Strict discipline, an unparalleled world perspective and focused problem-solving tactics: These are a few of the skills that make veterans ideal entrepreneurs. Unfortunately, too few them are putting those skills to use in the business world.
Despite generous federal incentives, fewer veterans are launching their own businesses than in earlier decades. According to a study by the Kauffman Foundation, the figure has dropped significantly since 1996 when one in eight small businesses were started by veterans. Last year only one in 20 small businesses were veteran-owned. The foundation's Index of Entrepreneurial Activity also shows that the veteran startup rate is declining faster than the startup rate for the general population.
The U.S. Small Business Administration is eager to reverse this trend and encourage more veterans to become entrepreneurs. Earlier this month, to coincide with Veterans' Day, the SBA launched the Veterans Small Business Week, an initiative to highlight veteran-owned businesses. There was even a Shark Tank episode that aired that week dedicated solely to business investment pitches from military veterans.
While meeting Mark Cuban is nice, there are more practical incentives to veterans looking to go into business for themselves. In 2013 the SBA offered $1.86 billion in loans to over 3,000 veteran-owned small businesses. Furthermore, the Veterans Entrepreneurship and Small Business Development Act has earmarked approximately $11 billion to government contractors owned by service-disabled veterans. But because not enough veterans are tapping into these funds, federal agencies have reportedly given these designated contracts to non-veteran-owned contractors.
This decline in the veteran startup rate may be due to a demographic and generational shift. Six million veterans will enter retirement age within the next 15 years, and there are far fewer veterans returning from the more recent wars in Iraq and Afghanistan. This means greater opportunities for those former service members looking to start or expand a business, especially one that contracts with the federal government.
More available funding and less competition is a formula that would sound pretty good to most would-be entrepreneurs. The first step to accessing these funds and contracts is to get certified as a veteran-owned business.