Duty Calls, But Business Goes On
By Marita Bon

Small Businesses Owned by Reservists
Small Businesses Employing Military Reservists

Small Businesses Owned by Reservists

Military reservists have a slew of life's little details to attend to when they get the call to duty but men and women that run their own businesses face particularly tough challenges. Not only must they decide how to keep operations going while they are away, they likewise must implement transition plans once they come home.

Given that one U.S. Small Business Administration survey indicates that nearly 61 percent of new veteran entrepreneurs have owned or currently own companies, it follows that a whole genre of veterans require guidance targeted to their unique situation. Fortunately, a number of organizations among them the SBA, SCORE (Senior Corps of Retired Executives) and various business and industry analysts provide detailed strategies for leaving and getting back to business.

Holding Down the Fort

Advice for keeping a company afloat during the owner's absence abounds, with Internet sites, magazine articles and entire books devoted to the subject. From this frankly bewildering welter of words, one clear message comes through: Make arrangements to protect the company BEFORE getting into that uniform.

Legal, administrative, financial and staffing provisions tied up neatly and completely can insure a firm's viability throughout the owner's deployment. The sections that follow offer solid, functional suggestions for entrepreneurs anticipating a military stint:

• Plan in advance. Tightening business practices well before a call-up can greatly simplify the period prior to deployment. Fundamental strategies include: establishing an emergency fund for slow periods; obtaining personal insurance appropriate to the situation; updating business plans; devising marketing tactics to implement throughout the deployment period; scouting for key managers; and staying abreast of emerging technology and other developments. Putting together a complete, documented inventory of assets likewise makes good business sense.
• Seek assistance from support agencies. Depending on the field, a range of organizations can help an entrepreneur with preparations for departure. Two excellent resources speaking to these issues (military loan programs, for instance), are the SBA Office of Veterans Business Development (www.sba.gov/vets) and for reservists www.sba.gov/reservists. In the public sector, professional or trade organizations can provide financial and logistic information specific to their fields.
• Prepare the staff. One of the biggest perks of employing good people is their willingness to help during tough times. Many human resource experts suggest asking staffers for suggestions on keeping operations humming. In addition, offering bonuses or rewards for continued excellent performance can do a lot to maintain productivity and high standards of service in the owner's absence. The weeks prior to deployment also are a good time to train employees for additional responsibilities.
• Consider the customer. Of course, customer loyalty does not happen overnight. Rather, it is a product of an entrepreneur's ongoing attention to service. That said, when military deployment looms, a savvy business owner will ensure that clients know well in advance about his impending absence. Short newspaper announcements or personal letters will keep clients in the loop, but a face-to-face conservation is warmer and friendlier.
  
  When an owner plans to make referrals to other businesses during his absence, he would be wise to inform clients of these arrangements. Though temporary loss of some customers may be inevitable, honesty and clear communication right upfront can bring them back into the fold later on.
• Communicate with suppliers. Entrepreneurs should advise vendors as regarding details of their upcoming deployment and also make sure they thoroughly understand changes in procedures or policies. Written documentation of new arrangements is critical.
• Face financial realities. Money how to make and manage it without being on the job constitutes a huge quandary for deployed business owners. On the upside, the experts do offer some valuable tips, among them:
  
  Consult an accountant about controlling costs, reducing overhead and other techniques to keep the company viable. When maintaining financial solvency during deployment is impossible, the Military Reservist Economic Injury Disaster Loan program (MREIDL), managed through the U.S. Small Business Administration, can provide loans of up to $1.5 million at low interest rates. The purpose is to cover necessary operating expenses that will not be met due to key persons' or owners' military obligations. Complete information is available online at www.sba.gov/aboutsba/sbaprograms/reservists.
  
  Address all fiscal obligations. Strategies such as notifying the Internal Revenue Service of an upcoming deployment; contacting vendors, creditors and banks; deferring or restructuring loans; updating authorized signature cards; and reviewing credit ratings can prevent costly financial snarls once a military stint wraps up.
• Consider legal issues. No entrepreneur should leave for military duty without consulting his lawyer. Assigning power of attorney, reviewing insurance policies, updating company contracts and revising wills are among the many tasks a good attorney can make easier.

