By Spring 2018 M-VETS Student-Advisor David A.L. Brown
For many recruits to the U.S. military, one of the principal motivations for serving is the promise of success in a post-military career. We’ve heard from commercials, pamphlets, professional conferences, and in countless anecdotes that the military builds the character and skills necessary to be successful leaders in business.[1] Several Fortune 500 companies boast military veterans as CEOs, founders, or presidents—including Nike’s Phil Knight, FedEx’s Frederick Smith, Verizon’s Lowell McAdam, and Johnson & Johnson’s Alex Gorsky.[2] However, even after accounting for the country’s decreasing percentage of military veterans since World War II, Post-9/11 veterans appear to be starting fewer businesses than their counterparts in previous generations.
A recent article in Slate claims that nearly half of America’s World War II veterans “went on to own or operate” their own businesses, citing a 2013 study conducted by the Institute for Veterans and Military Families (IVMF) at Syracuse University.[3] According to the same study, over 40% of veterans of the Korean War became entrepreneurs following their separation from military service.[4] However, despite Post-9/11 conflicts representing the longest continuous period of military conflict in American history—including two simultaneous wars, for a combined 25 years of occupation—veterans of the Post-9/11 era are the least likely to own or operate their own businesses. Today, only 4.5% of Post-9/11 veterans are “self-employed,” according to the U.S. Bureau of Labor Statistics.[5]
Some suggested causes for this steep decline include the decline of the U.S. manufacturing industry, as military leaders often transitioned into plant foremen or assembly line supervisors while they accrued the skills necessary to start their own businesses. Others point to the decline in small retail businesses (commonly known as ‘Mom & Pop Shops”) in favor of ‘big box’ corporate retailers. Another answer lies in the increasing divide between professional military skills and the rapidly-advancing state of corporate technology, leaving veterans trained by the military in fields from logistics to office administration to medical trauma response at a disadvantage compared to civilian counterparts more experienced with the software, hardware, and tools employed in the private sector.
Most significantly, however, start-up costs for a new business today appear to be substantially higher than they were for a veteran leaving the service in generations past, given disproportionate increases in the prices of everything from real estate to motor vehicles to business insurance compared to the buying power of the U.S. dollar in previous generations. According the U.S. Department of Commerce’s Minority Business Development Agency, the average cost of a new start-up in 2009 was estimated at “just over $30,000.”[6] Adjusted for inflation, $3,577.75 in 1960 had the equivalent buying power of $30,000 today,[7] in an economy where the median house cost less than $12,000; meanwhile, the median cost of an American home today is approximately $200,000.[8] Furthermore, World War II- through Vietnam-era veterans enjoyed a G.I. Bill which included fixed-rate low-interest loans for small business start-ups, a feature prominently missing from the 1984 Montgomery and Post-9/11 G.I. Bills.
Post-9/11-era veterans interested in starting their own businesses must know how to generate this start-up capital in order to be successful in a world where their dollars simply don’t go the distance that previous generations enjoyed. Fortunately, one little-known arm of the federal government can act as a one-stop shop for veteran entrepreneurs: the U.S. Small Business Administration (SBA).
The U.S. Small Business Administration offers several programs designed to enable veterans to own and operate their own businesses. Through its Express Loan Program, the SBA guarantees private loans up to $350,000 for entrepreneurs who cannot secure funding elsewhere, protecting private lenders from default while enabling new entrepreneurs to secure funding for their business start-ups, in exchange for a guaranty fee dependent on the size of the loan itself. Veterans may also take advantage of the SBA Veterans Advantage Program, which reduces or negates guaranty fees for loans secured through the SBA for businesses that are at least 51% veteran-owned.
The SBA also operates sixteen Veterans Business Outreach Centers (VBOCs), which offer assistance to veteran entrepreneurs in the form of free business counseling services. SBA also offers the Boots to Business program, located on military installations as part of the DoD’s Transition Assistance Program. Boots to Business offers classroom-style training in entrepreneurial basics such as market research, business fundamentals, and revenue recording and reporting. Women veterans may also take advantage of special partnership programs in which the SBA participates, including the Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE) training program at Syracuse University’s Institute for Veterans and Military Families. V-WISE includes business training, mentorship, and offers membership in a supporting network of professionals and fellow entrepreneurs personally and professionally invested in the success of women veteran-owned business start-ups.
Since the removal of fixed-rate business loans from the G.I. Bill, the U.S. Small Business Administration has supplanted the Department of Veterans Affairs in providing critical start-up assistance to veteran-owned businesses, and should be the first stop for any would-be veteran entrepreneur. Further information on business assistance through the SBA can be found here: https://www.sba.gov/business-guide/grow-your-business/veteran-owned-businesses.
[1] See, e.g., Chris Gosselin, Why America’s Veterans Make the Best Entrepreneurs, Fortune.com (Nov. 11, 2016), available at http://fortune.com/2016/11/11/veterans-day-leadership-ceo/ (last visited May 18, 2018).
[2] See, e.g., Alex Lockie, 15 Fortune 500 CEOs Who Got Their Start in the Military, Business Insider (Aug. 26, 2015), available at http://www.businessinsider.com/15-fortune-500-ceos-who-got-their-start-in-the-military-2015-8 (last visited May 17, 2018).
[3] Kimberly Weisul, Half of World War II’s Veterans Started Businesses. Less than 5 Percent of Today’s Veterans Do., Slate.com (Oct. 4, 2016), available at http://www.slate.com/blogs/moneybox/2016/10/10/fewer_veterans_are_becoming_entrepreneurs_a_lot_fewer.html (last visited May 18, 2018).
[4] See Veteran Entrepreneur Fact Sheet, Bunker Labs, available at https://bunkerlabs.org/wp-content/uploads/2016/11/Veteran-Entrepreneurship-Fact-Sheet_Nov-27-2016.pdf (last visited May 18, 2018).
[5] Steven F. Hipple & Laurel A. Hammond, Self-Employment in the United States, U.S. Bureau of Labor Statistics (Mar. 2016) p. 10, available at https://www.bls.gov/spotlight/2016/self-employment-in-the-united-states/pdf/self-employment-in-the-united-states.pdf (last visited May 18, 2018).
[6] Minority Business Development Agency, How to Estimate the Cost of Starting a Business from Scratch, U.S. Dep’t. of Commerce (Nov. 25, 2011), available at https://www.mbda.gov/news/blog/2011/11/how-estimate-cost-starting-business-scratch(last visited May 18, 2018).
[7] Value generated using the inflation calculator at DollarTimes.com, available at https://www.dollartimes.com/inflation/inflation.php?amount=3577.75&year=1960 (last visited May 18, 2018).
[8] Emmie Martin, Here’s How Much Housing Prices Have Skyrocketed Over the Last 50 Years, CNBC.com (Jun. 23, 2017), available at https://www.cnbc.com/2017/06/23/how-much-housing-prices-have-risen-since-1940.html (last visited May 18, 2018).