The Future Is Bright For Military Veteran Entrepreneurs

The future is looking bright for veterans who own or are considering starting a home-based or small business. Federal government agencies and veterans’ groups are stepping up efforts to provide veteran-owned small businesses with the financing, training and business opportunities needed to be successful.

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Business ownership and entrepreneurship by America’s veterans, particularly veterans with a service-related disability, have received increasing attention in recent years, especially since the Veterans Entrepreneurship and Small Business Development Act of 1999 took effect. In fact, the head of the U.S. Small Business Administration, Hector V. Barreto, established a task force in 2005 to take a look at SBA’s policies and effectiveness in ensuring that veterans and their survivors and dependents are given special consideration in SBA programs.

The task force also is charged with coming up with more modern and more effective ways of providing help to veterans, including service-disabled veterans, who want to start or expand a small business. The group also will work with veterans’ organizations to help these veteran-owned businesses become more aware of opportunities for lucrative government contacts and to compete more effectively for federal contracting dollars.

Tangible evidence of the increased government focus on helping veteran business owners was the first-ever cooperative, interactive web cast in December, 2005, involving panel discussions and answers to questions submitted by interested veterans. The topics ranged from start-up assistance to how to find and participate in the lucrative federal contracting opportunities for veteran business owners. By the way, if you missed the web cast and are interested in learning more, the four-hour-plus web cast has been archived by web caster, TVWorldwide.

Veteran Entrepreneurship Increasing

Among the reasons for increased attention to veterans’ entrepreneurship and business ownership plans are the results of a 2003 study, commissioned by the SBA. The study, “Entrepreneurship and Business Ownership in the Veteran Population,” discovered that nearly one-fourth of all veterans in U.S. households either were considering or in the process of buying or starting a new business. Most of these potential business owners (62%) were planning to start a home-based business.

The results of the study also revealed the ambition, determination and optimism of these “vetrepreneurs.” Although the majority of the new veteran entrepreneurs planned to initially locate their business in their homes, more than two-thirds of these prospective home-based business owners planned to soon expand beyond their homes. In addition, nearly three-fourths of them thought they would hire at least one person shortly after starting their businesses.

When compared to all owners of existing businesses, current veteran business owners were less likely to have their business operations entirely in their homes. The study found that only about 39% of the current veteran business owners were entirely home-based, compared to 53% of all small businesses. That percentage was higher for service-disabled veteran-owned businesses, however, with 52% entirely home-based, compared to 38% of veterans with no service-related disability.

One surprising result of the study was that only about 11% of new veteran-owned businesses were likely to be entirely Internet-dependent. The importance of the Internet to both new and existing veteran-owned businesses should not be underestimated and remains critical to their business success. Nearly a third of the new and one-fourth of the existing veteran-owned businesses indicated that their business was 50% or more dependent on the Internet.

Greater Awareness Needed Of Business Assistance Programs

The majority of new, potential, and current veteran business owners were concerned about locating and accessing resources and government programs, obtaining financing, and finding useful and practical public and private small-business assistance programs.

Much of the focus of existing, expanding and new small business programs and assistance aimed at veterans, both government and private sources, is directed toward addressing these concerns. However, finding the sources of funding, training and technical and business assistance may not be easy, especially for those veterans who have not previously owned a business.

Study results revealed that only about 6 percent of current and new veteran business owners said they had used a small business program specifically designed for veterans. A greater number of current and new veteran business owners (22% and 17%, respectively) had used a general small business program, rather than one designed for veterans.

The need for small-business assistance programs continues to grow as an increasing number of veterans become small business owners. The Small Business Administration indicates that veterans represent approximately 9% of the U.S. population, but own 19% of America’s small businesses.

An SBA study of veteran-owned businesses concluded that veterans historically have been at a disadvantage in terms of earnings, despite the benefits of education, training and employment opportunities resulting from military service. Those veterans who most benefited from military experience were those who were able to get education and training they might not have otherwise been able to get. The study suggested that veterans most motivated toward entrepreneurship were those who had trouble either finding jobs or making enough money.

