Estimated reading time: 7 minutes
“Veterans bring amazing advantages to the entrepreneurial game — things like discipline, perspective, leadership ability, and the learned skill of seeing problems as opportunities — to say nothing of having accomplished ambitious goals with the weight of a gigantic bureaucracy on their backs.” — Bill Murphy Jnr, Inc.com
The typical image of entrepreneurship involves someone having a world-changing tech idea, raising millions in venture capital to then become a billionaire. Sure, this happens. But most businesses are not built like that. They are mostly just built with discipline, problem-solving, understanding risk, and a will to succeed.
That’s why entrepreneurship can be a great option for veterans. Veterans have applied these attributes and done so in some extremely challenging and complex situations — ones with real life-or-death consequences.
According to the Small Business Administration, veterans own 2.4 million businesses in the US. They also report that these businesses employ more than 5 million people, generated revenue of $1.14 trillion, have an annual payroll of $195 billion, and they represent 9.15% of all U.S. businesses. And even though the veteran population in the US is equal to 7% of the population, veterans account for 14% of the franchise owners in the country.
Although the numbers show success in many ways, there is also reason for concern for veteran entrepreneurship. While 50 percent of World War II veterans and 40 percent of Korean War veterans owned or operated their own companies, just 4.5% of post-9/11 veterans can say the same. And this isn’t a problem just for veterans. One can’t help but see that veterans are prime candidates for entrepreneurship but aren’t pursuing it as readily as they could be.
So what are the options for a veteran interested in entrepreneurship?
Startup
The path people typically think of when they think “entrepreneur” is a startup. This is the one that gets idolized in the media. We all love a good story of someone overcoming the odds, working their butts off, and taking all the risk to make something happen.
If you find yourself tooling around with an idea for a startup, I highly recommend you go check out Bunker Labs’ Launch Lab Online. This self-paced course will help you examine whether or not pursuing this idea is something you really want to do, and also if the business itself is indeed a feasible option. And beyond just the course, Bunker Labs is a great place to go for those interested in veteran entrepreneurship.
And beyond creating a whole company, there are a number of ways to start a business online with minimal costs. Blogs, dropshipping, and freelancing are all ways you can create your own niche online to make a business for yourself.
A quick note about the term “startup.” It’s ambiguous. This can be anything from two guys in their garage who are months away from making money to a company with 30 employees and millions in annual revenue.
Buy an existing business
Most people don’t think of buying a business as an option. If you didn’t think this was an option, you likely are thinking “No way, buying a business will costs hundreds of thousands of dollars — at the least! I don’t have that kind of money just sitting around.”
Yes, if you have some fat stacks ready to go, you could be fortunate enough to just buy a business with your own money. But for most veterans interested in entrepreneurship, this is likely not an option. But there are other ways for veterans to pursue entrepreneurship.
Loan- It is entirely possible to buy an existing business with a loan from the bank. Before you do, however, be aware that the bank is likely to be unwilling to negotiate and will be unforgiving should you miss payments. But this is an option.
Seller financing- This option essentially cuts out the middle man in the loan process. Instead of working through a bank or traditional lender, you work directly with the business owner. Essentially, you negotiate a price for the business with them and then pay them installments until the price is paid off.
Seller financing can work really well for both parties. The seller may be wanting to retire or leave the business to work on something else. But they have likely poured a lot of time, love, and money into that business and don’t want to see it go away. And so they might really want to sell it to an aspiring entrepreneur and see it continue to succeed. The seller also will receive payments from the buyer for a period of time, providing them with consistent cash flow.
And seller financing can also work great for the buyer. First, it can allow them to start running an existing business without having to build it from the ground up. Additionally, by cutting out the middleman of the banks, the buyer can likely secure a lower rate and save themselves some money. And lastly, by continuing to pay the previous owner, you can maintain a relationship with them. The previous owner will want to see the business continue to do well in order to make sure they are getting paid and can help the new owner as a mentor through the entrepreneurship process.
Search fund– If you find yourself at a top MBA program, there is also an option called a search fund. Basically, an aspiring entrepreneur (or usually a pair, and almost exclusively from top 10 MBA programs) works with a group of investors to raise a fund with the purpose of buying an existing company. The money raised from the fund is meant to cover your salary and your expenses in trying to find a company to buy. These companies tend to fall in the $5million-$20 million range, are often undermanaged, but have a history of recurring revenue. The typical strategy in search funds is to buy the company, grow it in value, and then sell to a private equity firm a few years later in order to provide the original investors a large return. There have been a number of veteran entrepreneurs who have done this successfully.
If you really like the idea of running your own business, but don’t have the time or means for a startup, then buying an existing business can be a great option. Even if you have an idea for a startup, buying an existing business could help turn that idea into a reality. Buying a business will get you access to their supply chain, equipment, and relationships which you could use to pivot the business into a new direction.
Are you thinking of buying a business? I recommend taking a look at Acquira and its accelerator as a way to get started. They place you in a cohort with other business buyers, help you vet deals, and then help you put together the financing to close on a business. Take a look HERE and use the link to get 10% off.
Franchising
Starting a business from the ground up is tough in a large part because your potential customers have no idea who you are. And in buying a small business you will get the existing structure but are still responsible for things such as advertising and market research.
Buying a franchise, however, can be a way to get run a business that already has national reach, advertising, and playbooks built for how to run the business. Franchising can provide veteran entrepreneurs more of a “turnkey” approach to running a business.
When people hear “franchise” the immediate thought a lot of the time is fast food, but franchise opportunities exist far beyond the foodservice industry. There are franchise opportunities in auto repair, cleaning services, hiring services, postage delivery, and property management.
In looking at potential franchisees, the startup fee can often turn people away from this as a possibility. Most franchises will have some type of fee to buy into the business, and then there will likely be additional expenses involved with starting such as legal fees, leasing an office, and hiring employees. But unlike getting a loan for a startup, which probably has no proven record for the bank to examine, lenders see the value and potential in franchises more easily — these are already trusted brands. And so acquiring the capital from a bank may be easier than you think.
You may also think about working with a group of investors to cover the expenses. This group can also serve as an informal board for a new franchise and can help it get started.
For veterans interested in franchising, I highly recommend checking out VetFran. This is a nonprofit initiative from the International Franchise Association designed to help connect veterans with franchise opportunities and educate franchises about the benefits of working with veterans. They have a host of resources on their site and also work with franchisees to create discounts on franchise fees for veterans.
If you have ANY inkling about franchises, you NEED to follow The Wolf of Franchises. He is an industry expert and runs a FREE newsletter, which you can sign up for HERE.
For anyone interested in learning more about entrepreneurship for veterans, I cannot recommend Vet to CEO enough. A nonprofit run by a couple of returned army veterans who are now run their own companies, they run a 7-week course for veterans interested in entrepreneurship. From market research, to legal structure, to financing, they show you how to do it and provide resources to get you started.
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Thanks for the shout-out for VETtoCEO!