A Veteran’s Guide to Starting a Small Business

Did you know that, out of the 27.9 million businesses in the United States, 2.52 million of them are owned by veterans?

That’s right—employing over 5.793 million different employees and bringing in over $1.220 trillion in sales—veteran-owned businesses have a big impact on the U.S. economy.

Clearly, small business in the United States would be nowhere close to where it is today without veteran entrepreneurs. But still, starting a business as a veteran business owner is much harder than it should be.

That being said, there are a handful of steps you can take and resources to take advantage of if you’re a veteran trying to start a business, including traditional forms of financing and various VA SBA loan programs.

Here’s your ultimate guide to starting and financing a business as a veteran entrepreneur.

3 steps to starting your veteran-owned business

The decision to even start your veteran-owned business is already a big, exciting, and possibly scary step. If you’ve never done this before, you have a few learning curves to get over.

Knowing that you want to start a business is just the first step—you don’t necessarily know how to start a business.

Let’s run through a crash course on how to start a business, then cover the many resources available to veteran entrepreneurs to help start your business along the way.

Step 1: Coming up with your perfect business idea

You might be going into starting your business knowing exactly the business you want to start. You have that stellar business idea, and you just can’t sit on it—business ownership came to you.

But on the other hand, there are many people who naturally have that entrepreneurial spirit. They’re born to be their own boss, but don’t necessarily have the business idea to get rolling with. If that’s the situation you find yourself in, then step #1 of starting your business is coming up with the right business idea to pursue.

(If you already have a stellar business idea and you’re trying to take it off the back-burner, then skip ahead to step #2.)

If you're looking for a business idea that works for you, here are four questions to ask yourself:

What are my skills?

As a veteran, you have a very unique set of skills that could be utilized and translated into a viable business idea. Or, you might have skills from before you joined the Armed Forces, that you can tap into to spark some inspiration for your business idea.

Figuring out how to run and manage your business is already hard enough, so don’t make starting the actual business harder for yourself. There’s no need to reinvent the wheel here—play to your strengths.

What am I interested in?

Many small businesses were built from ideas that just made plain sense—not necessarily related to the business owner’s passions, dreams, or interests. So, that whole “loving what you do” sentiment doesn’t have to hold true as you develop your business idea.

However, it’s worthwhile to consider your interests while you’re brainstorming your business idea. You might find that there actually is a great business idea in a realm that you thought might have just been a hobby for you.

What resources do I have?

You might already have the contacts, tools, resources, or equipment you need to start a business without even really knowing it. If you’ve got a stellar tool shed, and you’ve always been handy, then starting a repairs business might be a good idea.

Or, if you’ve inherited a storefront or retail space, you already have the foot in the door when it comes to starting a brick-and-mortar shop. Starting a business likely requires significant investment upfront, so it’s a good idea to start something where you already have a few of the things you need.

What need could I fill?

As you look around your local (or larger) community, is there a big, gaping need that should be filled by a great business? Then you could be the one to fill that missing puzzle piece.

Many of the most successful small and large businesses started because they were out to solve a problem. So put your thinking cap on, walk in the shoes of your potential customers, and try to solve the problems they face every day.

Step 2: Writing your business plan

Once you have a business idea to pursue, now it’s time to get it into writing.

Drafting a business plan is a crucial step for starting a business. Your business plan will lay out where your business is right now, and how you’ll get from point A to point B in the next two to five years.

Your business plan will help prove your case to investors, lenders, and potential partners for your business—showing why people should work with and invest in your business.

All in, it’s an important document to think carefully about. So, here’s what you’ll need to incorporate into your business plan.

1. Executive summary

Your executive summary is a general overview of your business—giving the readers a glimpse into what they’ll get if they flip through the pages of your plan.

This section shouldn’t be more than one or two pages—brevity and clarity are key here. While your executive summary is short, it’s probably one of the most important pieces of the whole documents. If an investor or lender doesn’t get what they need from the executive summary, there’s a chance they could just put your business plan aside all together.

Your executive summary should give a general explanation of what your business does, and where you want your business to be in three to five years.

Here’s what an executive summary could include:

• Mission statement: Your mission statement is a paragraph (no more than four to five sentences) explaining what your business is and your higher-level goals for your business.

• General company information: Give some insight into when the company was formed, who the founders are and what their roles entail, the number of employees, and the location of your business.

• Business highlights: Are there any key numbers and growth you’ve hit already? Include some examples of what you’ve already accomplished. This could be financial highlights or key milestones of the business. This gives the reader a snapshot of how successful your business has been and how successful it could be in the future.

• Products and services: Give a brief description of what you actually sell and who you sell it to. (If you don’t have a fully formed product just yet, give a plan for what it will look like in the future.)

