After supporting the American dream of freedom and prosperity through military service, millions of veterans choose to be their own boss and start a small business. It’s a good match, because soldiers’ skills are similar to those of successful entrepreneurs: their determination, willingness to take risks, and ability to handle stressful situations translate well to life as a business owner.
Like any new small business, most need some help to get started. Fittingly, there are many resources and benefits available specifically to help America’s veterans do that.
Read on for an overview of the veteran-owned business landscape, marketing opportunities, a breakdown of how to bid for government contracts, and other supports like educational programs, loans, and financing options for veteran-owned businesses.
By the Numbers: Veteran-Owned Businesses
Veteran-owned small businesses are an important part of the American economy. According to the latest U.S. Census data, veteran-owned businesses make up 7.5 percent of the country’s 5.4 million businesses with employees. And roughly 2.5 million veteran-owned businesses produce over $1.2 trillion in annual sales, have annual payroll of over $200 billion, and employ nearly six million people.
In 1999, the federal government passed the Veterans Entrepreneurship and Small Business Development Act. This legislation acknowledged that the United States had done too little to assist veterans who wanted to start and grow small businesses following their military service.
The legislation also set a goal that 3 percent or more of all federal contract dollars be awarded to service-disabled veteran-owned businesses (SDVOBs). This adds up to big money: In 2015, the federal government spent $13.8 billion, or nearly 4 percent of federal contracting dollars, with SDVOBs.
California, Texas, Florida, New York, and Georgia have the most veteran-owned companies, but state governments vary in their commitments to veteran-owned businesses (though most have some sort of preference, or set-aside legislation).
Most veteran-owned businesses are small businesses employing fewer than 15 people, and veterans are more likely than non-veterans to be business owners (13.2 percent of veterans are self-employed, compared to 12.3 percent of non-veterans).
Related: Military Service Creates Solid Business Owners
Veteran-Owned Business Defined
While a veteran-owned business sounds self-explanatory (and in general terms, it is), when it comes to the government’s formal definitions and guidelines for government contract eligibility through the U.S. Department of Veterans Affairs (VA), the rules are very specific.
There are two categories: Veteran-Owned Small Business (VOSB), and Service-Disabled Veteran-Owned Small Businesses (SDVOSB). To qualify as a VOSB, you must own at least 51 percent of your company and be responsible for management of day-to-day operations and strategic decisions. You’ll also need a Department of Defense Form 214 to verify veteran status. To qualify as a SDVOSB, you’ll need a disability status letter from the VA Benefits Office confirming your status as service-disabled.
Use the VA’s Office of Small & Disadvantaged Business Utilization website to register and verify your business. A quick list of resources is also available for preparing to do business with the VA, including procurement readiness, corporate partnerships, and veteran franchising opportunities. Government contracting advice is also available from the U.S. Small Business Association (SBA).
Aside from being able to bid on government contracts, registration has other benefits, like potential tax relief, improved access to capital (more on this below), counseling, start-up support, and displaying the SDVOSB or VOSB logo, which shows customers that your business is veteran-owned.
While the bidding for government contracts can be attractive, many businesses aren’t big enough to contend, or simply choose not to, because being a veteran and owning a business has several other inherent advantages.
Related: Is Your State Vetrepeneur Friendly?
Veteran-Focused Resources & Financing
All new businesses need help at some point to get started, and there are several resources and financing options available specifically to help those that served.
The SBA’s Boots to Business is a free education and training program for service members seeking to become entrepreneurs. The two-day course is taught at over 165 military installations worldwide, and active duty military members as well as their partners and spouses are eligible.
For veterans looking for help with financing a new business, a Patriot Express loan can mean a much faster path to ownership. They get former military personnel up and running quickly with business loans specifically for veterans.
The emphasis here is the speed at which veterans can find financing at competitive rates to get off the ground, compared to regular business owners. SBA-approved lenders give preference for helping veterans, but like any business loan, it’s important to be prepared with collateral, proper financial records, a solid business plan, and an understanding of what the loan can and can’t be used for.
Patriot Express loans cap at $500,000, and funds can be used for operational expenses, to purchase inventory, or for short-term working capital. For a full list of resources for veteran-owned businesses, including the Patriot Express program, visit the SBA’s VOB site or contact the Veteran’s Business Outreach Center.
Related: Best Small-Business Loans for Veterans 2017
Veteran-Owned Business Advantages
In addition to an edge in winning government contracts, veteran-owned business have an edge winning business from large corporations and the average American consumer.
Veterans defended our nation’s freedoms and prosperity by serving in the armed forces, and then made the choice to start their own business following their service. It should come as no surprise that America wants to buy from veterans, and the numbers back this up.
According to the National Veteran-Owned Business Association (NaVOBA), almost 15 percent of FORTUNE® 1000 companies aim to include veteran-owned businesses in their supply chains as part of their supplier diversity programs.
Related: Checklist for Corporate Contracting
Studies also show that 70 percent of Americans would rather buy from a veteran-owned business than from one that is not. Veteran-owned business can also be listed in NaVOBA’s VetBiz Directory, a database that highlights new businesses and allows visitors to search by location and a wide array of industries and sectors.
Supporting the entrepreneurial dreams of America’s veterans has also been part of the National Federation of Independent Business’ (NFIB) mission since its founding in 1943. Wilson Harder, NFIB’s founder, knew that soldiers returning from Europe and the Pacific had the drive and determination that would help them find success in business.
NFIB defends the right of small business owners to own and operate their businesses without undue government interference. Many NFIB state offices work directly with local and state representatives to offer veteran-owned business decals to recognize the men and women who served our country and own businesses in local communities, and offer a wide variety of member-exclusive benefits, business products, and services.
Related: Learn More About NFIB in Your State
For more information on how the NFIB promotes and protects the rights of more than 325,000 members to run their businesses, find your local NFIB or learn more about NFIB membership perks and savings.
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