Service-disabled veterans tend to have fewer business ownership skills than veterans without disabilities and also were less likely to have had previous business ownership experience. A large potential market for veteran-specific small business programs exists, but the programs need to be well designed and well advertised. Study results indicated that more than 95 percent of new and current veteran business owners said they would use the veteran-specific small business programs—if they knew about them.

What’s Being Done?

The Small Business Administration is one of the most extensive sources of information for current and potential veteran business owners. In addition to a focus on entrepreneurial training, the SBA recently established a task force to look at more effective and modern ways of making sure that veteran-owned businesses are given special consideration in assistance programs, through SBA and the U.S. Department of Labor’s Office of Veterans’ Employment and Training. Special consideration includes access to vocational rehabilitation services, technical and managerial assistance, and financial assistance; quicker processing of SBA loan applications; and to increase awareness and participation in government contracting opportunities by veteran-owned businesses.

The SBA also established the Advisory Committee on Veterans Business Affairs to review the range of assistance programs available to existing and prospective veteran business owners. The Advisory Committee submits an annual report to Congress and the President on its findings and its recommendations for promoting small businesses owned by veterans.

The Committee’s 2004 Annual Report found that SBA assistance to veteran entrepreneurs has increased by 50% to 100% over the past four years, despite budget cuts and a time of war. However, the Committee calls for a significant increase in dollars allocated to veteran entrepreneurship programs, and the development of a nationwide network of Veteran Business Assistance and Coordination Programs.

The Committee made several other recommendations; current and prospective veteran business owners may want to keep an eye on how quickly and completely these come to pass. Recommendations included:

• Create a national, computer-based based Veterans Entrepreneurial Training (VET) & mentoring system (NetVET) providing self-paced entrepreneurial assessment, training, e-counseling and coordination in support;
  
  
• Create a Special Patriot Loan program for service-disabled veterans, veterans and Reservists to help increase the chances of entrepreneurial success for service-disabled veterans and veterans in federal procurement;
  
  
• Establish specific federal procurement goals for Veteran Owned small Business;
  
  
• Revise the GI Bill so that veterans’ benefits could be used as collateral or equity for SBA loans, business start-up costs and operation expenses and entrepreneurial training;
  
  
• Explore the possibility of creating an SBA Veterans Continuum Loan, similar to the GI Home Loan program;
  
  
• Produce and develop television, radio, and print advertising and posters by SBA, providing information about and promoting programs available to veterans and small businesses;
  
  
• Develop a website linked to the SBA Homepage to guide veteran business owners through the challenges of doing business with the federal government;
  
  
• Simplify the process of entering the federal procurement marketplace for service-disabled veteran-owned and other veteran-owned small businesses; provide incentive payments for these businesses; and restrict or eliminate the practice of bundling contracts, which often serves to eliminate veteran-owned and other small businesses from obtaining government contracts and subcontracts.

What The Future May Hold

Other SBA research has shown that home-based businesses make up a significant proportion of new and current veteran-owned businesses. A need exists for more assistance programs with a focus on the challenges of home-based business ownership.

Also, veteran home-based business owners may want to watch for public and private veteran small business programs that provide assistance on the use and role of the Internet in veteran-owned businesses, since research has shown the Internet to be a strong part of many of these businesses.

Service-disabled veterans may soon see more emphasis on assistance programs aimed at those service-disabled veterans interested in home-business start-ups and the management of existing home-based businesses.

Overall, the majority of veterans have proven to be smart business owners and good entrepreneurs. They bring to business both tangible education and training and intangible qualities they gained from their military experience, including self-discipline, work ethics, teamwork experience, a sense of responsibility, knowledge of decision-making methods and the ability to improvise and adapt. As any successful home-based business owner probably has discovered, these are many of the same qualities needed for success in business.