what’s available because it may not be available for very long.

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    Ari Chazanas

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  • The Carbon Credit Market Could Grow 50X Bigger: How One Pioneering Platform Is Meeting the Demand | Entrepreneur

    The Carbon Credit Market Could Grow 50X Bigger: How One Pioneering Platform Is Meeting the Demand | Entrepreneur

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    Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.

    Major airlines, consumer brands, and even oil companies like BP and Shell are committing to zero net carbon emissions over the next several decades. EthicStream is giving them a way to prove they’re reducing their carbon footprints by selling carbon offset credits.

    This market is estimated to reach $550B by 2050, and you can invest in their company as they aim to kickstart the global market phenomenon.

    But first – what are carbon offsets? And why are they not all created equal? This should give you an idea of why investing in EthicStream is such a unique opportunity right now.

    The world needs quality carbon offsets.

    Carbon offsets represent one ton of carbon dioxide that has been saved from being released into the atmosphere. They measure the amount of carbon either avoided or removed from the atmosphere via projects like reforestation, renewable energy, etc.

    It would be simple if carbon credits were all it took to run a sustainable business. But unfortunately, no two carbon credits are alike. Some low-quality carbon credits can be earned by polluting slightly less than expected, while others come from genuine carbon-offsetting projects.

    EthicStream does the latter and we’ll talk about how shortly.

    The important thing with quality carbon offsets is that we can know when businesses trading them are tangibly helping the environment, providing more than “lip-service.” And EthicStream is making that possible.

    Here’s what puts EthicStream’s carbon offsets are in a league of their own.

    EthicStream is miles ahead of competitors.

    What makes EthicStream offsets high-quality? It all centers on their partner, CarbonEthic.

    CarbonEthic is a well-established carbon offsetting firm with nearly a century of experience in forestry and ecology. They specialize in high-quality credits that are verified to meet or exceed international standards with sequestration and reforestation projects.

    Due to the nature of their relationship, EthicStream is able to purchase these credits from CarbonEthic at a discount then sell them at a market rate.

    With companies like Apple, Burger King, Facebook, Ikea, and more, all committing to net-zero emissions sometime between 2030 and mid-century, carbon offsets will play a vital role in brokering more environmentally sustainable business operations.

    And EthicStream is making that a reality.

    They are the only company that can get high-quality carbon offset credits from CarbonEthic at a discount. Others may raise money to stream and trade credits, but they have no supply – instead, they are burning cash trying to find projects to invest in. Meanwhile, EthicStream already has a supply baked-in.

    Now, here’s how you can become a shareholder in this company before the market really takes off.

    The EthicStream investment opportunity.

    The carbon credit market is expected to continue growing over the coming years, as countries and businesses around the world make net-zero carbon commitments. EthicStream is uniquely positioned to capitalize on this growth, as they have already secured a discounted supply of high-quality credits from CarbonEthic.

    This advantage will allow EthicStream to quickly expand their business and capture more of the growing market ahead of everyone else. EthicStream also has the knowledge and experience to invest in projects outside of CarbonEthic’s forest projects, further increasing their reach and potential for profit.

    To sum it all up, a carbon-offsetting future is inevitable at almost all levels of commerce, making EthicStream an attractive investment opportunity for anyone looking to strengthen their portfolio while helping the planet.

    Learn more about the EthicStream investment opportunity here.

    *Disclosure: This is a paid advertisement for EthicStream’s Regulation A+ Offering. Please read the offering circular at www.ethicstream.co

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    StackCommerce

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  • How Proving My Value Helped Me Reshape the Face of High-Value Asset Trading Globally | Entrepreneur

    How Proving My Value Helped Me Reshape the Face of High-Value Asset Trading Globally | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    My dad left when I was 11 years old. I watched my mom struggle to pay bills and provide for my sister and me. I decided that I would find a way to help.

    It wasn’t my first time getting a job, and it definitely wouldn’t be my last. But with every new position I took, I had to prove my worth. I had to convince managers and people in charge why a child was a valuable hire.

    This education in promoting myself and conveying my value allowed me to understand how others perceive worth in the world.

    Related: 7 Ways to Know Your Worth and Shake the ‘Poverty Mindset’

    It started with weeds

    The first job I had to take was with the apartment manager of the complex I lived in. I did some landscaping, cleaning and other random handiwork for much-needed cash. I was too young to work officially; the funny part was that this was my second job.

    This job wasn’t being promoted; it didn’t exist. They weren’t looking for someone to fill in the gaps I found. Chances are, the apartment manager wasn’t aware of the need for the work I provided. I could see what needed to be done and communicated compellingly to the apartment manager.

    I was able to showcase my ability to see problems and offer solutions, as well as my willingness and desire to work. There is great value in someone willing to identify and complete the work that needs to be done. This was my first experience understanding my value.