• Financial information: If you’re looking for business funding—whether through a business loan or through equity—state your goals in the executive summary. Be sure to mention any banks or lenders you’ve worked with thus far.

• Future plans: At the end of your executive summary, give the reader a look into where you want your business to be in three to five years.

2. Company overview

The next section of your business plan should be your company overview. A company overview is a look into the structure of your business and how it generally functions.

A good way to structure your company overview is to think about these three general pieces of information:

• Give a brief pitch: Start by describing what your business does in a few sentences. This is not unlike an elevator pitch. This gives the readers an idea of what they’re working with.

• Provide your value prop: Explain the nature of your industry and the marketplace that you serve. Position your business in the larger picture of the industry, explaining where you fit in.

• Describe your structure: Once you’ve explained the business and your value proposition, explain how your business is structured. How many owners are there? What’s your legal entity? Be sure to explain this when you put together a company overview.

3. Market analysis

Next up could be a market analysis. You could spend days and weeks conducting and presenting the perfect market analysis of your industry, market, and competitors, but here’s a quick glimpse into what it should include:

• Industry description and outlook: Give a description of your industry by presenting the industry’s size, trends, growth rate, and outlook.

• Target market information: What market is your business specifically targeting, who’s in it, and how big is it? This describes your ideal niche, customer, or client. This data will also have demographical information to give a look into your business’s customers (think gender, age, household income, etc.). It’s good practice to also include the lead time in your target market (the time it takes for your product to get to your customer once they’ve ordered it).

• Market research results: This section is probably the most important of your market analysis, giving the results and findings from any in-depth research you’ve done on your target market.

• Competitive analysis: A crucial step in outlining your market is looking into your competition. Who’s out there serving similar customers in your target market? What makes them similar to you, and what makes them different? How are they doing financially, and how much market share do they hold? The people reading your business plan will want to know what you’re up against.

4. Business organization

The next step in writing your business plan is to outline your business’s organization and management structure. This explains who’s who in your business, what everyone’s background is, and their past experiences bring to the team.

This part of your business plan will break down the following:

• Organizational structure: Before you go into detail on who each stakeholder is, lay out the structure in which they're situated. This is like an organizational chart of laying out what everyone does and what team they manage.

• Ownership structure: You’ve mentioned key owners before in your business plan, but go into detail on how your company’s ownership works.

• Background of owners and board of directors: Next, explain your background as a veteran and relevant work experience you’ve had, and do the same for the rest of your owners, managers, and key team members. This information will prove to potential investors and partners that you’ve surrounded yourself with a good team. The SBA has a good list of what exact information you should include here.

• Hiring need: What talent will you need to hire in the near future to make your team complete? Outline what key managers you’re currently looking for in order to grow your business.

5. Product development plan

Once you’ve gone through the nitty-gritty of how your business works and who’s involved, it’s time to walk through the actual product you sell or service you provide.

This section is meant to dive into your product and who it’s intended for. It can be structured as the following:

• General product description: Give the details of your product, highlight the aspects of the product and service that make it stand out, and describe who it serves. Be sure to speak towards how exactly it fulfills your customers’ needs, and how it’s different than your competitors.

• Current product status: Have you already rolled out the first stage of your product? Or is the design and fulfillment still in the works? This section will explain how fleshed out your product really is.

• Product development research and goals: This section should explain how you plan to iterate on the product in the future. What research do you need to do before the product goes to market, and what do you want it to look like when it does? Also, if you have any plans for additional products in the future, give a brief description of what those might look like.

• Sourcing and fulfillment: If you need to rely on other vendors or manufacturers to provide your product, you should outline what that looks like and the key players involved. Include information about what inventory or materials you need, how you get them, and how often you need them.

• Intellectual property: While it’s more relevant for technology-based businesses, make sure you outline any intellectual property that is proprietary to your business in the product description. Note if you have patents or are in the application process for one.

6. Financial plan and projections

The current financial status of your business—and your plans for the future—can be one of the most important parts of your business plan. This section of your business plan outlines the current state of your business’s financials, and any small business financing you’ll need in the future.

As you’re just starting your veteran-owned business, you might not have a lot to show here. But eventually, you’ll want to include the following financial documents:

• Income statements

• Cash flow statements

• Balance sheets

• Accounts receivable statements (if applicable)

• Accounts payable statements (if applicable)

• Documentation of debt obligations (if applicable)

And if you don’t have any of these documents because you’re just starting up, then the financial section of your business plan should include financial projections.

While there’s more that goes into your financial projects, in general, they’re your best guess at your financials based on the market analysis you did and the performance of your top (and most comparable) competitors.

When you’re projecting your future financial performance, here are some documents and information to include:

• Statements of projected income

• Cash flow forecasts

• Balance statements

• Capital expenditure budgets

And finally, if you have any plans to take on financing in the future, you should explain your needs and goals in that regard.

