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CHAPTER 9 GROWING YOUR BUSINESS EMPIRE

expand your business into new markets and make a new net
profit of $2 million (double your profits), wouldn’t it be worth
it? Instead of making $500K of net profits previously (when
you owned 100% of the shares), you would now earn $1.6
million of profits from your 80% share of the expanded profits!
(i.e. 80% x $2 million).

3) Get a Bank Loan
The third option would be to borrow money from the bank.
You can either do this in the form of a credit line (bank
overdraft) or a term loan. By borrowing the money at 8%-9%
interest and investing the money to grow your profits at 20%
or more, it definitely makes great business sense.

The great thing about taking bank loans is that you don’t have
to give up shares and hence a portion of your future profits.
Once you pay back all the capital, you (and your partners)
will still retain 100% control.

However, this is considered the most risky option, as money
borrowed from banks has to be returned with interest. Banks
usually require you to sign a bank guarantee or to pledge
your house as a collateral. In other words, if you borrow
too much and your business expansion fails, you could stand
to lose your personal savings, home and even be subject
to bankruptcy.

4) Franchise Your Business
This fourth option allows you to achieve the best of both
worlds. Franchising allows you to expand your business rapidly
without giving up any shares or taking on any risky loans.

Franchising is a business arrangement where you (the
franchisor) grant other business owners (the franchisees) the

SECRETS OF BUILDING MULTI-MILLION DOLLAR BUSINESSES 267