General Business and Finance Blog

Why seek business opportunities in China? There are a number of reasons why people should stop and take notice. Based on records that are available the Peoples Republic of China is considered as the second largest economy in the world after the United State.
The estimated gross domestic product of China amounted to $7 trillion if this is measured by using the purchasing power parity. Now being the second largest economy in the world may have its pros and cons, but certainly the number of pros far outweighs the cons.
If the economy of China is so huge then one thing that can be deduced from it is the fact that a number of opportunities can be taken here. And the only way to get it is to know where it is and in what industry or sector. Now the country is blessed with rich natural resources and a number of industries are seen in the country right now that help it grow in leaps and bounds.
But the two most important sector of the economy is agriculture and industry. These two are the traditional source of income and employment for the majority of the Chinese population. These two sectors of the economy employ more than 70 percent of the labor force of the country. The income that was sourced from these two sectors accounted to more than sixty percent of the country’s GDP. These two sectors differ in many ways and are often seen as the ones that push the dichotomy between the rich and the poor. Even though it may happen, the participation of these two sectors have succeeded in employing majority of the people in the country and helped other people from other countries gain employment as well.
Aside from these two booming sectors, the steps taken by the government and its future plans help ensure that the business climate in the country will be suited to those who are seeking employment and to those who may want to do business in China. Business opportunity did come in many forms when these government initiatives were put in place. One of the major steps done that made the country competitive and friendly to business entities is when the country was opened up in 1979. The moment the opening up of the economy was made official; the economy of the country has grown to record levels and has become steady ever since. To facilitate growth in the country and to encourage more business opportunities, the government adopted the five year strategy for economic development and the more recent 11th Five Year Plan.
Steps like these that are made by the government have enabled the country to be more competitive and in the process making a China trade one of the most sought after trade out there. It is expected that the economy of the country will still grow and will continue to be the biggest in Asia. So for the businessman on the look-out for opportunities, certainly a China investment is part of the plan. Doing trade with a large economy like this country has its many benefits for sure.

This real estate and business financing article discusses a concept which is referred to here as “Thinking Outside the Bank”. It is meant to be a variation of the well-known “thinking outside the box”. Despite the prominence of traditional banks, they are not the only viable source which should be considered for a commercial mortgage or commercial loan. There are many reasons why a commercial borrower might not go to a traditional bank for a commercial real estate loan or other business finance circumstances.
Business borrowers have more commercial mortgage and commercial loan alternatives than they realize. As noted above, I refer to these business financing alternatives as “Thinking Outside the Bank” because a typical commercial borrower probably believes that a bank is the best source for a business loan in business investing situations. Non-traditional business lenders are usually viewed as having the competitive edge for many common commercial financing and commercial real estate investment property financing scenarios.
In some cases a traditional bank will offer to provide a business loan but will attach excessively stringent terms and covenants. In other cases a traditional bank will decline the commercial mortgage outright, perhaps because they do not even provide business financing to the commercial borrower’s particular industry. In either case, the commercial borrower is likely to benefit by “Thinking Outside the Bank” for their business investing efforts.
Commercial loan borrowers might feel that a bank is their most likely source for business financing. However, since traditional banks usually focus on a few types of businesses and commercial real estate investing, non-traditional business lenders should be emphasized for any business loan situation. Therefore the recommended business finance and commercial mortgage strategy discussed in this article is to “Think Outside the Bank”.
As I reported in a previous business financing and investing report, in many commercial mortgage situations it is common for a local bank to assess stricter commercial loan conditions than would typically be seen in a competitive business loan scenario. Such banks can often take advantage if there are few business lenders in their market.
A prudent response by business borrowers is to consider non-traditional commercial mortgage options. It is not necessary for borrowers to depend upon traditional banks for business loan strategies. For typical commercial loan scenarios, a non-bank lender can often provide better business financing terms because of the competitive market situation.
There are at least three business financing situations in which business borrowers will typically experience that non-traditional lending sources can provide conditions that are best for the borrower: (1) commercial real estate investment property loan programs; (2) credit card factoring and business cash advance programs; and (3) working capital management programs for credit card processing.
Business Loan Investing Options – Commercial Real Estate Investment Property Loan Programs -
Two of the most common commercial mortgage difficulties experienced by commercial borrowers can be avoided if they “Think Outside the Bank”. The first business financing situation is the prevailing practice of traditional banks to avoid most special purpose investment properties (such as funeral homes and golf courses).
A second business loan possibility is the frequent practice of many commercial banks to add recall and balloon conditions to their commercial loans. The bank can then require early payoff of the commercial real estate loan under stipulated conditions. Both business financing situations can easily be prevented by a non-traditional lending source.
Business Financing Choices – Business Cash Advance Programs -
Most businesses that accept credit cards will qualify for a business cash advance with their credit card receivables. Traditional banks will typically be very poor candidates to consider if a business needs assistance with credit card factoring and business cash advances.
Because successful business owners typically need more working capital than they can obtain from a bank, it is important for a business to “Think Outside the Bank” with non-traditional lenders to help with this working capital management function.
Credit Card Processing Programs – Working Capital Management Choices -
The selection of a credit card processing service can be critical in improving the cash flow of a business with significant credit card activity. Credit card processing providers can be combined with the credit card financing process mentioned earlier.
In coordinating a business cash advance and working capital business loan program, it is usually possible to achieve improvements in the business owner’s credit card processing services. Traditional banks are usually not competitive in providing assistance with a business cash advance using credit card receivables. So it is likely that a non-traditional lender will be the major source of competitive help with credit card processing improvements.
A closing business financing and commercial real estate investment property financing thought: I have written an earlier business loan article about commercial lenders to avoid. It should be noted that there are in fact both traditional and non-traditional (non-bank) lenders which should be avoided.
When business owners are “Thinking Outside the Bank”, they should be ready to avoid troublesome non-traditional business lenders in their investment quest for worthy working capital management dealing with commercial real estate loans, credit card financing and credit card processing.

