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.
What is in a business plan? According to the Small Business Administration, it should contain:
- Executive Summary – This introduction shows a basic snapshot of your business plan, including your goals and the outline of what your business will offer.
- Company Description – This will provide information about what your business is going to do and how this is different than others to meet a need in your target market.
- Market Analysis – This is an in-depth look at your potential target market and the competitors in it.
- Organization and Management – This will outline exactly how your business will be structured.
- Service or Product Line – This section will showcase what you are selling and how it will benefit your customers.
- Marketing and Sales – This section will outline your marketing plan and sales strategy.
- Funding Request – If you are going to look for funding, you will include this request in your business plan.
- Financial Projection – This section will show that you have a plan to be financially profitable within a projected period of time.
- Appendix – If you have additional information you need to add, including permits, resumes or lease agreements, it will go in the appendix.
In order to be successful in seeking to fund 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 to fund 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, non-profit 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 a business loan or financing. A strong business plan is the starting point of seeking to fund, 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.