This may be to bring on more investors into your business (therefore giving away equity in your business) or to approach small business lenders to find debt financing for your business.

In this last part of your financial information, describe what type of funding you need right now, how much you might need in the future, and the potential impact of having that funding for your business.

7. Appendix

Most complete business plans will also have an appendix included at the end of the document.

The appendix holds any supporting information and data points that you didn’t want to clutter the heart of your business plan with.

Specifically, this could be tables, graphs, and charts that help explain any section included in your business plan.

Step 3: Registering your business

Now that you’ve outlined your business in a business plan, the next key step is to make it all official—registering your business and securing the legal documents you need to operate.

This is a hard transition to make after big-picture planning, but it’s a necessary one if you want to get up and running any time soon.

Taking the time to properly establish your new business from the get-go will save you a lot of headaches in the long-run.

Here are the steps you need to take to make your business official and legally established with the local and state government.

Register tour business name

Once you come up with an unforgettable business name, you should register it. If you plan on using a unique name for your business, file your “doing business as” (DBA) name with your state’s agency.

Your DBA name is a business name that’s different from your personal name, the names of your partners, or the officially registered name of your LLC or corporation. This is important to note because when you form your business, the legal name of the business becomes the name of the person or entity that owns the business (you), unless you choose to rename it and register it as a DBA name.

If you decide to register your business as a sole proprietorship, partnership, corporation, or LLC, you’ll need to register your DBA name.

You can do so at your county clerk’s office or with your state government.

Choosing a legal structure

The next official task to undertake is to choose a legal structure for your business. The structure you choose will impact how you file state and federal taxes, the roles and ownership of different team members, and how you’ll be held liable if someone files a legal claim against your business.

It’s a complicated decision—one that we could devote a whole separate guide to. But as a quick run-through, here are your main options:

Sole proprietorship

A sole proprietorship is a simple, common way to structure a business.

It is an unincorporated business in which there’s one owner, and no distinction between the business and the owner. That means that you, the business owner, are entitled to all of your business’s profits, assets, liabilities, and debts.

You don’t need to take any formal action to form a sole proprietorship—you’ll automatically be a sole proprietorship if you form a business as the only owner.

As for taxes, because you and your business are legally the same, the business itself isn’t taxed separately. You’ll file the business’s income as your income on your taxes.

Partnership

A partnership is a legal structure in which at least two business partners share the profits and liabilities of a business. In order to formalize a partnership, you should draft up a legal partnership agreement if you choose to structure your business this way.

With a partnership, the business itself doesn’t pay taxes—they “pass-through” to the partners. The partners then include their share of the profits and losses on their personal tax returns.

A benefit of forming a partnership is that there’s some shared financial commitment in the deal.

Corporation

A corporation is an independent legal entity that’s owned by shareholders. The corporation, not the owners or shareholders themselves, is legally liable for any assets and liabilities.

A corporation is a more complex business structure, and tends to come with more costly administrative fees and more complicated tax obligations.

S Corporation

An S corporation is a special type of corporation, designated through a separate IRS tax election.

Whereas a corporation is subject to “double taxation”—where the corporation is taxed once and then again to the shareholders—an S corporation helps you avoid paying taxes twice on your business’s profit. The main difference between an S corporation and a general corporation (C corporation) is that taxes for S corporations pass through to the shareholders.

Limited liability company (LLC)

A limited liability company (LLC) is like a hybrid between a corporation and a partnership or sole proprietorship.

With an LLC, shareholders of the business are not legally liable for the business’s debts and liabilities (like a corporation), and they get the benefit of having taxes pass through to the shareholders (like a partnership or sole proprietorship).

Register for state and local taxes

Before you register for state and local taxes, you’ll first need to get a tax identification number.

Also known as an employer identification number (EIN), your tax identification number helps the IRS keep track of your business for tax purposes. Not all businesses will need one, but check to see if you should have one with the IRS.

Again, the IRS will use your EIN to track your business for federal tax purposes, but most U.S. states and territories will have you pay income and employment taxes for your business as well. (Certain states have additional requirements, like state-mandated workers’ compensation and unemployment insurance, but you can bet on having to pay income and employment taxes).

What you’ll need to do for registering for state and local taxes will vary widely from state to state.

Get all the documents, permits, and licenses you need

The last, nitty-gritty step you should take to make your business official is to get the small business licenses and permits you need to operate.

Virtually every small business needs a business license and/or permit to operate legally. So before you open your doors, make sure you’ve done your research to see what you need to hold before doing business.

We have a resource for how to get state-specific licenses and permits, so make sure to check that out.

Resources for veterans starting and managing a business

There are resources out there specific to veterans starting and managing their businesses.

