Words by Doug Nordman.
After a military career, you might be a little tired of following orders. It must seem wonderful to get rid of the "company" uniform, make your own hard business decisions, and blaze your own trail to financial independence!
Let me temper the fantasy with statistics from Scott Shane's "The Illusions of Entrepreneurship". (Try your public library.) It was published in 2008 (right after the start of the Great Recession) but it's based on decades of real data. Better still, it's not biased by the recent bull market. In this post I'll share resources to help you tilt the odds in your favor, but let's start with a realistic assessment. Most of what you've heard about starting a business comes from the success stories (a real-life survivor bias) because you rarely get a thorough analysis of the failures.
Shane's summary of surveys and statistics shows that the typical entrepreneur wants to be their own boss. They tend to start small ventures instead of building the next Google, but they're still overly optimistic. Their lifestyle businesses operate out of their home and may compete in very crowded fields. They also may work 80 hours per week for several years, and won't even take a salary for the first 18 months. Most of these businesses flame out within five years-- after lower earnings (and worse benefits) than traditional employment.
The industry you choose for your startup will greatly affect its success. The decisions you make can also improve the odds, but most entrepreneurs make the wrong choices. (Hence the high failure rate.) Buying an established business (including a franchise) is usually more survivable than starting one. Working in an industry before starting your own business in it is a good tactic, and education improves your performance.
According to Mr. Shane the majority of successful new businesses have been started by Caucasians in their 40s-- mostly by people with experience. The opportunities for women and minorities are growing, but there is still a higher chance of failure. The good news is that today's government and public policies are helping more entrepreneurs start up more businesses than ever before-- and that includes military veterans.
The best news is that today's entrepreneurs need less startup capital. The $100 Startup is a reality (this link downloads a free PDF copy of the book), and military veterans have the motivation to overcome the obstacles. We're persistent and disciplined-- and those are two skills that greatly increase your odds.The better news is that military veterans' skills translate well into running their own businesses, just like leading their troops to overcome obstacles and complete their missions. Today's veterans have either started or are owners of over 13% of America's businesses, with over $1.6 trillion in sales and over eight million employees.
Where can you begin? With your customers. Entrepreneur Dane Maxwell surveys potential customers (who are usually running their own businesses) about their problems and their pain points. Once he understands the issues, he hires coders to develop software to automate the painful parts of the business. He asks one or two customers to pay the development costs (in exchange for free use of the result) and he sells the program as a website subscription to the rest of his customers. His business has become helping others run their businesses, and he doesn't even write his own code-- he just oversees the development of the solution to a problem.
Another entrepreneur, Ryan Finlay at ReCraigslist, started his self-employment by flipping household appliances. He has plenty of competition but he's disciplined, he's developed an efficient rehab process, and most of his customers shop on price and reliability. Three years later he's using what he's learned to branch out into other projects.
Where can you learn more about finding these opportunities and developing your own businesses? Start with finding your mentors online or in your own town. Veteran Mark Morris started MyGigline.com and then networked with other veteran entrepreneurs to develop a list of over 50 resources for government programs, education partnerships, and advice. Entrepreneur Pat Flynn has learned how to start online businesses in several different niches, and he shares everything he's learned about the obstacles and techniques-- for free.
If you've had enough of the military, then don't just get out and find a job. Look for ways to support your transition to the next phase of your life. While you're still in uniform, take business or financial classes to learn how to run your own company. Consider leaving active duty for the Reserves or National Guard, where drill income can help pay the bills while you build your business. Decide whether you want to return to school for a degree, or use your veteran's training programs to get a new certification. Use that resource list to find veterans who will answer your questions over coffee. Consider taking a traditional job in your chosen field for a few years so that you can learn the industry and boost your own skills. Start your business as a side hustle, grow it until it pays more than your day job, and then save up enough money to make the leap to full-time entrepreneurship.
This is not easy-- but it's straightforward and within your control. You'll be your own boss in the most challenging career that you've ever tackled, but it's your career.
What if you want to raise more money to grow your business faster? I'll discuss that in a future post about startups, accelerators, and angel investing.
About Doug Nordman
I served in the U.S. Navy's submarine force for 20 years before reaching financial independence and retiring over a decade ago. My spouse spent 17 years in the Navy's Meteorology/Oceanography community and eight more in the Navy Reserve. These days both of us are enjoying our beach-bum retirement in Hawaii, where we were first stationed in 1989. Our daughter just finished college on a ROTC scholarship and is an ensign on a destroyer.
I wrote "The Military Guide to Financial Independence and Retirement" to share the advice and stories of over 50 other servicemembers and veterans. All royalties are donated to military charities (over $9000 so far), and we're collecting more material for the second edition. Stop by The-Military-Guide.com to share your story and learn more about gaining your financial independence!