Veterans make up a big part of the nation's business sector. In 2007, nearly 10 percent of businesses — 3.7 million — were owned by veterans, according to the Small Business Administration.
A study conducted for the SBA released in 2015 found that from 1989 to 2013 — a period marked by economic extremes, including the Great Recession — veterans who were small-business owners did financially better than veterans who didn't own a small business.
We asked Matt Sherwood, a veteran and executive director since 2009 of VetBizCentral in Flint, Mich., to fill us in on the qualities veterans bring to the table that make them a success. Sherwood works with veterans from Michigan, Ohio and Indiana. VetBizCentral is one of 15 Veterans Business Outreach Centers located throughout the United States. Here's what he had to say:
Do the results of the SBA survey surprise you?
No. The success rate for veteran startup businesses is higher than for nonveterans.
What qualities do veterans bring to running a small business that explains their success rate?
You can trace it back to the skill sets and traits instilled in them during their time in the military. These include tenacity, discipline, dedication to the mission, selflessness and the ability to adapt and overcome. You can call it a "never say die" attitude. In addition, veterans are well-motivated and well-acquainted with working in a team environment. Some veterans are familiar with running a small business from watching their mom or dad, but many aren't.
Many veterans have an unshakable belief in a higher purpose. They're risk takers, they take initiative and they're determined. Without those, you won't be a veteran entrepreneur.
Franchises are taking off and becoming more popular with veterans. Many offer significant discount rates to veterans. Again, the skill sets and traits they learned in the military are of great help. With a franchise, the veteran works with a checklist; you're given the recipe, and you make the cake. That meshes well — we like to work with checklists. Give us a checklist, and we'll make it happen.
This is a business model that correlates well with veterans. It provides great structure for putting a business together. The rudimentary business elements like marketing, advertising and human resources that a new startup would have to do on their own are already covered with a franchise. Our centers offer good due diligence to help them understand the franchisee's requirements.
What do you think about the information available to veterans who want to start a small business?
There are tremendous resources available, including specialized SBA assistance and business development and entrepreneurship programs such as Operation Boots to Business. With our program under the SBA, vets have a great learning center where they can take online tutorials, learn how to write a business plan, and prepare for financing — which is critically important. We connect them with resources in their backyard. Most will need some "hand holding" and face-to-face counseling. We also provide mentorships. There's camaraderie among vets. It means they're often willing to help a new business owner become successful.
Are there unique challenges facing a veteran just out of the military?
For individuals starting a business, the biggest challenge is access to capital. The SBA Veterans Advantage loan is available, and we talk to them about that.
We also talk about realistic expectations when it's time to access capital. Most small businesses start with $1,000 or less. If you're planning to start a business with a need for $250,000 with no experience, it's unlikely to occur.
I don't sugarcoat it. There's no entitlement to get a loan because you're a vet. It's important we talk to them about the financial lay of the land. Those with marginal credit can look into an unsecured business loan, but the interest rate will be higher. If a low credit score is an issue, we can help the individual improve it.
Do vets realize the importance of business insurance?
Yes. They understand that business risk should be considered and covered from the start. When we have an initial feasibility meeting, we stress that they need a professional team, and an insurance agent should be a member. They know from their military training that they're going to need to conduct upfront research and do their "due diligence." This applies to their need for business insurance coverage.
What can the rest of us learn from these small-business owners and "vetpreneurs"?
Passion. That's the most important aspect of starting a business. You've gotta have it. It has to be something that gets you out of bed each day; that drives and motivates you to get your business up and running and sustained. I think that's why the success rate for veterans in small business is higher than for nonveterans.