When it comes to economies in Asia, the name Singapore isn’t far behind. In fact the city-state of Singapore is rated as one of the best in the region alongside that of China and Japan. But the development of the city-state into what it is now was littered with obstacles and hardship as well. History reveals the city-state became a self-governing state within the British Empire in 1959. The country separated from British control in 1963 and joined the Federation of Malaysia. But the presence of Singapore in the Federation was short-lived as the country once again left Malaysia and cited ideological differences. By 1965, the city has officially gained its sovereignty. It was the start of the march to progress for the city-state.
During that time, the city tried to become self-sufficient and at the same time faced a number of problems and issues like unemployment, housing shortages and of course the lack of available land for the people and for business and trade. But the difficulties faced by the country were short-lived as the country implemented a number of steps. These policies and government actions have made Singapore the respected economy of today. The Singapore of today is considered as one of the strongest economies in Asia and one of the centers of trade as well. Being a center of trade, it can be expected that this kind of set-up and development have given rise to business opportunities in Singapore that people from the state and from the rest of the world can take advantage.
A quick check on the economy and the industry of the city-state will reveal that the economy of the country relies on exports refining imported goods and in manufacturing. It is in manufacturing that the country has pushed much of its attention. In fact based on records, the manufacturing sector contributed 26 percent to the country’s GDP in 2005. So for the person who might want to do business in the country, then one Singapore business opportunity is in manufacturing. Singapore trade is diverse as well, since a number of companies are involved in varying fields like electronics, petroleum refining, chemicals, engineering and also bio-medical sciences manufacturing.
By the year 2006 the state produced about ten percent of the world’s supply of the foundry wafer output. And perhaps as a testament as to how the state is seen in terms of trading and business transactions, state was rated as the busiest port when it comes to the amount of tonnage shipped. These facts all help make the state what it is now and the reasons why a number of businesses set up shops in the state.
The state is now as well one of the preferred destinations of people looking for work or for people simply looking for fun and entertainment. If you are one of those who are into business and may want to diversify, then a Singapore investment will do. You can never go wrong with a state that is highly rated by businessmen and analysts.

With over 30,000 locations and fifty years in the burger business, the McDonalds brand is the most recognized and successful franchise in the world. Not surprisingly, before considering anything else many would-be franchise owners ask themselves: How much does a McDonalds franchise cost and how can I buy a McDonalds franchise? They hear it only costs $45,000 to get a Mighty Mac franchise, an investment that’s quite within their franchise affordability range.

