In the 10th episode of his “The Future Is Borderless” podcast, DOXA founder David Nilssen is in conversation with Guidant’s CEO Jeremy Ames as he explores the successes and challenges of Guidant—the 19-year-old Boise-based financing company specializing in Rollovers as Business Startups (ROBS) loans—that have helped the brand find its place in the sun.
Following Guidant’s story through the dialogue between David and Jeremy is to learn the value of resilience. The main takeaway from this episode is adapting to address your audience’s pain points is seen through the development of the brand’s two core functions:
- Financing a business via two loaning methods that make use of one’s 401(k) Plans—ROBS and SBA;
- To provide administrative services that are, in Jeremy’s words, “things that business owners are not excited to do.”
With every question answered, we see how Guidant’s growing pains were necessary learning experiences to overcome in creating a brand that goes beyond its initial goals. Read through to learn how Guidant has evolved to deliver financing and business solutions shaped by the specific customer it serves:
Nipping It In The Bud: Small and Medium-Sized Enterprise (SME) Vs. Administrative Tasks
120, the number of days an owner of a Small and Medium-Sized Enterprise (SME) spends to just fulfill administrative tasks—inevitable items in a business’ daily “to-do” list like payroll. These are lost days that one could have spent working on the business, rather than in it like 68.1% of entrepreneurs back in 2016. Seen as “the fourth largest business problem (23.25%),” the inefficiency to address the imperative nature of accomplishing these intrinsic tasks has major consequences alongside it. This is where Guidant comes in.
While it began as a financing company, the glaring need to fill the gap between owning and operating a small business drove Jeremy to start with providing 401(k) administration services. In his conversation with David, Jeremy verbalizes what every business owner has been thinking, “No entrepreneur has ever said, ‘I want to start a small business because I love paperwork, and I’m super good at it.’” Now, Guidant offers a variety of back-office tasks SME owners can delegate to help speed up their growth, services like:; payroll, HR, and accounting and tax.
Business owners are just like superheroes who are born with their respective villains, which in many cases are administrative tasks. With this hurdle in mind, Jeremy positions Guidant as every SMEs trusty sidekick in promoting back-office efficiency from within. He explains how he and his team focused on addressing this bane of every SMEs existence saying, “The problem is never going to get better unless we figure out how to take small business owners out of being in the middle.”
Choosing Your Entrepreneurial Soulmate
Having someone to share the highs and lows of making a business work is always a good thing. At the end of a busy working day, it pays to have someone sit across from you to discuss what things went right or wrong to help improve the way things are done. But choosing that “someone” isn’t all that easy. In fact, choosing the wrong co-founder could be the costliest mistake you can ever make, just ask 23% of businesses who failed because they had the wrong people backing them.
Thinking of entering a partnership? Here are Jeremy’s top two qualities you’d want to keep an eye out for in your partner:
- Choose a solid human being—”someone with integrity, trustworthiness, and knows how to battle it out in conflict in a way that’s fair and can maintain the relationship.”;
- Look for values alignment—“someone who wants the same things out of life, and who thinks about the world in the same way in terms of values.”
In 2003 a partnership between Jeremy and David that started with just “$10,000 and a laptop” has now impacted the lives of many entrepreneurs looking to make the most out of their 401(k) retirement funds.
Rolling With The Punches: Overcoming Business Obstacles
When the answer to the question “What was the most challenging situation your business has faced?” begins with “IRS,” you know it’s going to be a serious problem to have. To have an entire government agency breathing down your neck, watching every move you make is intimidating. For Guidant, it was a welcomed challenge.
A lot of compliance issues can occur when dealing with an agency like the IRS, especially for SMEs. Things like compliance costs, underpaid taxes, or untimely filing are just some of the commonly overlooked matters that business owners who are new to the tax code face. This is reflected by an IRS report done in 2018 where the agency identified small business owners as the biggest tax gap contributor. Such is the case that Jeremy pointed out in the episode.
Since 2008, the IRS has taken interest in investigating further how ROBS works, with the agency saying that the scheme is “questionable” albeit “not considered an abusive tax avoidance transaction.” This move from the government agency caused Guidant to play a proactive role in ensuring that their clients’ welfare is top priority.
“We decided to step in and say that if ever our clients get audited, we’re just going to pay for them to have really good representation,” Jeremy explains.
As the mediator between investors and owners of SMEs and external entities like the IRS, Guidant plays a crucial but rewarding role in ensuring that both parties get their piece of the pie. From Jeremy’s point of view, that obstacle in 2008 was more of a step forward than back as he details further, “This was a pivotal moment that shaped company principles, and what drove success moving forward.”
“One benefit of making that bet on our clients is not just a guarantee on the service that we offer, (but) also gave us incredible insight on what really was happening with these services,” he adds.
Embracing ROBS While Divesting IRA
“We’re going to build this business not around this thing that we do, but around this specific customer that we serve,” Jeremy shares. That same passion to build a customer-centric experience for the SME stakeholders they serve was what drove Guidant’s evolution from IRA to ROBS.
With the growing demand from people who were looking for investments to use their 401(k) on, coupled with an enticing pitch of ‘If you want to start a business with your retirement fund go here,’ Guidant had a competitive angle to play in the financing game. But it is this same brand equity of end-to-end financing services that drew questions from interested clients as to what else Guidant had to offer.
As Jeremy stated, at that time the brand was split in addressing two different customers—those interested in self-directed investing, and those who were running the companies. With IRAs having a lot of limitations that constricted investors versus the more flexible options ROBS had to offer, the brand made the decision to switch to the latter.
“Our heart was in the business side, and we made the decision to figure out how to divest the IRA part of what we were doing so we could double down on small business owners,” he shares.
This switch has proven to be a wise decision as evidenced by Guidant’s successful clients, businesses like La Village Cowork, NoDa Brewing, and The Horse’s Axe among others.
Of New Horizons And Pivots In Strategy
The decision to offshore and the shift to a totally remote work setup were the last few points of discussion for David and Jeremy in this podcast’s episode. While both topics continue the narrative of Guidant recalibrating to meet customer satisfaction, it also highlights the brand’s effort by switching gears to satisfy its employees.
On one hand, Guidant’s reasons for offshoring veered closer to a mix of financial and social factors dictated by the economic climate in Seattle—increase in the cost of living, coupled with a decrease in the number of administrative and customer service talent; long hours of commuting to-and-fro work averaging 2 hours; and the high salary grade technology talents demand.
On the other hand, its decision to have people work completely remote had a more psychological reason behind it—flexibility to ensure well-balanced professional and personal lives.
Both offshoring and remote working have proven to be beneficial to the holistic growth of Guidant. For the former, David mentioned that the move to offshore did not, by any means, take away opportunities from the US team, but instead “(Offshoring) created additional margin to make investments in people and culture.” With the latter, Jeremy involved the logistics of maintaining a hybrid setup—the brand’s initial step before transitioning to a fully remote setup—by stating that “Going fully remote reduced 15 to 20 problems associated with how to make a hybrid setup work to just 2 problems.”
If you want to see how Guidant puts these lessons in action, read more about their small business financing and services.