Thank you to all our veterans! Happy Veterans Day!

Support for Veterans Through Business Ownership

Happy Veterans Day and thank you to all the people who have enlisted to serve our country. I thank all veterans, but this post is mainly for highlighting those resources available to vets for small business ownership. As it is a topic that I care about and my personal sentiment is if you as a vet have taken the sacrifice in defending our country, then we can sacrifice some time to educate and help the transition to successful civilian life.

One path can be owning your own business.  I find that here in Hawaii, so many military personnel consider settling down in the islands after they are done with their military service. Then the question turns into opening a business due to the opportunities of being a contractor.  However, unfortunately business law tends to be abstract and also given the way the islands tends to do business and regulation that adds to their complexity. So hopefully if you, as a vet (or their spouse) are reading this, you find it helpful as a start.

Getting ready to become a business owner as a Veteran means educating yourself on aspects of small business ownership life. Fortunately, there are a lot of resources.

What a Vet Should Learn Prior to Starting a Business

In the past have had the fortune of conducting one of my favorite seminars as a part of the Boots 2 Business (B2B) program. More on that down below. Specifically, entity formation, but as an attorney I would stress understanding more than just choosing between LLC or corporation. If opening a business as a vet consider the following:

  1. forming a business entity;
  2. differences between LLCs and corporations;
  3. structuring and governing the entity you choose;
  4. tax and accounting issues;
  5. basics of contract law;
  6. understand local and state regulations;
  7. applying to be a government contractor;
  8. if you have a service-related disability, then understanding the program requirements for the Service-Disabled Veteran-Owned Small Business Program;
  9. moving your business and/or operating in multiple states; and
  10. if you are going to have a partner, then really understanding what a business partnership entails.

This is not an exhaustive list, but what I’ve come across in terms of frequently asked questions or issues. There are many other aspects such, as operational, marketing, human resource, and financial concerns for business ownership. In terms of where to get that education the B2B program is an educational and training program offered by the U.S. Small Business Administration (SBA). It is put out under the Department of Defense’s (DOD) Transition Assistance Program (TAP) and basically gives a survey course of business ownership. Note that it is open not only to Veterans, but also Active Duty Service members, and their spouses. Definitely worth a check out if you are considering opening a business an eligible.

Other Resources

In addition to the US SBA’s main website, if you are in Hawaii, then consider the following:

  • The SBA local office
  • The Veteran’s Business Outreach Center of the Pacific (VBOC)– The VBOC is a program of the University of Hawaiʻi at Hilo and funded partly by the SBA. It is committed to assisting veteran entrepreneurs by providing access to advisers on business and strategic planning, marketing, financial decisions, and starting, running, and exiting a small business.
  • Hawai’i Small Business Development Center (SBDC)– The SBDC is also funded in part through the SBA, but also by the State of Hawaii. The SBDC provides advice, research, and training for business owners.
  • SCORE Hawaii– is an organization dedicated to helping small businesses via education and mentorship. So they offer a varieties of educational activities, such as low-cost workshops or access to *mentoring.

*Note: whenever counseling with a new potential business owner client, I always tell them the biggest thing you can do for yourself is finding a good mentor.

Final Words

Sometimes closing down isn’t permanent. Sometimes you need a change of plan to reopen. The main goal is having a plan to execute.

Usually, military people transitioning to civilian life or vets have saved enough come to me when starting a new business. I would say that energy and enthusiasm is always enjoyable to work with, but as any small business owner can tell you there are other stresses. The stress of making it work. Stress of work-life balance. The stress of moving out of state. Sadness of closing down.

Just remember that there are all these resources not only to help start the business, but helping you move through your life of owning a business. For an attorney’s part, we do help with the formation, but also advising strategic decisions, which may or may not be tied to the business. One particular situation I see is military families starting a business here and then moving back to their home state. The question is what to do with the Hawaii-based business. This one-sheet should answer some preliminary questions, but as always you probably want to speak directly to an attorney for planning. Why? There is no one size fits all plan for every type of business owner. However, gaining key advice helps with strategic planning and I feel that veterans know the value of having a plan.