Back In the Saddle

With approximately 55,000 reservists self-employed, according to a recent report from

Congressional Budget Office (The Effects of Reserve Call-ups on Civilian Employers), it's a safe bet that those now on active duty will go home to their companies once their tours end. While getting back to business should feel great, transition issues can make the experience bittersweet. Pundits argue that it's not unusual for a returning entrepreneur to face financial losses, staff and market changes, a reduced client base and, quite simply, a general sense of displacement.

Devising preemptive measures before deployment, such as those listed elsewhere in this article, should avert serious business complications upon homecoming. But even the most comprehensive plans can't cover every contingency. To this end, experts from a range of disciplines suggest strategies to help entrepreneurs once again pick up the reins of leadership.

• Take advantage of programs that assist self-employed veterans.The Soldiers' and Sailors' Civil Relief Act of 1940 (SSCRA) guarantees special benefits for qualified business owners who leave their companies to serve in the armed forces. Among these are reduced interest rates on mortgage payments and on credit card debt; protection from eviction when rent falls under a certain limit; and delay in civil court actions that include bankruptcy, foreclosure or divorce proceedings. Of particular value to reservists is a provision regulating the interest amount on pre-service debts of activated military personnel, applicable to credit card debt, mortgages and car loans, to name a few. One caution, though service members MUST request interest rate deductions. They do not happen automatically.
• Get a grip. Though unpleasant, the reality is that some homeward-bound entrepreneurs will discover that re-starting or continuing their companies is not feasible. In some cases, declaring bankruptcy is the wisest course of action; in others, restructuring or selling may be advantageous. Before making any decision, though, experts advice business owners to seek input from financial professionals. Those who do find themselves in fiscal difficulties may contact the Office of Veterans Business Development at 202-205-6773, or online at http://www.sba.gov/vets, for assistance.
• Look at the big picture. Too often, entrepreneurs come home to companies that seem to have lost direction even when they've managed to stay afloat. Evaluating, then tweaking, old business plans or writing brand new ones can go a long way to stabilizing the situation. What's more, some experts suggest enlisting employees in the process, because they are in a position to identify potential growth areas, assess progress and pinpoint weakness that may have emerged during the owner's absence.
  
  At this point, a thorough inventory of assets also is in order, as is a discussion of personnel issues (conflicts, firings, promotions etc.) with management staff.
• Go over contracts, financial records and other legal documents. In a nutshell, most tasks in this category merely require restoration to pre-deployment conditions. For this reason, entrepreneurs should reverse powers of attorney; reexamine all insurance policies; change authorized signature cards; revisit loan and interest arrangements; check current credit ratings; and contact lenders, vendors and creditors. Notifying the IRS, state and local tax entities regarding deactivation status is a good idea, too.
  
  Finally, owners would do well to meet with company financial personnel for a thorough run-through of the books.
• Develop customer relations. A quick-start marketing plan can help recapture former clients and attract new ones. Luckily, the post-deployment process pretty much reflects pre-activation methods. Homecoming strategies include personal calls or letters to all customers (past and present); articles and photos in local newspapers or on television and radio; and special sales or celebrations recognizing the business-owner's return.
  
  Getting in touch with area schools, charities and civic groups also can be valuable, some sources say. Speaking to a local Rotary Club, for instance, provides the opportunity for an entrepreneur to talk about his military experience and his company.
• Ask for help. Entrepreneurs who return from active duty have plenty of resources to help them settle back in. Besides the U.S. Small Business Administration and SCORE, various veteran organizations, local chambers of commerce, small business groups, community colleges and even some financial institutions offer free counseling services.

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Small Businesses Employing Military Reservists

Just like military units, small businesses depend on each member to play a vital role in the operation. So naturally, no owner wants to see a key player swap out his or her work cloths for an Armed Services uniform.

Regardless, those who employ reservists face the potential for Uncle Sam to call up and clock out the help at anytime. More and more businesses find themselves struggling to compensate for the absence of employees called to duty. In fact, the CBO previously warned that some small businesses employing activated reservists might take a major hit, ultimately needing to halt operation for an extended period of time, if not indefinitely.