If you don’t already, these are the resources that every veteran entrepreneur should take advantage of to start off their business on the right foot or be the best business owner they can be.

1. Office of Veterans Business Development

The Office of Veterans Business Development is an SBA initiative that offers programs and services to empower new and existing veteran entrepreneurs (and their spouses). Use this resource for training, mentorship, direction to get access to capital, and networking.

2. Boots to Business

Boots to Business is an entrepreneurial two-step program that helps train veterans hoping to become entrepreneurs. This program is a part of the Department of Defense’s training track for their Transition Assistance Program.

3. Veterans Women Igniting the Spirit of Entrepreneurship (V-WISE)

Specifically geared towards female veterans and their families, V-WISE is an SBA-funded program that includes online training, conferences, and mentoring.

4. The National Center for Veterans Institute for Procurement

The National Center for Veterans Institute for Procurement is an extension of the Transition Assistance Program, offering entrepreneurship training to veterans at any stage of their business.

5. Veteran Business Outreach Center (VBOC)

Perhaps the most comprehensive resource for veteran entrepreneurs, Veteran Business Outreach Centers offers any kind of entrepreneurial development assistance—business training, counseling, and mentoring for veterans starting or managing a business.

6. SCORE

SCORE is a great resource for any small business owner, but shouldn’t be forgotten by veteran entrepreneurs. SCORE is a non-profit organization dedicated to giving free small business advice. Use them for contacting volunteer business counselors or go to one of their free business workshops and in-person appointments.

7. Institute for Veterans and Military Families (IVMF)

The IMVF is a program at Syracuse University, meant to provide education and training for veteran-business owners. The IMVF can help educate you on how to access capital, manage your business financing, or bootstrap your business.

8. Veteran Entrepreneur Portal

The Veteran Entrepreneur Portal is a VA-run portal that connects veteran entrepreneurs to different federal, state, and local resources, opportunities, or financing programs.

9. Service-Disabled Veteran-Owned Small-Business Program

The Service-Disabled Veteran-Owned Small-Business Program is an SBA program that helps entrepreneurs land sole-source government contracts of up to $5 million. Not all business owners will be eligible, but if you own at least 51% of your business and have a service-connected disability, you should consider applying.

10. VetBiz

VetBiz is a Department of Veterans Affairs organization dedicated to all things small business.

The first way to use this veteran entrepreneurial resource is to become a certified veteran-owned small business with them, which makes you eligible to win federal contracts.

11. USA.gov Resources for Veterans

The small business section of USA.gov has a large number of tools, training sessions, and more resources for veterans looking to start a business (or improve one).

12. VetFran

VetFran is a more tailored program with resources meant to help veterans get access to franchising opportunities. The website helps you determine if franchising is right for you, and what kind of franchises you could access.

13. Entrepreneurship Bootcamp for Veterans With Disabilities (EBV)

The IMVF started the EBV program—a three-phase training program with the goal of helping disabled veterans become entrepreneurs.

Each phase is a different program that focuses on the different challenges for becoming (and being) an entrepreneur. The last phase is a 12-month mentorship program with EBV mentors.

14. The Bunker

The Bunker (from Bunker Labs) is an incubator for veteran-owned technology startups. The Bunker is like any other incubator, providing you with office space, networks, mentorship, and professional development, just specifically focused on veteran-owned startups.

15. SCORE Veteran Fast Launch Initiative

Another SCORE opportunity meant just for veterans is the Veterans Fast Launch Initiative. This initiative includes free business workshops, personal mentoring, business calculators, templates, and more. Plus, the program also offers five free hours of consultation from a certified public accountant.

16. Coalition for Veteran-Owned Business

The Coalition for Veteran-Owned Business is more of an advocacy group for veterans. But because it’s a free service that promotes veteran-owned businesses through B2B product and services awareness, it’s worthwhile to get involved for networking and promotion purposes.

17. National Veteran-Owned Business Association (NAVOBA)

NAVOBA is another advocacy group for veteran entrepreneurs that you can become of a member of for free. You’ll get your business listed in their marketplace—so businesses looking to work with yours can find you there.

18. Patriot Boot Camp

Patriot Boot Camp provides free in-depth business education, mentorships, and live events. This boot camp is more geared towards technology-based companies, so if you operate a veteran-owned business in this space, don’t miss out on this program.

19. GovCon Ops Consulting

GovCon Ops is a private organization (owned by veterans!) aimed to help other veteran-owned businesses receive government contracts. This consulting business also helps veteran entrepreneurs navigate the process of simply finding the right government contracts for their companies.

The bottom line

Each one of these resources and initiatives is designed to help veterans like yourself launch and grow their own small business. We know that as a veteran, your training and skills leave you well equipped to start a successful business.

Thank you for your service, and good luck!