DRDA P.C. knows that entrepreneurship is risky business and offers assistance to those looking to own a start-up or franchise. Opening a successful small business involves more than just ponying up some cash, but it’s a great place to start.
As leaders in the financing industry, DRDA P.C. developed a non-traditional funding option called a BORSA (Business Owner’s Retirement Savings Account) plan to help prospective business owners finance a small business or franchise with the savings held in a qualified retirement account. A BORSA plan uses money stored in a retirement account such as a 401(k), 403(b), 457 or IRA rollover to buy or start a business without the usual taxes, penalties and distributions associated with early withdrawal. To remain in IRS compliance, DRDA devised the BORSA plan after closely studying the ERISA and Internal Revenue Code sections that deal with the use of retirement accounts to finance a small business.
Fighting day and night to keep your struggling small business alive doesn’t seem like a very enticing scenario for many prospective business owners. But before putting your dream of small business ownership on the back burner, remember that knowing what it takes to run a small business is key to keeping it from going under. Also, knowing when to quit is just as important.
New small businesses require ample time to develop, mature and gain profitability, which can take anywhere from two to five years. If you throw in the towel before your business hits puberty, then you may miss out. Most millionaires drown in debt before hitting the big time. Take a cue from Donald Trump; he wasn’t born with a silver spoon in his mouth, but through hard work and stick-to-itiveness, he succeeded in creating a multi-billion dollar empire. The same rule applies to your small business. Maybe you won’t make it to platinum status, but you may generate a nice cash flow.
The best kept success secret is knowing when to quit. If after several years your debts outweigh your profits than you may need to hold up the white flag and get the heck outta dodge. There are five fairly obvious warning signs that may mean your business is in jeopardy:
1) If you cannot meet the payroll and are deferring your own salary in order to pay debts and employees, you need to look closely at your situation. Pulling out now may save you in the long run.
2) Cash intake ebbs and flows in any business, but if low flow leads to unpaid invoices and bills then the business cannot continue to function.
3) Most business owners want to meet their financial obligations and keep every one happy, but sometimes that just isn’t possible. Avoid a law suit and serious financial trouble by closing the doors before the snot hits the fan. 4) Having liens on your assets is dangerous, as your business assets should always be protected from creditors. 5) While not a tangible warning sign, lack of sleep is your mind’s way of telling you there is something wrong.
Warnings aside, small business ownership can be a very smart financial move if done right. For more information on a BORSA plan and how it can help you fund your small business contact the business advisors at DRDA P.C. at 281-954-6040 or www.drdacpa.com.