In the government agency reported that about six percent of businesses employ reservists. Since many of these service members must leave at a moment's notice, The Uniformed Service Employment and Reemployment Rights Act of 1994 (USERRA) safeguards their work rights. This legislation ensures that reservists do not lose their previous job while away. It also secures some continuation of benefits during their activation. Moreover, the law prohibits businesses from discriminating against individuals in any aspect of employment as a result of their service in the reserves.

While this legislation helps preserve the livelihoods of military men and women in combat, it also tightens the economic vice on small businesses faced with a call-up. In their report The Effects of Reserve Call-ups on Civilian Employers, the CBO concluded that USERRA "limits firms' flexibility avoiding vacancies and imposes additional costs on some employers."

The agency goes on to note that small businesses (generally those with fewer than 100 employees) employ about 18 percent of all reservists who possess a civilian job. Based on a survey, the CBO estimates that of the 860,000 reservists serving in the Selected Reserves, anywhere from 8,000 to 30,000 members hold "key positions" in small businesses. In certain cases, their absence means decreased production, lost sales and more.

In order for a reservist to be eligible for USERRA:

• They must have held a civilian job with the employer.
• They must have given advance notice to the employer that he or she was leaving the job for service in the uniformed services.
• The period of military service must not exceed five years (with certain exceptions).
• They must be released from service with a non-disqualifying discharge
• They must report back to the civilian job in a timely manner or have submitted a timely application for reemployment.

The Battle At Home

Small businesses stung by an employee's deployment must wrestle with a number of issues. The most important, however, is making up for the lost manpower. Owners have several options. They might decide to lean a bit on other employees to take up the slack.

Through tweaking work schedules and issuing overtime, companies sometimes quash the problem without ever leaving in-house. Others must turn to outside assistance to fill the void. Since a reservist's employment might last anywhere from weeks to years, there's truly no certainties when it comes to the length of their absence. For this reason, some companies opt to seek a contract worker paying on an as needed basis. For those employers needing full time help, staffing agencies offer a number of solutions. Many of these firms not only provide temporary candidates, but temporary-to-permanent as well.

When possible, small business owners should set up a line of communication with the activated employee prior to their deployment. This can be done through swapping e-mail addresses with the reservist themselves, or their family members and commanding officer. Taking this simple step allows businesses to stay in the loop when it comes to their employees' whereabouts. Ultimately, the measure not only keeps companies up to date on the safety of their staff member, but also lets them better plan their next operational move.

Aside from relief loans, the SBA also offers management support for those with deployed reservists. The nonprofit organization teams up with its vast range of resource partners to provide business development, counseling and training designed to nullify the void left by deployed staff members. Those interested should contact their district SBA office.

The Hard Reality

As is the case with most small businesses, leaping over hurdles is all a part of the daily grind. Very few operations go from one week to the next without some type of challenge. Call it "damage control", call it "putting out fires," setback almost always rears its ugly head when running a full-blown business with only a handful of folks. Still, successful entrepreneurs did not get to where they are as the result of lack of vision, inflexibility and laziness. Truthfully, no business can afford to lose a primary staff member. But if this does occur, preparation might be the difference between marching on and missing the boat. Therefore, business owners faced with such a dilemma must dig up the same creativity and determination they mustered when first spearheading their venture. Simply put, don't be afraid to think outside of the box. There really is no clear-cut solution for temporarily diminished staff size. Even so, employers can use some factors to their benefit.

Thanks to recent legislation, any volunteer reservists applying for a civilian job must give the Ministry of Defense (MOD) permission to contact the potential employer. No owner should find them self in a situation where an employee's military status is only revealed after they've packed their bags and shipped out. Businesses need to recognize early on the real risk of a reservist employee's sudden leave. Nothing will combat the loss of personnel like old-fashioned preparation.

Management should make sure at least one other staff member understands the responsibilities of the military employee. Taking extra time to train early on likely will make all the difference later. Procedural guides and manuals that outline the reservist's job duties are documents that easily can be passed on to any future replacement. Employers might also want to assign someone to occasionally job shadow the reservist staff member, taking notes of his or her work routine. Last but certainly not least, the owner needs to know the ins-and-outs of their military employee's civilian job. Like the old adage says, "Don't throw all of your eggs into one basket," spread around the knowledge about the position. While the reservist employee takes on missions elsewhere, you are still the general at your office place and should know every aspect of the strategy.

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