Many of the personality traits that make a person an ideal candidate for military life, including independence, a desire to serve and the ability to stand firm in difficult circumstances, translate well into the world of entrepreneurship. If you are a veteran or someone in the reserves who is ready to start a business, there are a number of resources available to you. Here is an outline of what you need to do to start a successful business as you seek to attain financial security at home after serving the country abroad.
The Basics of a Business Plan
The foundation of any successful business is a business plan. This document outlines how you will start your business, how you will meet a need in your market and how you will see growth over the next three to five years. Your business plan will be the starting point for any financing you seek. Before lenders will be willing to extend financing, they will want to see that you have a solid plan for your business.
In order to be successful in seeking funding for your business, you will need to make your business plan stand out. This is a time when your service to the country is not going to help you in any way. Financial backers want to see that you have strong business sense. In order to stand out, make sure you:
- Are clear in what sets your business apart.
- Make it clear what you are going to sell, and be specific.
- Clearly identify your market and why you are needed in it.
- Showcase that you have a niche that will be successful.
- Clearly differentiate yourself from your competitors.
With a solid business plan, you will set the stage to launch a successful business.
How to Get Started Legally
Before you seek funding and open your doors for business, you are going to need the right paperwork and permits to start a business legally. While some of this will depend on the laws and regulations in your state, there are some steps that all businesses will need to take. These include:
- Naming and Registering Your Business – Choose a name for your business, and register that business name with the county clerk or state government office in your area.
- Registering with State Agencies – If you are going to operate as a corporation, nonprofit or LLC, you may need to register with your state government. Those businesses operating as sole proprietorships may not need to take this step.
- Get a License or Permit – Most businesses need either a license or a permit to operate legally. This may include a professional license that shows your expertise, a license for sales tax or the license to operate within any federally regulated industry. Permits are necessary to allow you to perform your service and handle the taxes needed to run a business. Research your business type in your state to determine what licenses or permits you need to operate legally, or talk to an accounting and business professional in your area for expert advice.
- Learn the Required Time Frames for Paperwork – Take some time to learn how long you are required, by law, to keep your records on file. This will help you stick to these legalities as you seek to run an efficient and effective business.
Before you ever open the doors for your business, make sure you are operating legally and understand the permits and regulations surrounding your business type.
Finding Financing for Servicemembers
Few businesses are able to start without some form of business loan or financing. A strong business plan is the starting point of seeking funding, as it will be what potential investors will look at to determine how risky you are, but that’s just a starting point. You have to know where to look to find that funding before you can apply to get it.
As a startup business with a strong business plan, you have a number of options for your financing. These may include:
- Financing from the Bank – The first place to look for financing is with your bank. However, it can be hard to get a business loan from a bank, particularly if you don’t have past business success to draw from. If you have something you are willing to use as collateral, like your home’s equity, or if you are not looking to finance a tremendous amount, the bank may be a great choice.
- Small Business Administration Loans – The Small Business Administration offers loans to startup businesses that are a little bit easier to get than bank loans. This is often the first place a startup business will look for funding. To apply for this funding, send a funding request along with your business plan directly to the SBA. You will still need a strong business plan to get these loans.
- Online Lending – An online lender may be less stringent in its requirements than a brick-and-mortar bank. Be careful, however, not to fall victim to fraud, which is easy to find online. Check a lender’s history before applying for a loan. Remember, if a loan seems too good to be true, most likely it is.
- Venture Capitalists – A venture capitalist is someone who is willing to invest in a new startup that is considered high risk but has high income potential. Venture provide cash to startup businesses in return for shares or an active role in the company. These investors look for young, high-growth companies, and are only paid if the company is successful. For this reason, venture capitalists take on a significant amount of risk, and are therefore quite picky about whom they will lend to.
- Crowdfunding – Crowdfunding is an interesting phenomenon that has really taken off with the introduction of online crowdfunding campaigns. With websites like Kickstarter and Indiegogo, small business startups can offer a small incentive for people willing to invest a little bit into their startup costs. Instead of ending up with a bunch of investors expecting dividends, you can use this to provide startup funding with the promise of a product when your product goes live. Crowdfunding is probably not big enough to provide all of your startup costs, but it can help fill in some of the gaps without all of the hoops you have to jump through to get a loan.
- Grants – If your business is in science or research areas, you may qualify for a grant from the government. The Small Business Innovation Research and Small Business Technology Transfer programs both provide funding to businesses that will meet federal research-and-development goals with the goal and potential to be commercialized. Typically, grants do not have to be repaid with interest the same way a loan is, and so if your business qualifies, this is an excellent way to get the money to start up.
Don’t forget to tap into the good will of your friends and family, but do so fairly. People may be willing to invest in your idea, but make sure you are giving them something in return. Whether you offer shares in the company, a percent of your profits or repayment with interest, utilize friends and family only when you can do so ethically.
In addition to these sources of funding, as a veteran or active duty member of the military, you may have additional resources available to you for your startup costs. These include:
- IFA VetFran Program – This grant program provides funding for veterans who are interested in starting a qualified franchise business, in addition to providing mentorship and training in business ownership.
- USDA Veteran Farmers and Ranchers Program (2501 Program) – Historically, the USDA’s 2501 program has offered funding to help veterans who wish to start agricultural businesses get off the ground. Eligibility and application processes change from year to year, but if you are considering an ag-based business, this is a good place to look for funds.
- Veterans Business Fund – The VBF is working to raise funding to provide loans to veterans with favorable terms as they seek to start their businesses. This funding will be available when the necessary number of donations have been received.
- Hivers and Strivers – Hivers and Strivers is a group of angel investors who specifically invest in veteran-led businesses founded by graduates of U.S. Military Academies.