    Then came pizza

    My next job was more official, but I had to fight for it. The pizza shop was not legally allowed to hire anyone under 15. I was 13 and needed a job. I was unwilling to take “no” for an answer, so I understood that I would have to convince the manager of my value.

    I came in day after day asking for a job. Eventually, the manager said he could not hire me because anyone under 15 could not work with the food. So, instead of selling him on the idea that I would join the kitchen crew, I sold him on the idea that I could man the phones. He couldn’t argue with that, so he gave me the job.

    By thinking outside of the box and refusing to give up when it got challenging and didn’t look like it was going to happen, I was able to own my worth and reach my goals. This early lesson gave me powerful confidence to move forward throughout the rest of my life.

    Related: Don’t Just Sell Yourself, Communicate Your Value: 6 Valuable Tips

    There’s power in creating opportunities

    When I needed to create income for my family so young, there weren’t opportunities being advertised that I could grab. I had to identify where I could offer value to others and create the opportunity I sought. In a study from MIT, researchers found that immigrants are actually “job creators,” creating more firms of every size, large and small, than people born in the U.S. While there are several reasons why this might happen, researchers cited the lack of opportunities available to immigrant workers as a core catalyst for why these businesses would be started.

    Another study explored the connection between adverse childhood experiences and creativity. According to the research, the group with the highest amount of adverse experiences also had the highest amount of creativity. By harnessing my creativity, despite facing adversity, and having the fortitude to create my own opportunities, I was able to move beyond the circumstances I was born into.

    High-value person, high-value assets

    When you continually have to showcase your value confidently, you stop questioning it. It’s much easier to own your value when you consistently make a case for why you are deserving, helpful and an asset to any team or situation.

    Working with high-net-worth individuals requires the utmost confidence. It is impossible to help people manage their valuable assets without first valuing yourself. You have to be able to walk into a room and advise some of the wealthiest, most brilliant and most insightful people on the planet without hesitation.

    By advocating for myself since I was a child and consistently showcasing my value to people who had more power, money and influence than I did back then, I have been able to own these rooms and situations with unflinching, unwavering confidence. You create significant change when you have the confidence to advise and provide solutions along with the experience and know-how to deliver results.

    Related: 10 Ways to Build and Boost Your Confidence

    I made a habit of looking for the things that needed to be done back when I was 11 — that skill is exactly what built my business. The market was crying out for something different, and it was clear that high-value Asset Management needed a mobility makeover.

    Once I realized that high-net-worth individuals needed more mobility for their assets, I was able to build a platform that increased each asset’s deployability. That meant people no longer had to hold on to assets that weren’t working for them and could trade for something that would enrich their lives.

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    Jarrett Preston

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  • The 19 Covenants of a Standard Franchise Agreement | Entrepreneur

    The 19 Covenants of a Standard Franchise Agreement | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The following excerpt is from Rick Grossman’s book Franchise Bible. Buy it now from Amazon | Barnes & Noble | iTunes | IndieBound

    The franchise agreement is the contract between the franchisor and franchisee, but it’s not a “standard” or “form” agreement. The format of the contract differs from one franchise system to another.

    While each franchise agreement will differ in style, language and content, all franchise agreements have covenants, each of which describes a promise, right or duty that the franchisee or franchisor owes to the other or that benefits the franchisor or franchisee. The following is a list of those covenants that one most often sees in a typical franchise agreement. (The franchise agreement on our companion website will have the specific language that addresses each covenant.)

    Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

    1. Grant of franchise

    The “Grant” section lets franchisees know that the franchisor is granting them the limited, non-transferable, non-exclusive right to use the franchisor’s trademarks, logos, services marks (called generally the Marks) and the franchisor’s system of operation (often called the System) for the period of time defined by the franchise agreement. The franchisee receives no ownership rights to the Marks or the System, and the franchisor always retains the right to terminate the franchisee’s grant-of-license because of a breach of the franchise agreement.

    2. Opening date, territory limitations, build-out and similar rights

    This covenant describes the franchisee’s territory (be it exclusive or not) and sets up a time schedule by which the franchisee must find a brick-and-mortar location, must have the plans for the unit approved and must be built-out and opened. This section may also disclose other matters such as the computer equipment needed to operate the business and the like.

    Related: The 23 Items That Make Up the Heart and Soul of the Franchise Disclosure Document

    3. Fees and required purchases

    This section will disclose the fees more specifically described elsewhere in the agreement. The fees include the initial franchise fee, any fees paid to the franchisor prior to opening, any fees paid to the franchisor during the term of the franchise, all advertising fee obligations and the like.

    4. Advertising

    In this section, the franchisor should repeat the franchisee’s advertising obligations as they’re stated in Item 11 of the franchise agreement (and the fees for which are identified in Items 5, 6, 7, 8 and 11 — as applicable).

    5. Term and renewal

    This covenant spells out the term (length of time) of the franchise agreement measured from the date the franchise agreement is signed to the date that the franchise agreement expires. If renewal rights are granted, this section will also spell out the prerequisites of this arrangement.

