Veteran’s guide to starting a business in 2021
[ Article was originally posted on https://bestaccountingsoftware.com ]
Military veteran-owned businesses make up a substantial percentage of businesses operating in the United States. In fact, more than 2.5 million U.S. businesses are veteran-owned, and more than 2 million of those businesses are run by veterans who are classified as self-employed. To be considered a veteran-owned business, at least 51% of the ownership must be allocated to a veteran, and that veteran must share in all risk and profits equal to their ownership interest.
Starting a business as a self-employed veteran can be a difficult process. However, we’re here to ease that process with information about planning, funding, setting up, managing, and growing a veteran-owned business. The article concludes with a list of resources that a veteran might use during the process of starting a business.
Beginning the Process
The first step in starting any business is choosing the type of business to launch. Veterans should begin by asking themselves four key questions:
Taking time to evaluate one’s talents or strengths can help with homing in on the types of businesses that might be a good fit. Playing to one’s strengths is important, so a good tactic is to identify as many skills as possible and look for patterns or themes that emerge. It’s also a good idea to consider business ideas based on established interests, such as a hobby or a lifelong dream.
In addition, starting a business typically requires a significant upfront investment, and it may require equipment. We’ll cover funding sources in more detail in the second article of this series, but potential business owners should consider now whether they have equipment that could form the basis of a business. For example, an existing work shed full of carpentry tools, skills as a craftsman, and an interest in continuing that line of work might be something to think about.
Finally, the needs of other people in one’s community can provide insight into potential businesses. Is there something that isn’t already in the local area—some product or service need that could be filled? Solving that problem for potential customers is a great way to get a business up and running quickly.
Conducting Market Research
Before launching any new business, the new veteran owner must understand what the business landscape looks like for the type of business he or she wants to start. Essentially, market research involves gathering information about potential customers and the target market. It’s important to understand who one’s customers are and what they want or need up front. The new owner’s goal is to determine whether there is an adequate market before writing a business plan.
Three key areas are crucial for conducting market research:
Franchising, Buying, or Starting from Scratch
Once a type of business is chosen, the next step is to determine whether to open a franchise, buy out an existing business, or start a brand new business from scratch. This decision is largely dependent on the type of business. For example, if a potential business owner wants to open a fast-food restaurant, a car wash, or a retail store, a franchise is probably the best way to get started. Maybe you completed your accounting degree while you were still in the military or did so immediately after separating; you could start your own accounting firm, or you could buy a practice from someone who’s retiring.
Something else to consider, according to the Small Business Administration, is the balance of control and guidance one desires in the business. For example, new owners wanting full control of the business who don’t need much guidance may find starting from scratch or buying a business from someone is the way to go. On the other hand, someone needing a lot of guidance who doesn’t mind giving up control will find a franchise structure is essentially a “business in a box,” in that you’re given everything you need to get up and running, but you don’t get to determine what that looks like or how it’s done.
Regardless of which startup method you choose, due diligence is essential. Those who choose franchising will want to review the franchisor’s Uniform Franchise Offering Circular and read it thoroughly. Franchisees will also want to know what their rights and obligations are, and should seek legal and financial advice from professionals with franchise experience.
When buying a business from someone else, it’s important to make sure that the sale price being offered is fair. There are several methods for valuing a business, and some of them are quite complicated. In addition, there may be licensing, zoning, and other concerns that need to be addressed. As such, it’s critical to consult legal and financial experts early in the acquisition process to ensure you understand exactly what you’re buying.
The next step is setting goals for a business. It might seem counterintuitive to set goals at this point—before writing a business plan—but the goals set will help in creating a business plan that is realistic and actionable. When setting goals, you’ll probably find it easiest to use the SMART method:
Preparing the Pitch
The next step in starting a business is to create a pitch deck. Television shows like Shark Tank, demonstrate this step in action. The pitch itself is a proof of concept for the business that is then floated to trusted friends, family, and advisors. Their feedback will help with refining the pitch deck for potential investors.
A pitch deck can almost feel like a business plan, but it really should be a summarized version of that document. And, with a pitch, you likely only have a few minutes to describe your business idea to your target audience. Here are some tips for preparing a pitch deck:
Naming the Business
A business’s name is almost as important as the product or service it offers. It needs to be catchy and descriptive. Don’t be afraid to try out lots of different name ideas within your advice circle, and consider getting help from an expert if you find that you’re not landing on a name that fits.
Choosing a Business Location
One of the most important elements of starting a business is choosing where it will be located. There are three main types of business locations: brick and mortar, online, and home-based.
Brick and Mortar
Setting up a brick and mortar-based business will be the most cost-intensive choice. Options will include buying or leasing a commercial property, with leasing being the most affordable and flexible (flexible in that you can move if necessary). Typically when leasing, you won’t have to spring for unexpected property repairs (unless you cause the damage). When buying, on the other hand, you do build equity and can make almost any physical changes to the space you desire.
The key here is really location, however. Where is the target demographic? A savvy business owner probably won’t want to open a bridal shop in an industrial park, for example—although local zoning codes most likely won’t allow that anyway. A good realtor can help one navigate issues like demographics and zoning, along with others, such as visibility, access, appropriate spaces and features, and local competition.
In short, the ideal site is located near potential customers or clients, in an appropriately zoned area where customers can easily find the business and access it conveniently. It’s cheaper if the location chosen has the features required for conducting the business, such as a kitchen or dressing rooms or whatever a particular business needs to operate. All of this should be in a market that is not already saturated with competitors.
The beauty of launching a business online is that the overhead can be much lower than that of a brick and mortar entity. In addition, an online business has the ability to reach even more customers or clients, potentially anywhere in the world! Another benefit of an online business is that new owners can visit many, many successful businesses online to see what is working for them. There are plenty of well-reviewed website builders, too, such as Wix, Network Solutions, Web.com, Site123, Squarespace, and more.
Any site that helps one build a navigable, clear, and simple layout with consistency will work. Look for customer-friendly features such as ease of transactions and limited clicks between item, cart, and payment. Your site is your storefront, and its appearance and the user’s experience will be what keeps new customers coming in and existing customers coming back.
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