Ascension Advisory’s founder, Chelsea Mandel, has introduced a potential solution for the financial difficulties faced by many aspiring entrepreneurs – the “sale leaseback” strategy. With this approach, businesses can harness the equity in their real estate holdings, providing a much-needed cash boost for their operations and potential expansion. Mandel’s alternative methodology to capital raising retains ownership rights and offers greater financial fluidity, particularly during significant periods of company growth.
The sale leaseback strategy meets an urgent need, considering that small businesses, which make a substantial contribution to the U.S. economy, often face the challenge of inadequate funding. Mandel’s inventive financing method caters to this necessity, simplifying the process of gaining access to capital for small businesses and hopeful entrepreneurs. It’s a forward-thinking strategy that aims to inject vitality into the small business sector while supporting the American dream of self-employment.
In the sale leaseback model, businesses are able to sell assets, like real estate or equipment, and then lease them back.
Optimized funding via sale leasebacks
This setup, often utilized in commercial real estate and equity firms, frees up capital tied in assets. The asset owner retains control of the asset, a vital advantage in industries where the location or unique characteristics of a property are crucial for business success. For companies with rapidly depreciating assets, such as tech firms with expensive equipment, leasebacks can actually help manage the financial risk of obsolescence.
Investors are attracted to sale-leasebacks as they offer low-risk, long-term income from lease payments, coupled with the possibility of eventually owning valuable assets. However, companies need to tread with caution, as high rental costs and property adjustment limitations can be potential pitfalls of such agreements.
Through her groundbreaking use of sale leasebacks, Mandel has enabled entrepreneurs to leverage company assets when needed, aiding in business acquisition and operational continuity without substantial initial investments. A shining example of this approach’s success is Dennis & Co.’s founder, Brian Dennis, who launched a new car dealership outlet with zero initial financial investment.
Mandel’s novel application of sale leasebacks could serve as a much-needed springboard for potential business owners, providing transitional liquidity during tough economic periods. This strategic maneuver allows entrepreneurs to leverage their real estate assets to raise crucial funding while keeping control and use of the property. As such, the prospects of starting or running businesses for budding entrepreneurs seem more attainable than ever with Mandel’s creative use of sale leasebacks.
