by Misty Stutsman
For generations, American Veterans have played a crucial role in the stability and growth of the private sector economy. Armed with the unique knowledge and real-world experience that can only come from military service, some of our most iconic U.S. businesses and brands were started by veteran entrepreneurs.
Nike? Co-founded by Army Veteran Bill Bowerman.
Walmart? Co-founded by Army Veteran Sam Walton.
GoDaddy and FedEx were founded by Marines, Bob Parsons and Fred Smith, respectively.
These are just a few examples, and while these incredible accomplishments may garner a lion’s share of headlines, it’s small veteran-owned businesses that help drive our economy. Today, 2.5 million small businesses in the U.S. are owned by Veterans. They employ 5.5 million people and bring in $1.2 trillion in revenue. However, we’ve witnessed a slow but steady downturn in veteran entrepreneurship; a dangerous trend not just for those transitioning from active duty, but for our nation’s economy as a whole.
Here’s a sobering statistic: while 26 percent of Veterans want to start businesses, only 6 percent do. Why? Because the single most important factor in launching—or later expanding—a business is the very thing Veterans are increasingly shut out from: access to financing and capital. The number of Veteran business owners has declined steadily since WWII (in 1945, 49 percent of all returning World War II Veterans went on to own or operate a business), and difficulty financing a start-up in today’s economy may continue that decline.
Starting Small, Thinking Big
The rebirth of veteran entrepreneurship is likely going to start small. When Bowerman and a partner started the business that would become Nike, they each put up $500 of their own money. Some, but not all, businesses today can be launched on a $1,000 investment (23.7 percent of veteran-owned businesses require no capital to start). But Veterans often lack the access to capital to invest in or expand their businesses.
Walton purchased his first store after leaving military service with $25,000 ($20,000 of it borrowed from his father-in-law). That’s about $161,000 in today’s dollars. Access to family funds of that magnitude aren’t an option for most individuals in our country, military or not. And, while 30 percent of veteran businesses start up on less than $5,000, and just over 50 percent of those businesses require up to $25,000, even those figures can be out of reach without putting Veterans (and most other entrepreneurs starting out) in a negative financial position.
When turned away by banks for traditional funding, often Veterans are uninformed about their best options and what they need to do to prepare for long term success which can leave them with a questionable landscape of alternative financial avenues. Online lenders and crowdsourcing are heavily marketed as solution, but can be a poor option for Vets who are targeted by misleading financing terms and sometimes predatory practices.
In our recent study at Institute for Veterans and Military Families, Operation Vetrepreneurship: Tracking Aspirations, Barriers, and New Ventures, we travelled the country, collaborating with Bunker Labs to meet with Veterans and military-connected entrepreneurs to hear what they had to say about the challenges and rewards of small business ownership. It is one of the most in-depth studies to date on vetrepreneurship and Veterans from city to city responded candidly with enthusiasm and real-life wisdom about their successes, failures, needs and wishes as small business owners. Here are some highlights:
When asked why they went into business for themselves, common motivations were:
- Dissatisfaction in the civilian workforce
- Recognizing business opportunities
- Financial and personal independence
- Work-life balance and flexibility
What topped the list of resources vetrepreneurs said would help them be successful? Finance again:
- Money management
- Communication tactics (which can build)
- Stress management (stress often caused by issues around paying bills, keeping up with payroll for those with employees)
The number two and three items on this list loosely tie back to finances too. Communication tactics would help build or expand a customer base that brings in revenue and stress management is often challenged by cash flow issues—overdue bills, lack of money for payroll, juggling lines of credit—that many small business owners face regularly.
The Search for Solutions
There are better financing options to online loans, draining retirement funds and re-mortgaging family homes; as well as other programs and resources to help safely get your business off the ground. An extensive list of national and regional entrepreneur training, mentorship and other resources for Veterans are included in this link to the study’s report: Bridging the Gap: Motivations, Challenges, and Successes of Veteran Entrepreneurs.
Some tips for new and aspiring veteran business owners to get you started:
- Do your research on what is available and which resources best address your business needs.
- Take advantage of resources available to Veterans and entrepreneurs, including financial literacy, mentoring, and programming. IVMF’s guide, Access to Capital: Be Prepared to Secure Additional Support for Your Company, is a great resource.
- Discuss financial goals with a financial expert and outline personal and business financial goals.
- Expand your networks. Attend events, industry specific and otherwise, to expand your network and make valuable connections.
And when you’ve established yourself, pay it forward! Mentor or share advice and resources that have worked for you with other aspiring and current veteran entrepreneurs.
Taking that First Step
Choosing the path of entrepreneurship may be daunting. But if there is anything that unites Veterans at their core, it’s the desire to face a challenge and take it on. Entrepreneurship is an important alternative to the limited employment options Veterans can face upon leaving their active duty roles. Keeping the entrepreneurial spirit alive and well is key to the financial and mental health of our Vets.
If you or someone you know is weighing options for their life after active duty, the studies noted above are a good starting place. Follow your dreams. Build your own empire. Simply follow the words that Bill Bowerman inspired: Just Do It (but arm yourself with the best tools and weapons when you do)!
About the author:
Misty Stutsman is the Director of the Entrepreneurship and Small Business portfolio at the Institute for Veterans and Military Families (IVMF) at Syracuse University. In this role she is charged with building the Center of Excellence for Veteran Entrepreneurship as well as the Coalition for Veteran Owned Business. In addition, she oversees a broad portfolio of nearly a dozen programs and projects that advance and promote veteran entrepreneurship nationwide through research, resources, supply chain opportunities and tools as well as training and program development. She graduated with a bachelor’s degree in Marketing and International Business and a Masters of Business Administration, both from Oklahoma State University.