This week is National Veterans Small Business Week and a great time to honor Veteran small business owners and the many contributions they make to the economy and our local communities.
According to the U.S. Census Bureau (2021), Veteran-owned businesses make up nearly 6% of all businesses nationwide, with approximately 3.9 million employees and approximately $177.7 billion in annual payroll. Despite their many contributions and successes, Veterans are often faced with obstacles as they establish and operate their business ventures. According to the 2021 National Survey of Military Affiliated entrepreneurs released in April 2022, access to capital is the top barrier facing new and existing Veteran-owned businesses.
Here are a few tips to help Veteran small business owners access capital:
• Develop a business plan. Having a business plan is an essential first step — it explains what product or service the business is offering, business financial goals and how the business may tackle any environmental or market risks. Business plans lay out what the desired goal is and how it will be accomplished. It also serves as a resource for potential investors and lenders — articulating current financial status, sources of revenue and how to meet revenue projections.
• Get financially organized. It is important to establish a checking and savings account specifically for the business and separate from personal account(s). A solid financial foundation creates a solid business platform and allows business owners to establish credit and financial stability. Plus, personal and business finances matter and can have an impact on financing. On the business side, a bank will determine if the business is generating a positive cash flow. On the personal side, a bank will want to know if there is enough income to support not only the current debt but also the debt that is being requested. Having accurate financials are crucial to determining the business financial need.
• Build relationships with critical partners. It takes a village! Make sure partners are aligned to support the business including an attorney, a CPA, as well as a small business banker. Good relationships with these partners are important in navigating business lifecycle changes as the business grows and helping determine if financials are in order before applying for funding. Utilizing resources to build other relationships can also help with potential financing options, such as connecting with a Community Development Financial Institution (CFDI) who can also help a small business access capital.
• Demonstrate a consistent and positive flow of funds over time. Positive cash flow is critical to short- and long-term financial success. Small business owners need to make the most of their cash by monitoring expenses, collecting payments quickly, and using resources that can make cash flow management more convenient. Owners should draft a cash flow projection to provide added control over cash flow and get a clearer picture of the company’s financial health.
Planning is key for Veteran small business owners looking to access capital. In fact, planning and preparing business finances in advance might be the most crucial part in getting a “yes” and access to the funding needed! Veteran business owners shouldn’t wait until capital is needed to start looking for it. Instead, they should get financially organized, create a plan, reach out to partners and take advantage of the many online resources available for small businesses.
— Jesse Von Feldt is the Wells Fargo Idaho Small Business Leader.