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Don’t be Discouraged by “Best States to do Business” Surveys

So you’ve decided that you want to start a franchise using your retirement funds, but you’re not sure where your business should be located?
A recent study by Chief Executive Magazine points to five states that were identified as the “Best States to Start a Business.” Those states are:
1. Texas
2. Florida
3. North Carolina
4. Tennessee
5. Indiana

If your company doesn’t have interest in doing business in any of those places, don’t be disappointed—our numbers at Guidant Financial reflect that five other states experienced the most growth in rollovers for business startups or ROBS:

 

 

1. Colorado
2. Washington
3. Maryland
4. Arizona
5. California

Face Value
So, why the differences? While the Chief Executive Magazine survey was based on such issues as tax policies, workforce quality and educational resources, our numbers reflect the actual amount of businesses started using ROBS from 200-2011. This is proof that although surveys can indicate trends and specific geographic advantages, their findings shouldn’t always be taken at face value.
For example, the survey conducted by Chief Executive Magazine named Maryland as one of the 10 worst states to start a business due to a combination of factors, including low ratings in taxation and regulations. However, our data reveals that Maryland is thriving for the type of small businesses our clients start up. Put simply: what’s bad for Main Street may actually be ideal for franchisees.
In states like Maryland that have a vibrant consumer base, a franchise could thrive in the way that a small-town mom-and-pop shop (or even a large corporation) may not.
Furthermore, many franchises offer protected territories to their franchisees, which gives them an automatic advantage in the market. If the customers are already there and the brand is recognizable, the foundation is built for a successful venture.
When it comes to financing, using ROBS to fund your business works in your favor because none of the external factors can affect your choice to use it. If you have sufficient retirement funds, you can become a franchise owner.
Using ROBS enables you to start your franchise cash-rich and debt-free because your funds will be structured as an investment into the business. You’ll have complete control of your investment because it will be you running the franchise. Furthermore, by avoiding unnecessary taxes and penalties, you’ll have more money available to build your business and pave a quicker path to profitability.
If you don’t live in a state that is regularly recognized for its rich business landscape, don’t despair. Using alternative funding sources such as ROBS, and conducting prudent research into your potential customer base can set you up for long-term entrepreneurial success. 
David Nilssen is the CEO and co-founder of Guidant Financial. A notable thought-leader in the small-business industry, Nilsssen was recognized as one of the Top 100 Small Business Influencers in 2011 and co-authored the book “Making the Jump Into Small Business Ownership.” Follow him on Twitter at @davidnilssen.

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