    6. Services offered by franchisor

    Though not all franchisors will repeat the pre-opening and post-opening services that they offer the franchisee in the franchise disclosure documents, sound drafting principals will require that these matters be repeated in the franchise agreement. Including them in the franchise agreement, however, removes the specter of litigation as a way to insert rights into the contract that aren’t otherwise stated.

    7. Protection of proprietary information, marks and other intellectual property

    As discussed in the “Grant of Franchise” section earlier, the franchisor is granting only a temporary license to the franchisee. Most franchisors will enforce this understanding by adding specific language that identifies each item that makes up its proprietary, confidential and trade-secret information and by then stating the limitations that are placed on the franchisee’s right to use such information. It is important protection for the franchisor and is not usually a covenant missing from the franchise agreement.

    Related: When Evaluating a Franchise, Ask These Questions

    8. Training

    This section should disclose any training offered by the franchisor, including any additional training, seminars, meetings or the like that the franchisor will either require or urge the franchisee to attend.

    9. Quality control

    As the name suggests, franchisors will address the franchisee’s specific quality-control requirements. This is sound franchising and is necessary to insure that the goods and services offered throughout the system meet the franchisor’s minimum requirements.

    10. Transfers

    Virtually all franchise agreements control the franchisee’s right to transfer their interest in the franchise relationship. This section will list the prerequisites to a transfer.

    Related: The Anatomy Of A Franchise Disclosure Document

    11. Defaults, damages and complaint limitations

    All franchise agreements will contain some recitation of the violations of the franchise agreement that will be treated as a breach. These violations may be divided into those breaches that result in the immediate termination of the franchise agreement, for which no cure is given, and those violations for which cure is provided.

    12. Obligations upon expiration or termination

    Once the franchise relationship has ended — either because the term has naturally concluded and no renewal has occurred, or because the franchise agreement was terminated — it is typical for the contract to list a series of steps that the franchisee must take to “de-identify” the business and the franchisee’s association with the franchise system.

    13. Franchisor’s right of first refusal

    Most franchise agreements give the franchisor the option, but not the obligation, to exercise a first right refusal to purchase the franchisee’s business — in the case where the franchisee seeks to transfer the business, or the first right to purchase the franchisee’s assets at the time that the franchise agreement expires or is terminated.

    14. Relationship between the parties

    Franchisees are always treated as independent contractors of the franchisor. This has several important implications. An independent contractor is not an employee or agent of the principal. Instead, the independent contractor is in business for themselves. The parties to this relationship pay their own taxes, hire on their own, are responsible for their own employees and generally operate independently of the other in carrying out the contract between them.

    Related: How Franchisees and Franchisors Can Master Their Relationship

    15. Indemnification

    All franchisee agreements will contain an indemnification covenant, which means that the franchisee will reimburse the franchisor for any losses it suffers as a result of some negligent act or wrongdoing of the franchisee. These covenants are almost always one-sided in favor of the franchisor — which is fair, given that the franchisee and not the franchisor is responsible for the day-to-day operation and maintenance of the business.

    16. Non-Competition covenant and similar restrictions

    A non-competition covenant is one that seeks to prevent the franchisee from opening a business that would compete with the franchised business. Virtually all franchise agreements will have non-competition covenants. The covenant is often broken into two parts: the “in-term” covenant; and the “post-term” covenant.

    As the name suggests, the in-term covenant prevents the franchisee from competing against the franchisor and any other franchisees while the franchise agreement is in force. Typically, this covenant covers a geographic area around each franchised, company-owned and affiliate-owned business. The post-term covenant covers the former franchisee after the franchise agreement expires or is earlier terminated because of an uncured breach.

    Related: The 5 Items in Your Franchise Disclosure Document That Can Make or Break a Real Estate Deal

    17. Dispute resolution

    This covenant spells out the methods the franchisor uses to resolve disputes with franchisees.

    Most often one will see at least a nonbinding-mediation requirement followed by a binding-arbitration requirement. In other cases, these two methods of resolution will be preceded by the requirement that the parties first meet face-to-face.

    18. Insurance

    All franchise agreements will require the franchisee to obtain insurance to cover its business operations. In all cases, each of the franchisee’s insurance policies will require that the franchisor be named as an “additional insured,” meaning that the franchisor enjoys the same coverage as does the franchisee, even though the franchisor is not paying for the coverage.

    19. Additional or “miscellaneous” provisions

    This is kind of the catch-all section of the franchise agreement that contains what some call “boilerplate” language, meaning that it is “usual” that such language be included in any contract. In virtually all franchise agreements, you’ll see covenants that cover mergers, modifications or amendments, non-waiver provisions, state-specific addenda and more.

    Related: 8 Steps to Finding the Right Franchise

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    Rick Grossmann

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