The Military Veteran's Guide to Starting a Business: Everything You Need to Know and More
According to a report by the Small Business Administration (SBA), a veteran is 45% more likely to be self-employed than those with zero military experience. This should come as no surprise—joining the military equips you with the resources, skills and mindset to be battle-ready, whether it be out in the desert or in the realm of business. In Entrepreneur magazine, writer Lida Citroen pointed out five business lessons she picked up from military veterans: Leadership is a mindset; vulnerability can be useful; teamwork saves lives; you must always know your "why," or your mission; and that we must value our commitments.
With all this in mind, a military veteran might think that starting a business is a walk in the park, right? Serving your country is hard, but make no mistake—business is tough too. Even though you don't put your life on the line when you start a business, you do expend a lot of capital, energy, and time researching programs and resources. Though the stakes are different, they're still incredibly high.
So how does a veteran make the transition from boots on the ground to starting a business? And how does a veteran go from opening a small-time startup to running a highly successful business? The veteran's guide to starting a business should give you all the answers, programs and resources you need to put your plan into motion.
What to Consider Before Starting a Business
Before you draft your business plan, you must answer these three questions:
1. What Is My 'Why'?
The most successful entrepreneurs aren't the people who want to make the most money in as little time as possible. A sustainable, believable business idea is one backed by a strong mission—an answer to why you do what you do.
Most successful entrepreneurs start out trying to solve real problems. Think about Impossible Foods, the meatless burger startup that aims to solve climate change by changing the way we eat, or Solarity, the Chilean solar energy provider that's making waves with its use of renewable resources.
And remember, you don't have to attempt to solve massive, global problems like renewable resources, poverty and climate change. You can simply take the time to drive around your town and pinpoint problem areas that could use some attention.
2. Am I Passionate about My Idea?
When entrepreneurs are focused on having a noble mission, they can forget that they also have to like what they're getting into. You can have the most admirable business idea in the world, but if you're just not that interested in it, you won't have the energy to keep at it for very long. When you start a business, you need to believe in your product 100%. Otherwise, either you or your company will suffer in the long run.
3. Do I Have the Skills to Execute It?
You have the vision and the passion, but do you have the technical know-how to pull off your business idea? If you're manufacturing a product, you need to have an idea of how that product is made. If you're providing a service, you should learn how best to provide that service to customers. If you can't think of a business idea worth pursuing, you can tap into your military background for inspiration. For example, you can provide security services resources considering your expertise in the field.
It's vital to learn the ins and outs of business too. Later on, you'll find a resources list of veteran entrepreneurship training programs that'll help you to acquire more business acumen.
Planning Your Business
This is where you put your ideas to paper and figure out if your proposal is feasible, your product is marketable and your business idea is unique.
Start with Market Research
Market research gives you a clear picture of your consumer base and helps you analyze the risks and opportunities that will come with pursuing your idea. Using surveys or in-depth interviews, try to gather as much information about your target audience as possible, such as demographic information like age, interests, income bracket, gender and the like.
You should also analyze what your competitors are doing and how consumers are responding to their products. This helps you identify weaknesses in current offerings that you can address with your own product.
The SBA has a list of resources that can get you started on market research.
Draft a Business Plan
There are many ways you can approach a business plan. But for first-time entrepreneurs, you can stick to the basic business plan format given by the SBA:
- Executive summary. This is where you state your vision/mission, your product and your goals.
- Company description. This is where you discuss your "why," or what problem your company is aiming to solve.
- Market analysis. This is where the results of your market research go.
- Organization and management. This reveals your management structure. Who is in charge? Who are the key members of your team? What do they do? It also discusses the legal structure of your company.
- Service or product. This is where you talk about the product or service you're selling. What does it do? Who is it for? How will it make their life better?
- Marketing and sales. This is where you discuss how you'll be marketing your product. How and where will you reach customers? What channels will you utilize?
- Funding request. This is where you detail how much funding you'll need to maintain your business. Here, you need to give a detailed description of where your funding will go.
- Appendix. This section varies by business plan. Generally, all supporting documents—from licenses to permits to resumes—go here.
