The U.S. military, across all its branches, hosts thousands of active servicemen and women—and their families—in hundreds of bases, camps, and other installations at home and abroad. These bases require more than just basic housing: they also include all the goods and services that military families use in their daily lives, like retail stores and a variety of full- and quick-service restaurants.
That means there’s an opportunity for entrepreneurship, with the added bonus of providing services for those who protect and serve the nation.
While operating a business on a military base means working in markedly different circumstances than operating off-base, the basic tenets of small business ownership remain the same.
Restaurants, for example, still need to provide quality food on a consistent basis, pass health inspections, offer great service, and so on.
But there are some aspects of military base small business ownership that are uniquely out of your hands.
We spoke to the long-time owner of a Blimpie franchise on a military base in southern Texas about his experiences, and he asked that we keep him anonymous out of respect for his coworkers and employees. We’ll call him Mr. Jones.
“When it came time for me to start a business, I had a thought: there might be recessions in every part of the economy in the future, but not in the military,” Jones says. “Though that was the original idea, I confess that it’s morphed into trying to give something back to the men and women who are my customers, because they risk a lot more than I do.”
As it turned out, operating a business on a military base comes with its own set of challenges and rewards.
Here are 6 things military base businesses need to know:
1. Most business goes through the AAFES.
The Army and Air Force Exchange Service is the primary retail distributor for both branches’ bases.
(There’s also the Navy Exchange and the Marine Corps Exchange—NEX and MCX, respectively.)
They operate many of the stores and restaurants at Army and Air Force installations worldwide, funneling the profits from those stores back into social services for the soldiers they serve. But the AAFES is always looking for third-parties to join up and help create a “mini-America” for those living on the base.
In an interview with The Street, director of worldwide services and vending at AAFES Denise Gumbert expressed support for small businesses and enterprises. “If someone has a business, we’re keen to hear about it. If we can’t operate it, we’ll advise them to alternative methods, because we like to see small businesses grow,” she said.
Whether you’re interested in operating a franchise from the base or opening an independent business, the first step is to contact the AAFES (or the corresponding contracting office) to discuss opportunities and concepts.
It should be noted that every local exchange has different standards as to what kind of business is allowed, and that the exchange usually requires home businesses to register in order to grant the AAFES the ability to refuse to grant a permit. According to Military.com, the AAFES has first rights to the following businesses and may or may not grant prospective business owners their permit based on this list of services:
- Retail stories
- Mail order, catalog, and ecommerce services
- Automobile garages and service stations
- Name-brand fast food outlets
- Packaged beverage stores
- Barber and beauty shops
- Flower shops
- Laundries, dry cleaning, and pressing
- Tailor shops
- Water repair shops
- Radio, TV, computer, or electronic repair shops
- Shoe repair shops
- Photo studios
- Vending machines
- Taxicab or bus services
- Personal services
- Pay telephone stations, telephone calling centers, and personal telecommunication services
2. There are plenty of familiar faces.
Commercial areas on military bases feature many of the same standby brands and chains you’ll see off-post.
There are gas stations, dry cleaners, movie theaters, and convenience stores. Plus, some major chains have made a concerted effort to move into the military base arena, like Dunkin’ Donuts and UPS.
In fact, UPS has pitched itself to veterans looking to open small businesses as a “known entity” in military base life. They’re one of many franchisors actively recruiting the thousands of veterans returning home from duty looking for work.
While the market is open to truly independent businesses—non-chain businesses, in other words—it’s undeniable that chains have a strong foothold on military bases and are by far the most commonly found kind of business.
3. Your business’s location may not be up to you.
Most of the infrastructure that small businesses need is already standing—the Blimpie that Jones bought was located inside a mothballed hospital that had been repurposed for commercial endeavors, for example—which is a big bonus for entrepreneurs who don’t want to invest in a new building.
But there’s a downside to this, too.
“AESS sends new businesses to the places that AESS needs them, not necessarily to where the sales are,” says Jones. “We’re in an office building and it’s pretty secure—it can be intimidating for people outside to come in. So my customers are mostly the people who work in this building. Very few are from other buildings on post.”
Though Jones is essentially at the mercy of the AEFSS in this regard, he notes that not all businesses have to deal with a limited customer base.
“The rest of the businesses on post don’t necessarily feel it as much as I do. There are a lot of very young recruits and they consume a lot of services. And if I was outside, on the base where they could reach me, my situation could be different than what it is now.”
4. Customers might be loyal, but limited.
Jones notes his business is basically “hidden” from those who don’t work in the same building. And in recent years, the number of customers who arrive from off the base entirely has dropped to virtually zero.
“In the past few years, after the shooting at Ft. Hood, security has tightened up and it’s a lot more complicated to come on post than it used to be,” says Jones.
Because of that, the concept of marketing and advertising is moot to Jones. Most traditional forms of advertising are forbidden on bases—you can’t hang fliers in public places or go door-to-door—so Jones has only one option to let people know he’s open and operating:
“My marketing is when I bake cookies,” he says. “The smell wafts up through the building and lets everyone knows that the cookies are ready!”
5. The military isn’t immune to downsizing.
While Jones originally looked to open a business on a base because he thought recession wouldn’t touch him, it didn’t keep him safe from the greater economic forces at play.
“In the building where my business is located, the command is being downsized. It’s not a dramatic cut, but they’re softly, slowly reducing the size of the base,” he says. “For this command in particular, any reduction hurts me, because I have fewer customers in the building.”
This creates a dilemma for military bases, which in the past have pushed to create a diverse economic environment for their occupants to enjoy, but are now downsizing and leaving business owners with dwindling returns.
Jones says there isn’t a dialogue between the base or AAFES about this issue—and he doesn’t want there to be.
“I’m not even on their radar, because the command is surely given that directive from Washington,” says Jones. “And even though I’m talking against my interests as a business owner, I think they need to do what they need to do. And the businesses that are on post that can survive, will, and those that can’t, won’t.”
6. City ordinances won’t apply… But a background check will.
Many aspects of owning a business on a military base are no different than anywhere else.
You still pay and file business taxes, take stock of inventory and assets, hire and deal with employees, and more.
But regardless of your base’s location, it won’t have anything to do with local rules and regulations—because military bases are on federal land. Jones’s health inspection is conducted by the base, not by the city, for example.
One major piece of paperwork that needs to be done specifically because the business is on a base? A background check.
“They do a background check on anyone who’s allowed regular access to the base—but that’s not even the first part of the process,” explains Jones. “Once you get your business approved and get on post, that’s when you’ll go through a background check.”
All in all, military base businesses are similar to regular businesses in that they have trials, tribulations, paperwork, and downturns in the economy to deal with. Although those issues aren’t the same across the board, there’s still a thin line between success and failure, and falling on one side or the other isn’t always up to you.
However, there’s a great satisfaction in running a business that serves the U.S. military and their families—and it’s up to our nation’s entrepreneurs to decide whether that reward is worth the risk.
from Fundera Ledger https://www.fundera.com/blog/2016/07/20/military-base-businesses/