A new veterans survey shows that veterans starting their own business face significant barriers to entry – especially when it comes to raising capital, understanding regulations, and accessing help – but veterans continue to successfully start and grow businesses.
The survey, conducted by the Institute for Veterans and Military Families (IVMF) at Syracuse University in 2020, received responses from approximately 2,500 U.S. military entrepreneurs in the U.S. to gain an understanding of trends in activities, needs, and barriers for military businessmen to win .
Since 2020 was the first year the survey was conducted, this information is a knowledge base regarding the veteran entrepreneurship community. Future surveys conducted annually can track changes in the data.
IVMF officials said they hope to use the data to educate public and private executives, as well as future seasoned entrepreneurs, about the condition of a seasoned business owner and how centers like IVMF can help.
U.S. Army Reserve Sgt.Bryan Herrera cuts the sides and behind the ears of a customer with an electric hair clipper at his store in Richmond, Virginia. Herrera balances a career as a sergeant in the Army Reserve with a full-time career as a hairdresser and business owner. (US Army / Spc.Eric Zedalis)
Veterans are geared towards entrepreneurship
With 44% of respondents expressing difficulty transitioning into civilian life, entrepreneurship makes sense as an entry point. 53% said they had no idea what they wanted to do as civilians. Some of the issues they have faced have been socialization with civil culture, the loss of the military community, and a sense of purpose – all of these are challenges that can be addressed in creating the culture of a new business.
Respondents cited some traits that helped them find their own boss. These veterans say that military-taught skills and attributes such as discipline, work ethic, leadership and management skills, and perseverance helped them get their business off the ground.
94 percent of respondents said they don’t give up when faced with difficulties, and another 83 percent say they use creativity to solve problems in these difficult situations. 79 percent of those surveyed stated that they worked consistently on overcoming obstacles.
Veterans also gave the reason they wanted to start their own businesses after finishing the military. The ability to make decisions on your own, the idea of creating something new, and the goal of financial independence and increased income were the main reasons for joining.
They also expressed an interest in adding a community-based component to their business models, consistent with the responsibility 70% of veterans feel towards their communities.
Overcoming barriers to entrepreneurship
The main problem for aspiring entrepreneurs is the same that all entrepreneurs face: lack of access to capital. Businesses need money to get going, and that’s just the beginning.
In addition to this lack of access, there is a lack of knowledge and experience. Many veterans simply don’t know all of the details they need to get started or how to raise money and manage financial problems, such as the economic conditions created by the COVID-19 pandemic.
There’s a lot of help out there for veterans – including public and private loans, and grants from nonprofits – but 34% say they’ve been turned down for loans. And that prevented the majority of aspiring entrepreneurs from applying again later.
When it comes to bureaucracy, there are substantial legal and professional fees involved in starting a business. While it is possible to pay a consultant or law firm to sort out the details, the lack of entry fees often makes this an impossible path. Some companies don’t understand the legal issues, including the certifications and regulations governing their work.
This lack of legal and financial experience could be remedied with the help of a good mentor, but 22% of entrepreneurs said they had problems finding one. Another 47% said they found local incubators or nonprofits that could help with another path.
Camp Zama helps entrepreneurs start private businesses. Jo Messerle, owner of DustBusters cleaning service, cleans the house of a moving soldier in Camp Zama, Japan. (US Army)
It’s not as bleak as it sounds
Listing the problems experienced business owners face can make the situation seem worse than it actually could be. Even in the market conditions created by the pandemic, there was success: 28% of new veteran companies did not have to raise seed money for their efforts. Of those who did, 59% needed less than $ 25,000, and 60% were able to get the funds they needed to get started in 2019.
Existing military-affiliated companies were also able to raise funds even if the amount needed was more than $ 25,000. 41% of them were able to expand their business with these funds.
Others who wanted to get started or grow but couldn’t raise seed capital still did so, either through their savings or through the use of credit cards. Any business owner reading this should be aware of the interest rates incurred on credit card debt: 66% of corporate debt incurred on credit pays an interest rate greater than 10%. That can add up over time.
Seventy percent of respondents also got help from their friends and family to get started. And while many of them were unaware of the federal, local, public and private programs and resources available to seasoned entrepreneurs, more than half of those surveyed knew about it. These are programs that offer financial resources, education, and even networking and mentoring opportunities.
In addition to the US Small Business Administration (SBA) and Community Development Financial Institutions loans and programs, there are numerous small business accelerator programs and incubators that are geared towards the veteran community and can provide education and small loans.
Mentoring and networking, while harder to find, are not impossible. Local colleges and universities often have educational programs for new entrepreneurs, and like-minded people can always be found there. Veterans in particular have access to nationally or regionally funded education and networking programs, either through nonprofits or through veterans service organizations.
– Blake Stilwell can be reached at [email protected] He can also be found on Twitter @blakestilwell or on Facebook.
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