Estimate the Cost of Launching Your Business
Many businesses fail due to an inability to pay back debts. From the get-go, you should know how much it will cost to start and operate your business for the first few months. Afterwards, you can find funding options that make sense to you.
Depending on what kind of business you'll be running, these are some of the items you'll need to account for:
- Office/shop rental
- Employee salaries
- Website cost
- Marketing cost
- Lawyer's fee
- Accountant's fee
Funding Your Business
Once you've determined how much money you'll need to start your business, you can begin to look at your funding options.
This means reaching into your savings or knocking on the doors of friends and family to gather enough capital to start. While self-funding is risky (you're literally putting your money on the line), it's also the option that gives you the most freedom and control over your business.
Your second option is to seek out investors who are willing to offer venture capital (VC) in exchange for shares in your company and/or a seat on the board of directors. With VC funding, you avoid shelling out your own money, but in turn, you give up some control of your company.
Hivers and Strivers, an angel investment group, is a good example of a VC funding program. The group connects investors with startup founders who are graduates of military academies.
Your third option is to crowdfund your business. This is a highly popular move these days, but it's also an unpredictable one. With crowdfunding, you need a unique and marketable product that will get a lot of people excited. Crowdfunding doesn't cost you any company shares, but you are expected to provide incentives to funders. This can be in the form of a free product or discounts and privileges. One of the downsides of crowdfunding, however, is that most crowdfunding sites take a cut from your earnings.
Business Loans and Grants
Veteran-owned businesses have the advantage of choosing from a plethora of loans and grants programs. There are specific resources for honorably discharged veterans, service-disabled veterans, reservists and National Guard members, spouses of service members, service members participating in the Transition Assistance Program, and widows/widowers of service members who died in duty or due to a service-connected disability. These are just a few of the loans and grants programs veteran-owned businesses can look into.
- The SBA Veterans Advantage 7(a) Loan. Also known as the SBA Express Loan Program, this is the SBA's most popular loan. Veteran-owned businesses can get up to $350,000 worth of financing from this loan.
- VA Small Business Grants. If you're a veteran starting a nonprofit, the Department of Veteran Affairs offers grant money that does not need to be repaid. Instead, grantees must follow strict guidelines.
- The SBA's Service-Disabled Veteran-Owned Small Business Program. A service-disabled veteran-owned small business can acquire contracting dollars with this program. To qualify for the Service-Disabled Veteran-Owned program benefits, you must be a small business that is owned and controlled by at least 51% by service-disabled veterans.
- VA Vocational Rehab & Employment Ownership Track. Service-disabled veteran-owned businesses can apply for financial assistance from the Department of Veteran Affairs, given that the handicap or disability impairs the service-disabled veterans from seeking out employment options.
- Military Reservist Economic Injury Disaster Loan Program. A veteran small business with a military reservist who has been called to active duty can apply for this loan.
- Connect2Capital Loans. Connect2Capital is a nonprofit seeking to "level the playing field for small business owners". Their array of veteran small business loans includes peer-to-peer loans, short-term business loans, and micro-loans, among others.
- Lending Club Veteran Loan. Lending Club is a private lender that offers small business loans to veteran small business owners on one to five-year terms.
Launching Your Business
Before you officially launch your business, consider the following factors first:
Location, Location, Location
The location of your business determines where you're going to register your business, to whom you'll be paying taxes, and what kinds of permits and licenses you'll need. Before choosing a location for your business, you ought to pay close attention to local zoning ordinances and areas in your city that have business-friendly tax environments.
Of course, choosing a location for a storefront also requires identifying whether or not it receives a lot of foot traffic, the kind of people that frequent the area, and the time of day they do so.
Your Business Structure
Are you a sole proprietorship, a partnership, a limited liability company (LLC), a c/s/b corporation, a nonprofit,or a cooperative? Your business' structure dictates your tax deductions, your personal liability, and what kind of licenses and permits you'll need to acquire.
Visit the SBA's website to learn more about each type of business structure.
Registration, Licenses and Permits
To register a small business, you must first choose and register your "doing business as" (DBA), or trade name. If you're choosing to operate your business under your own name, you don't need to register a DBA. Next, file for a trademark to protect your company's name from use by other businesses. Lastly, register a domain name for your company website before someone else grabs it.
