Today, We Explore 401(k)s, Q4 and Buying Commercial Property

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September is over and fall has arrived in full force. Grab your favorite pumpkin-flavored item and enjoy today’s run down on the DOL’s new rule on multiple-employer 401(k) plans, the SBA’s program for buying commercial property, and strategies for selling to skittish consumers this 4th Quarter.

New DOL rule aims to help 38 million Americans without access to work-sponsored retirement plan

A new rule from the Department of Labor went into effect today, making it easier for local or state associations to sponsor retirement plans for the approximately 38 million Americans who do not have access to one through their employer. The rule seeks to help small businesses offset the cost and administrative burden of sponsoring a 401(k) plan by allowing organizations within the same industry to band together to provide a plan ⁠— or for associations like Chambers of Commerce or HR firms to administer the programs. Currently, a similar proposal called the Secure Act is waiting for the Senate’s consideration.

The Number: 53%. It’s not a surprise that small businesses have a more difficult time sponsoring retirement plans for their employees. As of 2018, 53% of employees at firms with 100 or fewer employees had the option of contributing to a retirement savings plan, compared to the 85% of employees at larger companies. 

The Quote: “If you’re interested, I’d suggest reaching out to your local chamber to see if they’ll sponsor one.”

Loan program makes it possible to be your own boss … and landlord

There are many variables that small business owners can’t control ⁠— including the rise and fall of commercial property rents. The Small Business Administration’s 504 loan program allows savvy SBOs to team up with lenders to secure funding to buy fixed assets, such as commercial property or equipment for expansion. In many cases, acting as your own landlord and paying down a mortgage during the lifespan of your company can result in owning property with significant wealth-generating potential even after you sell the business.

The Number: 10%. Typically, the SBA’s 504 loan program requires the business owner to provide 10% of the project costs, with the SBA providing 40% and a participating lender kicking in the final 50%.

The Quote: “It’s the perfect opportunity for small business owners to actually create wealth by purchasing their commercial property. Most small businesses will pay a landlord rent for the complete tenure of their business—18+, 20+ years in their business and in the same spot, paying a mortgage to a landlord—and if they would have purchased that commercial real estate, in most cases, that property can be just as valuable as their business by the time their career is over.”

Small businesses look for ways to sell to skittish consumers

Independent retailers across the nation have noticed a downtrend in consumer spending heading into the 4th quarter ⁠— and are looking for ways to entice customers to open their wallets during this traditionally big-spending season. Many businesses are attempting to broaden their offerings to appeal to different price points, increasing focus on online sales, offering loyalty or exchange programs and attempting to cut down on overhead to make up for lost revenue.

The Number: $29.10. In Houston, the owner of a chocolate shop noticed customers reaching for smaller boxes of sweets as early as Valentine’s Day this year, noting that the average sale last year was $33.95 compared to $29.10 this year. 

The Quote: Americans are spending less time shopping. But when they are coming in to shop, you need to help them, to answer their questions so they can overall have a memorable experience that keeps them coming back for more.”

 

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