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We officially founded our non-profit organization VETtoCEO in 2013 and have been delivering an online entrepreneurship program specifically designed for military veterans since 2012. Our Entrepreneurship for Transitioning Warriors program has educated over 4,000 veterans in over 40 cohorts.
Five unique insights have come out of all this experience. We like to position them as the five things we never hear veteran entrepreneurs say.
1. I can’t believe our plan worked so perfectly
The lack of a market for our great idea is almost always at the top of the list of studies that look at the root causes of small-business failure. We all have that “aha” moment where we come up with an idea and can’t believe no one else has thought of it. Our passion for the concept drives our entrepreneurial passion for creating a business based on it. Ultimately, a large percentage of us learn the hard way that nobody wants to exchange their money for our great idea. We concede that the shortcuts we took in conducting market research just drained our savings and maxed out our credit cards. We realize that there’s another name for things we’re passionate about, but others aren’t — it’s called a hobby.
2. We’re going to have to give some of this money back since we raised too much
The lottery syndrome is alive and well when it comes to small-business funding. We’ve all gone to these events where the successful people are on stage alongside their investors telling their stories. We in the audience leave thinking that there are investors everywhere spending billions of dollars on startups. While true, we aren’t told as often that most of those investments are in two categories — healthcare and technology — because most of the unicorns are born in these fields. We rarely hear that angels and venture-capital firms only invest in 2% or less of the companies approaching them each year for funding. Banks are a different story. If you believe their marketing, you’d think it’s easy to get a commercial bank loan. It’s not, especially for startups.
3. Our bankers and investors are true partners
When we first start out, we assume that if we’re lucky enough to get a bank or investors to invest in us, they are our partners. Veterans, in particular, fall into this trap. We come from an environment, particularly those who served in combat units, where we would give our lives for each other. We trust each other to look out for our health and well-being at all times. Some of us then transition to being small-business owners and find out that there is a third new variable to our operating environment: money. Money brings all kinds of influences and drivers for those involved, and rookie entrepreneurs don’t know what they don’t know about how strong these drivers can be for those that provide the money.
First-time entrepreneurs often have no idea what some of these terms associated with funding mean. We’re just glad that we’re getting funded, and we don’t read the fine print. As long as things go according to plan, everyone’s happy. However, the minute the inevitable occurs and things don’t go according to plan, the terms associated with our funding kick in. That’s when we learn the hard way what covenants, rights of first refusal, put options and many other preferences and protections that banks and investors build into the fine print in their term sheets are.
Bankers and investors are not bad people. They’re very good at what they do, and without them, we would not be the most entrepreneurial nation in the world. We negotiate the deal while enamored by the funding that’s about to come our way. Often, it’s our first time negotiating terms, and they’ve done it countless times. They have black belts in small-business finance, and we have white belts. We all know what happens if a black belt fights a white belt.
4. I’m going to start my own business instead of finding a job. It’s less risky.
Money isn’t the reason we join the military. It’s why we say we serve in the military, not work at the military. Unless you’re in a finance role, the military generally operates with little consideration for how much a mission will cost. There’s nothing we can do about our own money while serving anyway. Pay is standardized and based on rank and time in grade, with some bonuses for those of us who do the dangerous stuff or get deployed to a war zone.
When we’re getting ready to leave the military, getting a paycheck zooms to the top of our priority list. So, the most obvious answer to getting a paycheck is finding an employer to provide us with one. It doesn’t dawn on us that getting one paycheck from one source is riskier than having a business that many customers pay. As our six-pack abs disappear and a little gray starts showing, we slowly realize how vulnerable we are working for one employer.
5. I was a badass in the military so being an entrepreneur is a no-brainer
I used to jump out of airplanes behind air-droppable tanks. There’s not a big market for that skill set outside of the Army. But because I did things like that, I’m not intimidated by the prospect of going down the path of entrepreneurship. If I can do daring things as I did in the military, then I’m not afraid of anything. So the belief goes.
We have found that this is not true at all. The simple reason is we never do anything alone in the military. From the first day of boot camp when we get assigned a battle buddy to ultimately serving with our units, we never go it alone. The riskiest military missions have layers of on-call assistance and assets that allow us to do brave and dangerous things. That network of support, most importantly our buddies to our left and right, minimizes the risks for mission failure and harm.
When we leave the military, that safety net falls away overnight. Entrepreneurship is one of the loneliest things we do in life — just ask any entrepreneur. As veterans, it’s not only foreign to us, but also scary.
Different paths to entrepreneurship
It’s a precious privilege to lead others in the military. When we get promoted to sergeant or enter the service as a junior officer, the organizations that we’re assigned to lead are already there. We don’t get told to go out the front gate of the base and recruit 40 people off the street to join our platoon and raise money to buy our equipment. All that stuff is already there, and we focus on leaving that organization in better shape than when we took over.
Although it’s not always the first thing that comes to mind when people think “entrepreneurship,” this experience of leading within an existing organization also applies to the entrepreneurial world. The path to small-business ownership via startup might get all the glory, but there are other, just as valid, ways to get there too. Franchising is one of them. Franchisors love veterans because we’re very good at taking standard operating procedures and executing them. Successful franchises take the “no market” issue — the No. 1 reason for business failure — off the table. The person who thought of the franchise concept proved there was a market there already, then used franchising to scale.
Buying an existing business is another common path to entrepreneurship, but it’s not sexy. Existing businesses already have done the hard stuff, and they have proven that the original idea has a market; they have customers and revenue. Additionally, financing for purchasing a franchise or an existing business is more accessible than funding for startups.
I’ve always been amazed at how the bravest among us are so fearful of the idea of starting a business. We’ve learned through experience why. On the other hand, the leadership and decision-making skills we learned serve as unique strengths if we choose to franchise or buy an existing business on the road to entrepreneurial success.