Veterans not only protect our country – they build it up, too.
According to the Annual Business Survey data released by the U.S. Census Bureau in Jan. 2021, approximately 5.9% of all businesses in the U.S. are veteran-owned, and these veteran-owned businesses employ roughly 3.9 million employees. Additionally, based on previous surveys of veteran business owners, the Small Business Administration (SBA) estimates that 85.3% of veteran business owners founded their businesses themselves.
With their well-honed skill sets, tireless work ethic, and dedication to the betterment of our country, veterans are uniquely poised for entrepreneurial success – but that doesn’t mean it’s an easy journey. As with any business venture, starting out as a veteran entrepreneur has its ups and downs. From coming up with a killer business idea to finding the financing to make it happen, there are a lot of steps along the way.
Are you thinking of joining the ranks of veteran entrepreneurs and small business owners? This guide is here to help.
No matter what you specialized in during your years of service, there’s room for you in the world of entrepreneurship. Veterans have their hand in virtually every sector of the economy, from finance and insurance to transportation, real estate, construction, and health care.
Women veterans, in particular, have come to represent an increasingly large share of the entrepreneurial workforce. According to the National Women’s Business Council, for example, the percentage of veteran-owned businesses run by women has grown within the last decade, outpacing the growth of other demographics of veteran-owned businesses.
The key to getting started is recognizing your unique skill sets and knowledge base and turning those specialties into a profitable, successful business idea. If you know you want to work for yourself but you’re still brainstorming, consider the areas of expertise you already possess:
You will also want to consider your goals as a veteran entrepreneur. Do you want to employ other veterans? Donate funds to veteran assistance programs? Simply reach as many customers and make as many sales as possible? Knowing your goals as an entrepreneur can help you focus on the business ideas that will flourish for you.
Once you’ve created a shortlist of potential business options, do some market research to see what demand is out there. You should also look at competitors in the space to determine how you can differentiate your business and product or services.
If you want to start your own business but don’t have a burning new concept you want to bring to life, franchising also could be an option. VetFran refers to franchising as “going into business for yourself, but not by yourself,” and the organization provides resources to connect veterans with franchisers.
Once you’ve decided on your business concept, it’s time to plan it out. You’ll want to break down your company’s purpose and mission, your market and potential audience, the resources, and team members you’ll need, as well as the specific products and services you will offer. You’ll also want a plan for marketing and sales efforts.
Business plans are intended to give you a general road map to work from, as well as inform potential investors and lenders about your company. Keep in mind that every business is different, so if you’re using a template to create your business plan, make sure you customize it to your unique needs and goals.
It’s important to start your business off on the right legal foot – and that means registering your business with the government. This might include filing a “Doing Business As” (DBA), registering as an LLC, partnership, or corporation, and obtaining an Employer Identification Number. The SBA offers guidance to help you determine how you need to register your business.
Here’s what the business registration process generally looks like:
You’ll also want to look into business insurance options, such as professional liability insurance or product liability insurance. Proper insurance is important for any business. However, it’s especially critical if you choose to remain a sole proprietor since your personal assets won’t be protected from liability claims related to your business.
The Small Business Administration offers a good overview of the types of business insurance you might need and how to get them.
Your credit score and history will play a big role in what types of financing you can secure (and at what rate) for your business goals. To ensure you have the best access to affordable funds, consider boosting your credit before applying for any personal or business loans.
Here’s how you can do that:
If you have no credit whatsoever, meaning you’ve never had a credit card or loan to your name, consider opening a credit card aimed at startups.
Use it for utility bills or other small charges each month and commit to paying it off in full before the due date every time. This will give lenders a good credit score and at least some credit history to base your financing options on.
See related: Credit guide for military members and their families
You have several options when choosing how to finance your business venture. You can use credit cards, take out a loan, apply for a grant or use a combination of all of these, depending on your financial needs and goals.
A business loan can give you access to large amounts of money to get your business off the ground. These loans are often used for hiring employees, purchasing real estate or equipment, creating inventory, and more. They can also be used to keep your company afloat while you kick off sales and revenues.
The veteran-run StreetShares Foundation, for example, offers veteran-friendly business loans you may want to consider.
So do federally funded Community Development Financial Institutions (CDFI), such as the multistate coalition of CDFIs working with Veteran LLC, which focuses on increasing access to business capital for veterans and their spouses. You can use the U.S. Department of the Treasury’s CDFI search tool to look for applicable opportunities.