The McDonalds Franchise Fee As with most things in life, a little information is a dangerous thing. While it’s true McDonalds charges a $45,000 franchise fee, this is only the initial franchise fee for licensing rights – the upfront fee charged to join the network. There’s a LOT more financial commitment and cost involved to buy a McDonalds franchise after that. On top of the investment, there are other qualifications besides having the money.

Different McDonalds Franchise Ownership Options According to McDonalds, there are two ways to buy a McDonalds franchise and enter their system. The first, and most frequently used method is purchasing an existing restaurant, either one operated directly by McDonalds or from a McDonalds franchise owner/operator. The second, infrequently used way is obtaining franchise rights for a new restaurant. Let’s consider these in reverse order, since McDonalds provides few financial details on the first, most frequently used method.

Buying A New McDonalds Franchise For franchise licensing rights to a new McDonalds, the company charges its standard $45,000 initial franchise fee. The second cost category associated with establishing a new McDonalds franchise is “Equipment and Pre-Opening Costs.” According to McDonalds, these costs range from $995,000 to $1,843,000. So, basically a McDonalds franchise is a $1 million to $1.8 million initial investment. The factors impacting new restaurant costs are: size of the McDonalds restaurant facility, area of the country, pre-opening expenses, inventory, selection of kitchen equipment, signage, and style of decor and landscaping, McDonalds says. A detailed breakdown of the initial investment costs into discrete categories, including a working capital component, is provided in the McDonalds FDD Franchise Disclosure Document which can be obtained at the Franchise Foundations website (see link below). Owner/operators must pay forty percent (40%) of the total cost from liquid, personal assets and may finance the remainder from traditional lending sources.

Buying An Existing McDonalds Franchise What about the most frequently used way to buy a McDonalds franchise – purchasing an existing restaurant from a current McDonalds franchise owner or one that’s company-owned by McDonalds and sold as a “turnkey franchise”? Unfortunately, details about how much this type of McDonalds franchise costs are not specified, other than the following statement:

“The purchase price of an existing restaurant varies and is dependent upon a number of factors including sales volume, profitablity, occupancy costs, reinvestment or improvement needs, competition and location.”

To get a better handle on this statement, when existing, “turnkey franchises” are sold in any industry (McDonalds franchises included) the purchase price reflects the value of the business as a going concern, generating (in the case of McDonalds) $X million in sales and $Y in profits. A typical McDonalds restaurant that’s been operating for at least one year produces over $2,000,000 in annual sales, with profits in the low six-figure range. I estimate the sales price of an existing McDonalds franchise (or company-owned restaurants sold as turnkey franchises) to be in the $2 million to $5 million range, plus or minus. Twenty-five percent (25%) of the purchase price must come from liquid, personal assets and the balance can be financed from traditional lending sources.

Ready to whip out your checkbook? Even if you are, there’s a lot more to obtaining a McDonalds franchise than just have the investment capital.

The McDonalds Franchise – Item 19 Financial Performance Representations According to the McDonalds FDD Item 19, the average annual sales volume of traditional restaurants in the U.S. open at least one year as of 12-31-08 was $2,311,000 in 2008. The highest sales volume for a U.S. McDonalds in 2008 was $9,552,000 (the “star” performer). The lowest performing McDonalds clocked in at $491,000. Item 19 of the McDonalds FDD goes on to list proforma financial results for restaurants that hit three different sales levels – $2 million, $2.2 million and $2.4 million, showing cost of sales, gross profit and operating profit at each level. Unlike other franchise companies with similar investment levels, McDonalds steps up to the plate and provides franchise earnings information in Item 19 of its FDD.

Getting the McDonalds FDD Franchise Disclosure Document If you would like a copy of the entire 375-page McDonalds FDD published 2009 (or just particular sections of the FDD, like Item 19 Financial Performance Representations or Item 7 Estimated Initial Investment) to review and get further information, go to the McDonalds Franchise page of the Franchise Foundations website.

copyright 2008-2010, Kevin B. Murphy, B.S., M.B.A., J.D. – all rights reserved

For further information, visit the Franchise Foundations website

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