Finally, I would like to extend a big mahalo to all of the veterans (and to the family members that support them) for your dedication and service to your country. Thank you.


DISCLAIMER: This post provides general information, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Shameless Self-Promotion of My Future Events

Hey Everyone,

Sorry, this Draw the Law will be very brief.  It is a very busy week, as at the state Legislature it is Conference time, which means the House and the Senate sit down to hammer out compromises for the bills.  Basically, this is one of the last hurdles for a bill to become enacted into a law.  If it does not get out of Conference, it is dead.   Therefore, I am watching and tracking legislation so that over the summer I will be resuming Law in the Brief, where I will update you on new laws that affect your business.

In addition, I as an Oahu Director for the Young Lawyers Division (YLD) of the Hawaii State Bar Association (HSBA), I am charged as a co-chair of Law Week, next week (April 30th – May 5th).  Law Week is a focus on the legal profession and a time for many lawyers to do outreach to the community, as such the YLD will be taking to the KHON2 Actionline phone lines during the weekdays of Monday – Friday next week. Look for more information on my blog and the HSBA website.  Secondly, we will also be setting up free legal clinics throughout the state. See the flyer below to see for further information.

Draw the Law: Marketing or Reseller Agreements

Today’s Draw the Law is the beginning of a several posts where I talk about various types of agreements that a business owner will contemplate using.  As a transaction and compliance attorney, I am asked to look over documents.  Many of these documents are templates from the Web, which are not necessarily bad, however they sometimes are not written in the favor of the person who wants to use them.

One aspect you need to understand of contract drafting is that while there are many laws that protect consumers from unfair business practices in contracts, in the realm of B2B there are fewer protections.  If you sign it, you cannot argue you didn’t know about it; I know many small business and startup owners who still operate as if they are consumer because they have been used to just going to a store an accepting the store policy.  This is not the case: you are a business negotiating with a larger business.  So you really should have an attorney go through contracts to make sure they are in your interest/favor or fair to the parties involved.

So let’s get to an agreement that usually benefits a small business trying to grow, a marketing or reseller agreement.  Let’s say you make an awesome product . . . but you are stuck on an island in the middle of the Pacific.  However, Chinese and Midwestern tourists love your product, and you think that it would do well in those areas.  What do you do?

You could build a presence in those locations.  However, building brick-and-mortar is expensive, and then there are labor costs if you need to staff the store.  Online retailing is a possibility, but let’s say your product needs a salesperson to explain how awesome it is and why customers need to buy it.

Supposing you know a distributor or a massive retailer that wants to carry your line of products, this is where a marketing or reseller agreement steps in. Basically, this agreement allows them to sell your product (or service) for a fee.  They get access to your stuff, and your stuff gets exposed to a larger market.  Now, this is where a business sense and lawyering meet, negotiations.

Consider the Following: Negotiate Provisions, Do Not Accept What is Placed in Front of You

Remember I said that B2B contracts have fewer protections for the small business than consumers have in a B2C situation. Therefore, if you are a small business owner, but you know your product or service is awesome you have to leverage that to push on certain clauses.  Here are some clauses you might want to think about when negotiating a marketing agreement:

  1. If there is a dispute under the agreement, where will it be resolved? – I discussed this concept in a Boilerplate Blurb post.
  2. Can the company that is reselling your goods sell competing goods? – Think cereal aisle at the supermarket.
  3. Does the resellers salespeople needs special training to sell your goods? Do you have to pay for that? – Consider that if your item is awesome it will bring people into the store, but if it is complex or a hard sell it takes up valuable space.

These are only a sliver of things that need to be discussed, while many large companies will try to force a small business desperately trying to grow do not sign their contract without understanding what it entails.  You can always ask them to clarify a clause that you don’t understand or you would like to know how it operates in practice.  At the very least you know what you are getting into before rather than after. Finally, if you push back you may get favorable language inserted into the agreement or a compromise.

See you next week!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.