Did you know that 24 million Americans are veterans? That’s approximately 10 percent of the U.S. population, according to the U.S. Department of Veterans Affairs. Of those veterans, nearly one in 10 is a small business owner. This important group collectively owns 2.4 million small businesses, employs almost 6 million Americans and generates more than $1.2 trillion in receipts, according to the latest data available from the U.S. Census Bureau.
There are many theories about why veterans are more likely to start and run their own businesses than the general population. It’s been said that veterans are more inclined to be business owners because of their military service, their commitment toward setting and achieving goals, their perseverance and willingness to take on great challenges. From our experience working with veteran entrepreneurs, we know these men and women are proven leaders and they have the demonstrated skills and experience needed to be successful business owners.
Nonetheless, we also know veterans can face obstacles in getting a business started and established. Many are not aware of what’s available to help them plan, finance and operate a new business. We want to share a few tips on upfront planning and financial preparation, as well as a few resources available to veterans.
What to consider before starting and owning a business
One of the first considerations in becoming a business owner is to make sure you have a solid business plan. That includes doing research to learn about your customers, your competitors and your industry and meeting with a banker and financial advisor to review projected cash flow. Starting any business or buying into a franchise also requires you to make a large initial investment, so it’s important to ensure that your current and future finances are in order.
Make sure you thoroughly research the startup costs for your business and have your financial plan reviewed by your financial advisor to ensure you have the funds needed for the first years of operation. Before you apply for credit, take time to understand what your business needs to do to be considered credit-ready and in the best position to secure financing. It’s important to meet with a banker to understand your options before you need credit. As a general rule, business owners should keep these credit practices in mind:
– Separate business and personal finances
– Keep business and personal credit records
– Track and maintain positive cash flow
– Develop a banking relationship
– Build a strong credit profile
Resources for Veterans
There are many resources available to assist veterans who want to start their own small business or become self-employed. Here are several places to start:
U.S Small Business Administration (SBA): Each year hundreds of thousands of veterans are assisted by SBA, helping them start and grow their small businesses. Its website, SBA.gov, is full of information and resources for veterans. The SBA’s Office of Veterans Business Development page includes links to various government programs. The Small Business Development Center also offers outreach to veterans. In addition, the SBA oversees federal loan programs that provide offers for veteran-owned small businesses. SBA loans have a government guarantee, and are made to small businesses through banks and other lending institutions. Veterans who are approved for an SBA loan through Sept. 30, 2015 are eligible to obtain the loan at a reduced fee or with no upfront fee, depending on the product. The SBA is seeking to increase lending to veteran small business owners, and in 2013, introduced a Veteran Pledge Initiative with participating lenders to boost SBA lending to military veteran business owners by 5 percent annually over a five-year period.
U.S. Department of Veteran Affairs: This site helps small businesses become certified as veteran-owned or service-disabled veteran-owned. Once certified, the businesses may be eligible for procurement programs and can be found by contracting officers for the Veteran’s Administration.
Hands on Banking for Veterans: A free, online program that teaches people in all stages of life about the basics of responsible money management, including how to establish a small business, how to create a budget, rebuild credit, save and invest, and borrow responsibly.
Service Corps of Retired Executives (SCORE): A non-profit association dedicated to helping small businesses get off the ground, including specialized mentoring programs and online workshops for veterans and their families.
In addition to these resources, there are numerous organizations and agencies that now offer a complete range of social media options as a way to stay abreast of the latest information for military veterans. LinkedIn, for example, has several active veteran discussion groups, including National Veterans Small Business Engagement and Service Disabled Veteran Owned Business (SDVOB).
America’s veterans make great contributions to our nation. With the right tools and guidance, more veterans can achieve success as entrepreneurs and small business owners.
Chad Osorno is the Head of Business and Government Banking for Wells Fargo in Nevada.