- SBA Express Loans for Veterans – The SBA has a specific incentive for veterans that allows qualified veteran small business owners to borrow up to $350,000 with no upfront fee through the end of the 2016 fiscal year. Veterans can also get business counseling and training through government contracts through the SBA.
A winning plan is great, but it’s only the beginning. Naturally, success depends upon earning new customers and keeping them over time. With the latter, develop and improve your customer service skills. Current customers are not only your best source for ongoing revenue, they’re also your best source for new revenue—but only when you, your product, and their experiences truly stand out.
Along side exceeding expectations, here are a number of approaches and resources to help guide you into new customers:
- Root your digital marketing strategy in local opportunities
- Harness the power of social media organically
- Invest in paid advertising, but always test the results
- Use your own network strategically
- Ask for referrals to build word-of-mouth business
- Dedicate a specific amount of time each day to prospecting
While many business start with just the owner and his or her partners, as your business expands you may find that you need to hire employees. Perhaps your business will launch with a few employees at startup. Regardless, if you will be hiring employees at some point, here are the steps you need to take:
- Register for an Employer Identification Number – The EIN ensures you can report payroll taxes to the IRS. You can apply for your EIN online or through the IRS over the phone.
- Set up Your Books for Records for Withholding Taxes – The IRS requires employers to keep records of their employment taxes for a minimum of four years, so establish this at the outset before hiring your first employee. Make sure you are prepared to withhold both federal and state taxes and prepare your federal wage and tax statement report each year.
- Verify Employee Eligibility – Before you hire someone, make sure that they are eligible to work in the United States by using Form I-9 to request documentation to prove citizenship or employment eligibility. Keep this form on file for three years after the date of hire or one year after the date of termination.
- Register with Your State – Your state will have a new hire reporting program. Register your hiring of an employee within 20 days of the hiring date.
- Purchase Workman’s Comp Insurance – All businesses must have workman’s compensation insurance, even if their workplace is not high risk. Talk to your insurance agent about buying this insurance.
- Put up Required Notices – You need to post notices about rights in the workplace as well as the responsibilities of employees under labor laws.
What to Do When You Deploy
Running a business requires, in a large number of ways, your physical presence at the location of business. Especially if you are running a sole proprietorship or are the sole owner of the business, you have to be present for it to be successful. Any time a major player in a business leaves for an extended period of time, problems can develop. When you are called to active duty, your business is left to flounder.
Does this mean you have to wait until you retire from military service to launch your business? No, absolutely not. What it does mean is that you are going to need a strong support group around your business to ensure it will operate solidly while you are away.
This means you have to have a plan for your deployment, before it is even announced. Even if you feel a deployment is unlikely, you still need to know what you will do if it does happen. Your spouse, family, friends, employees, contractors and business partners will need to be able to run things while you are gone should a deployment happen.
Perhaps you are thinking that you will be protected because of the employment and financial protections afforded to those who are actively serving our country. For instance, you may have heard that you can’t have a credit account foreclosed on while you are away. This is true, but unfortunately, the financial and employment protections for military members are only for personal accounts and traditional employment. They do not extend to your business. So, what can you do to keep your business up and running? Here are some strategies to help prevent a devastating loss while you are overseas:
- Train Someone Early – Sometimes you get little notice of your pending deployment, so make sure you have someone who is not in the military who is trained on running your business.
- Keep Your Spouse in the Know – Even if you don’t train your spouse to run your business, give your spouse some say in the business while you are gone. Remember, your success is also your spouse’s success, so position give your spouse some power to make decisions in your absence.
- Consider Taking a Partner – Your business may be your baby and your brainchild, but sometimes you have to do what is necessary to protect it, and if you have the real chance of being deployed, that may mean taking on a partner. Choose wisely, and choose someone who is not in the military, but consider taking on a partner to oversee things in your absence if you deploy.
- Have a Plan – Know what you will do when you deploy before you get orders. The months prior to deployment are filled with paperwork and decisions, so assume that you will eventually be deployed, and have your plan in place before you enter that difficult time.
- Be Willing to Give up Control – You may have the freedom to check in from time to time while on deployment, but most likely you will need to be willing to give up freedom to make decisions during this time. That’s why it’s crucial to trust the leadership team you have in place during your deployment.
- Tap Into the Military Reservists Economic Injury Loan – The Military Reservist Economic Injury Disaster Loan is an option to help those small businesses who are unable to meet their operating expense because an essential employee was sent to active duty after living as a military reservist. While you are not guaranteed this loan, the program is fairly easy to get approval through. Under this program, you can borrow up to $2 million to get through a challenging time. This might be what you need to keep your business financially solid in your absence.
Military-Specific Resources for Starting a Business
As you can see, starting a business as a member of the military is not much different than starting a business as a civilian. You have a few additional resources and considerations to make, but otherwise the process is basically the same. That said, you will find a number of support resources to help you launch your business successfully. Here are some places for you to get additional information and support in your new endeavor:
- VA Veteran Entrepreneur Portal (VEP) – Find federal services for small business owners and veteran small business owners in one convenient location.
- SBA Office of Veteran Business Development – A portal for the Veteran Business Outreach Center which provides counseling, mentoring, business training and referrals for business owners who are also veterans.
- Women Veterans Igniting the Spirit of Entrepreneurship (VWISE) – A program designed for women veterans who also wish to become entrepreneurs and need guidance or training.
- EBV National Program – the EBV National Program is designed to provide training and small business management help to veterans and their families by taking veterans through a three-phase program to provide training in business. Applicants can have their training, lodging, travel expenses, course materials and meals covered while participating in the program.
- Military.com – Resources form Military.com about entrepreneurship for veterans.