Veteran entrepreneurs run businesses that last, and employ 5.8 million people nationwide — but they’re on the decline.
Delivering the keynote address at the 11th Annual Veterans Small Business Conference, Jessica Fialkovich, president of Transworld Business Advisors, talked about “alarming trends” in veteran entrepreneurship and how to turn them around.
Fialkovich said veterans have a long history of venturing into entrepreneurship — more than 50 percent of WWII veterans and more than 40 percent of Korean War veterans started businesses after their service.
Today 2.52 million businesses are owned by veterans, accounting for $1.14 trillion in gross revenue. And, Fialkovich said, veteran-owned businesses are less likely to fail.
“Starting a business is very hard and sustaining a business is even harder,” she said. “Less than 10 percent of businesses that are started actually make it to their 10th anniversary — but research shows us that veteran-owned businesses survive longer. And women veteran-owned businesses are one of the fastest growing segments. They grew 4 times faster than traditional businesses between 2007 and 2012.”
Veteran-owned businesses are also 30 percent more likely to create jobs for returning military members.
“But we have some alarming trends in the future,” Fialkovich said. “Recent research shows us that since 9/11 only 4.5 percent of returning military members choose entrepreneurship as a career.”
It’s been trending downward every year — 12.3 percent in 1996, compared with 5.6 percent in 2014 and 4.5 percent in 2016.
The total number of new veteran entrepreneurs since 2001 is just 162,000.
That’s a problem, Fialkovich said, because there aren’t enough entrepreneurs waiting in the wings to take over the wave of businesses that will need new owners when Baby Boomer veteran entrepreneurs retire.
Baby Boomers own about 50 percent of small businesses in the veteran community, and 74 percent of all veteran-owned businesses are owned by those aged 55 or older.
“At some point those people want to retire — might be tomorrow, might be in 10 years, but at some point they will,” she said. “And what we have is a massive gap. The total businesses to transition over the next 5-15 years is 1.86 million and with only 162,000 new entrepreneurs since 2001.”
Without enough entrepreneurs to take the reins of transitioning businesses, 4.3 million jobs could be at stake, Fialkovich said.
She said the decline in veteran entrepreneurship can be explained by three general trends:
- Startup financing for a new business is hard to get.
- Jobs are plentiful, and perceived as more stable than entrepreneurship.
- Industry changes like technology and global markets make starting a business more complex than ever before.
But the gap created by retiring Baby Boomer entrepreneurs is also an opportunity, and could be part of the solution.
“Baby boomers ready to transition are going to give ample opportunities [for veterans] to purchase both profitable businesses and businesses that are ripe for a turnaround,” Fialkovich said. “Capital for acquisitions, unlike capital for a startup, is more accessible than ever, and the SBA has some great programs for acquisition financing for businesses. … And government contracts are favorable for vets, women and minorities. All the trends are set up to help the transition and to support small business in Colorado and the United States.
“There’s never been a better time in history to be an entrepreneur,” she added. “The barriers to entry are very low and our resources are at an all-time high.”
Fialkovich’s advice for everyone else: “If you’re not an entrepreneur, support entrepreneurs and support small businesses. You can invest in a small business. You can coach a small business owner. You can volunteer at an nonprofit or an organization like the SBDC that supports entrepreneurs and business owners. … And at the very least, shop every day at small businesses and veteran-owned businesses in your community.”
Hosted by the Colorado Small Business Development Center, the Veterans Small Business Conference focuses on business training and support for veteran entrepreneurs looking to start or grow a business.