You can also get loans designed specifically for small businesses through business lenders, such as Lendio, Kabbage, and Funding Circle.
As with other small businesses, veteran-owned businesses tend to be more successful in securing business financing from online lenders and small banks than larger banks (which often have stricter approval standards).
According to the New York Federal Reserve, for example:
If you’re unsure where to start, check out the SBA’s lender match tool to connect with other lenders that might be willing to help fund your business. The SBA offers loans of up to $2 million to veteran small-business owners who have been called to active duty service for the National Guard or Reserves.
The SBA also offers a limited number of other small-business assistance programs, such as the SBA 7(a) loan program, which federally guarantees loans made to qualifying small-business owners. The Veterans Advantage is one such option, offering reduced fees for eligible businesses.
Personal loans give you the freedom to use your borrowed funds as you wish. They are also more widely available during the coronavirus crisis.
Use a personal loan to finance your business goals or put it toward a home or other expenses as you transition from military to civilian life.
Some of the top choices for veteran-friendly personal loans include Navy Federal Credit Union, USAA, PenFed Credit Union and SoFi. You can also go to any credit union or bank for your personal loan, as long as you have decent credit. In most cases, your average lender won’t take into account veteran status on personal loans, so good credit helps ensure favorable terms and interest rates.
Business credit cards are a common way new entrepreneurs pay for smaller-cost items, such as office supplies, utility bills and business trips.
As a member of the military, you’re in an even better position to find a good deal on credit cards. Many credit card issuers, for example, offer special perks to veterans and active-duty service members, such as dramatically reduced interest rates and annual fee waivers.
See related: Best military credit cards
Many of today’s credit cards also offer some form of cashback, travel rewards, welcome bonuses or other perks that can help your bottom line. Make sure to compare offers, rates, and rewards before choosing your business card.
Grants offer veteran entrepreneurs funding to help launch and operate their businesses. Dozens of options are available, but some of the most common veteran-based grant programs include these sources:
States also offer their own unique grant programs, and these often have a smaller pool of competitors. Make sure to check the office of economic development in your state (and city) to see if any grants are available to you.
You can also use grants to hire other veterans. For example, the Department of Labor offers Jobs for Veterans State Grants.
Also, keep an eye out for other special grants for veteran entrepreneurs that may pop up throughout the year.
Some entrepreneurs opt for crowdfunding to meet their financing goals. For example, you can find investors using platforms such as Kickstarter, Indiegogo, SeedInvest, Crowdfunder, Crowd Supply, Fundable, WeFunder, and Fundly. For service-based businesses and creatives, you can also set up ongoing subscription services through Patreon.
Some crowdfunding services, such as Indiegogo, even offer high-quality educational resources and directories of experts who can help you with your business.
You can also look to investors and angel funds, depending on your business model. Hivers and Strivers Angel Fund is one good option if you graduated from a military academy.
Many resources and programs are available to veteran entrepreneurs. Do your research to find programs that fit your needs. There are even programs specifically geared toward women and service-disabled veterans.
The Office of Veterans Business Development also lists an extensive collection of resources for veterans and veteran small businesses, including these:
Starting a business can be difficult, and getting guidance from those who have been there can help immensely. Fortunately, veterans can pull from a variety of resources for this sort of advice, including these:
The number of women veterans is also increasing. According to the Department of Labor, 10% of veterans are women. A few resources targeted to these women veterans include these:
Veterans who have been disabled in service have unique struggles in reaching their entrepreneurial goals. If you fall into this category and were injured during service, there are several resources available to help. A great place to start is the Service-Disabled Veteran-Owned Small Business Program. The U.S. government has committed to a goal of awarding at least 3% of all federal contracts to small businesses owned by service-disabled veterans, making this a great spot to start.
As a veteran-owned business, you can benefit from both government and non-governmental organizations recognizing your veteran status.
Many sources of support are available specifically for veterans who are starting or growing their own businesses. From grants and financing to hands-on support and guidance, there are numerous resources to help you develop your idea, launch your company and achieve your long-term goals.
This blog post was originally posted on CreditCards.com on August 18, 2021. It was written by Aly J. Yale and Kelly Dilworth, edited by Rebekah Hovey, and reviewed by Antonio Ruiz-Camacho. See original post.
For more financial planning advice and business coaching, consider our community subscription. You’ll gain access to members-only events, including our quickly dissolving problems sessions where we discuss whatever’s on your mind and how you can solve it, advised by these coaches and peers.