Franchise Financing and Structuring Methods for 2024

Strategic Business Planning and Wealth Protection: Insights from Larry Carnell of Benetrends

Patrick Findaro from Vetted Biz recently spoke with Larry Carnell, VP of Development at Benetrends and a seasoned entrepreneur known as “Dr. ROBS.” Larry introduced a unique funding structure that allows investors to buy a franchise or business in a tax-efficient manner. In this conversation, Larry shares his expertise on business structuring, wealth protection, and strategies for building generational wealth.

The Importance of Business Structure and Exit Planning

Larry emphasizes that many entrepreneurs make a critical mistake by focusing solely on starting a business without considering their exit strategy. “It’s not just about starting a business; it’s about how you structure it for the long term,” he says. Business owners should think about how political and economic changes over the years could affect the wealth they build. Proper structuring today can protect that wealth for both the entrepreneur and their family.

Creating Wealth from Small Businesses

Historically, sophisticated tax structuring was often reserved for established entrepreneurs. However, Larry points out that wealth can be created from small companies as well and that planning upfront is essential. With political efforts underway to increase capital gains and even introduce wealth taxes, Larry warns that business owners need to be proactive about protecting their assets. “Politicians may eventually try to tax not just your business profits but your assets post-sale,” he cautions.

Following Politicians’ Wealth Protection Tactics

Larry advises entrepreneurs to look at how politicians protect their own wealth. “Politicians know what’s coming, and they rarely remove benefits that impact their own wealth,” he observes. He encourages entrepreneurs to adopt similar strategies to safeguard their finances and avoid what he calls “the herd mentality” in response to political promises. By following where politicians place their money, business owners can find ways to protect their assets and reduce tax burdens effectively.

Structuring a Business for Wealth Protection

Larry lectures nationwide on strategies for wealth accumulation and tax mitigation beyond traditional funding solutions. He discusses how health-related issues have led to an increase in bankruptcies, emphasizing that proper business structuring is crucial to prevent financial erosion. According to Larry, designing business plans with wealth protection in mind can help entrepreneurs shield their assets from unexpected costs, particularly healthcare expenses.

Current Opportunities for Funding New Businesses

In today’s economy, funding options for new businesses are abundant. Larry explains that now is one of the best times to start a business due to wealth and tax protection features that were unavailable decades ago. By leveraging SBA loans and retirement accounts, potential franchisees and business buyers can consider more substantial investments. He recalls a client who was able to buy a $1.3 million business, instead of the $300,000 business he originally considered, by using his retirement funds effectively.

Building Generational Wealth Through Business Ownership

One of the key benefits of business ownership, Larry explains, is the opportunity to create generational wealth. He recalls how structuring a business properly allowed a client to generate cash flow that not only supported his lifestyle but also provided an income stream for his spouse and children. “It’s a way to set up wealth that can support your family for generations,” he notes. Larry stresses that building a business with family involvement in mind can ensure its continuity and long-term success.

Leveraging Franchise Expertise and Advisors

Larry encourages aspiring entrepreneurs to work with franchise experts, consultants, and business brokers who can help them identify successful opportunities. “I used to be a business broker and a trainer for the International Business Brokers Association,” he shares, adding that his approach to financing is informed by an entrepreneurial perspective. This unique approach helps clients find funding solutions tailored to their specific business goals, rather than simply meeting banking requirements.

Avoiding Common Pitfalls in Traditional Banking

Larry criticizes traditional banking practices, noting that many loan officers are incentivized to collect applications without regard for approval outcomes. This can delay the loan process, as some banks prioritize application volume over quality. At Benetrends, Larry aims to provide a more personalized, advisory approach, focusing on what’s best for the business owner rather than the bank.