“Invest in yourself to the point that it makes someone else want to invest in you.”
-Tony Gaskins
Some people know early on that entrepreneurship is their calling. For others, they make the transition to business ownership later in life. No matter when you decide to take control of your destiny, determining how you will fund the realization of your dreams can be challenging and stressful. Obtaining the money to bring your visions to life is somewhat of a rite of passage. At theBLOQparq (tBp), we also checked this necessary item off of our list. While it’s true that getting your hands on that “mean green” is a necessity, how you make it happen can have a significant impact on the future of your business.
Going The Untraditional Route
Many people are unaware of how much debt they can accrue from traditional business funding. Cash flow is one of the most important things for a new business to maintain, and when you are up to your eyeballs in debt, you don’t have that luxury. This is where self-directed 401k funding comes into play. The concept of using your own retirement money to fund your own business is not new, but not everyone is aware that this option exists or how it works.
There are many benefits to utilizing a self-directed 401k, including getting your business off the ground faster, utilizing your funds more efficiently, and ultimately, having the opportunity to invest in yourself. So say goodbye to begging bankers for money because the only person you need approval from is YOU!
Discover How A Self-Directed 401k Works
Let’s start with the basics. When you work in corporate America, you likely contribute to a 401k that acts as an investment in your employer’s stock. This gives the company shares in return for your cash. A self-directed 401k is a similar concept with one major difference. Instead of investing in someone else’s business, you financially support your future by buying into your business.
The best part is that you don’t have to give up any of the savings you worked hard for and rightfully earned during those countless 40, 50, and even 60 hour work weeks. We are going to let you in on a little secret. When you use a self-directed 401k to support your new business ventures or journey to franchise ownership, you are not borrowing or withdrawing money, which means you don’t owe Uncle Tom anything. Pre-tax dollars are a marvelous thing. This brilliant and surprisingly simple process is just three steps:
Step 1: Create a C corporation
C corporations are an entity election made by a business that allows the shareholders or owners (you) of a business to be treated as separate entities. The C corporation is also legally separate from your retirement plan.
Step 2: Establish a 401k plan for your C corporation
The idea here is that you are an employee of your own company – the employee in charge, of course – and you decide to participate in this new and promising C corporation’s 401k plan. Hint: this is your business we’re talking about.
Step 3: Make the rollover a reality
Funds from your existing retirement plan(s) must be transferred to the new self-directed 401k plan. Once this is done, you are ready to start investing in yourself. A right you most definitely earned during your time working for others.
So, what comes next?
Now that you are officially the trustee of your new 401k plan, you have the authority to provide the necessary funds for your entrepreneurial endeavor by purchasing stock in the C corporation you created. You can also use your retirement funds to cover operational and marketing expenses for your business. Talk about taking control of your destiny! There are companies, such as CatchFire Funding, that can help you complete the entire self-directed 401k process in less than three weeks.
When backed by your self-directed 401k, the experience and knowledge you’ve gained working in corporate America is a recipe for business ownership success. No matter what industry you transitioned from or how many superiors you reported to, the time you spent working with (and even for) others has allowed you to refine crucial skills along the way. With your self-directed 401k funding your dreams and a one-of-a-kind community like tBp to house them, there’s no telling what you will accomplish. There are few things greater than the power of unlimited possibilities, and with a self-directed 401k, you can experience it for yourself.