After registering your company name, you must register your business with your state through the Secretary of State's office or a business agency. You also need to register your business with the IRS and get an Employer Identification Number (EIN) if you'll be hiring employees.
Lastly, you need to obtain certain business permits/licenses to legally operate your business, especially if you deal with guns, ammunition, alcohol or tobacco. Other business activities that require permits/licenses include the import of animals and animal products, aviation, ocean transportation or cargo shipping, radio and TV broadcasting and transportation. The SBA has a page linking to specific licenses and permits.
Seeking Mentoring and Advice
Business ownership is tough. There's no shame in seeking sound advice from expert entrepreneurs. Here are a few resources and programs you can turn to for mentorship in business development.
- Boots to Business entrepreneurship training program (B2B). As the SBA's veteran entrepreneurship training program, Boots to Business offers courses on the foundations of business ownership (Introduction to Entrepreneurship) and revenue readiness. B2B is a collaboration between the SBA and Syracuse University's Institute for Veterans and Military Families.
- Veterans Business Outreach Center (VBOC). SBA's business outreach center program for military veterans offers business training and counseling to service members who want to become entrepreneurs. Find a Veteran Business Outreach Center near you through SBA's website.
- Bunker Labs. This nonprofit organization offers online and in-person educational business programs for military veterans and their spouses.
- VetToCEO. This free online entrepreneurship training program teaches veterans to become entrepreneurs over seven weeks.
- Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE). This business training program specifically caters to women veterans who want to become entrepreneurs. Women veterans can sign up for a 15-day online course, a three-day live training program and other mentoring options.
- The Center for Women Veterans is another valuable resource for information on veteran entrepreneurship training programs available for women.
- The Entrepreneurship Boot camp for Veterans (EBV). This intensive boot camp offers business training for veterans and their families. There are three phases to this entrepreneurship training program: an online self-study course, a nine-day residency at a partner university and further support after the boot camp.
- Dog Tag Inc. (DTI). Of all the veteran entrepreneurship training programs listed here, Dog Tag Inc. is one of the most intensive. DTI offers a five-month business fellowship at Georgetown University’s School of Continuing Studies. Those who finish the course will receive a Certificate in Business Administration.
- Veteran Institute for Procurement (VIP). With a focus on federal procurement, VIP offers three federal procurement programs that are meant to help business owners prepare for federal procurement.
- Service Corps of Retired Executives (SCORE). This is the largest network of volunteer, expert business mentors.
4 Tips for Future Veteran Business Owners
1. Don't Be Afraid to Self-Promote
In the military, you're taught to think about your team's needs as much, if not even more, than your own. After all, survival literally depends on teamwork out there. As a result, service members tend to be humble and modest about individual achievements. But when you're trying to succeed as an entrepreneur, marketing is key. Do not be afraid to toot your own horn and get the word out on your offerings.
2. Learn How to Network
In the military, you don't get to choose your own team. You learn to grow with the people you're assigned with. In business, however, extending yourself beyond your immediate circle will benefit you greatly. Networking with other business owners and investors gives you more access to knowledge and opportunities you can use to leverage your business.
3. Contingency Plans Are Key
Ensuring the safety of your team and the success of your mission depends on the existence of several contingency plans. The same principle can be applied to running a business. Don't just come up with a plan A and hope for the best. Have a plan B at the ready should something unexpected happen.
4. Never Forget Your Mission
When you're a soldier, you always operate with your mission in mind. And as a leader, you always make sure your team knows exactly what you've set out to do. This makes it easier for everyone to make quick decisions in dire situations. Now apply the same principle to your company. Make sure that everyone on the team knows exactly what the plan is. When goals or strategies change, let everyone know right away. Don't leave room for second-guessing.
Entrepreneurship is a challenging and deeply rewarding career option for a military veteran. With the intense training that vets go through, business development and business administration almost seem intuitive. After all, a thriving business requires good leadership, problem-solving skills, a strong vision, teamwork and steadfast commitment. With a solid plan and enough training resources and business development programs to pick and choose from, any vet can be well on their way to becoming a highly successful entrepreneur.