Do You Have What it Takes to Beat the Odds in Small Business?

As a veteran, it can be challenging to find your niche in a civilian career. Many military service members and their spouses seek independence after retirement in the form of running their own business. However, small business ownership and management can be a roller coaster for you and your family – you’ll want to consider the reality of being an entrepreneur before you take the leap.

Reality: The Odds of Longevity Are Not in Your Favor

According to the Bureau of Labor Statistics, only 50% of U.S. small businesses will survive the first five years. Less than 30% will survive more than ten years. Depending on your industry and your market, the rate of survival may be much lower.

If you look back on the statistics of new small businesses opening, and small businesses closing nationwide, the numbers are pretty close. For every new hopeful, there is another entrepreneur who couldn’t make it.

What You Can Do

Understanding this, you’ll want to research common challenges for businesses in your desired industry. Of the businesses that failed, what was the reason? Talk to colleagues in your field – what do they wish they knew before starting out? Then, take the time to address these issues in your business plan.

Just because many small businesses fail, does not mean that yours will – you simply need to have a clear view of your obstacles, and have a plan to overcome them.

Reality: Most Small Business Owners Don’t Make Millions on their Business

Note the terminology in the statistic above – these percentages don’t count the “success”, but the “survival” of a business. A surviving business is breaking even consistently – but may not be making much money for the business owner.

The reality is, 86.3% of small business owners said that they take a yearly salary of less than $100,000. In fact, 30.07% of small business owners report that they don’t take a salary at all. Most of the millionaire small business owners obtained their millions from other avenues – like real estate or the sale of a business – and not the operation of the business itself.

What You Can Do

What can you do with this information? You can plan ahead. Before you jump into small business ownership, have a plan for your personal/family finances. If you need to make a salary, make sure you cover that cost in your business plan.

At some point, you need to be making a salary either way. The truth is, you won’t stick it out in a business if you can’t support your family. Set your sales and growth goals with this in mind. Determining how you will pay yourself is an absolute necessity for your personal life, and your business success.

If your family is not prepared for the risk, you may want to reconsider jumping into small business ownership – at least for the time being.

Reality: You’ll Need to Pay Back Those Loans

This one seems like common sense, but you would be surprised how many veteran and military spouse small business owners are unaware of the fine print behind VA loans for businesses.

The VA loan program – SBA 7(a), SBA Express, and Military Reservist Economic Injury Disaster (MREIDL) Loans are actually guarantees made available from the Small Business Administration. They do not originate from the Veterans Administration, and they are not provided as grants. They are standard loans though standard lending institutions – like the bank or credit union – that require repayment, and carry an interest rate.

What You Can Do

The benefit of a VA loan for veterans and military spouses is that the federal government guarantees your loan – or at least a portion of it. This means you ma not have to have collateral – like your home, your car, property, or equipment – if your loan is less than $25,000. If you are requesting a loan that is higher than $25,000, you may still need to come to the table with collateral.

If you are just starting out in business, carefully consider whether you need outside financing. If you can bootstrap your business in its infancy, you may be able to obtain a loan for growth later down the road without risking personal collateral – like your home.

Reality: You Can Overcome the Odds

You should never enter into small business ownership with rose-colored glasses. You need to be as objective and brutally honest with yourself and your family as possible. That way, you can create a plan to overcome those common obstacles that leave the road to entrepreneurship littered with dashed dreams.

If you know what you’re up against, and you are willing to put in the extra effort – you may just be the next small business success story.