The US Survey of Business Owners provides important data on the demographics and characteristics of businesses in the nation. It is conducted once every five years, with the last survey conducted in 2012. The Small Business Administration (SBA) used the 2012 data to develop a report on veteran-owned businesses in the US. The data show that veteran-owned firms are a significant component of the economy.
There were 2.52 million veteran-owned businesses in 2012, representing 9.1 percent of all US firms. Veteran-owned firms totaled $1.14 trillion in receipts (3.4 percent of all receipts). The vast majority of them, 82.5 percent, were non-employers. Of those that were employers, they accounted for 5.03 million workers and annual payroll of $195 billion. While employer firms were a relatively small portion of all veteran-owned firms, they accounted for almost 92 percent of all receipts generated by veteran-owned firms. Additionally, most veteran-owned employer firms were very small, the majority having fewer than 20 employees (80.6 percent). The breakdown of industries is provided in the chart below.
Veteran-owned employer firms provided about the same level of benefits as businesses overall, including health insurance contributions (40.4 percent of veteran-owned firms), retirement plan contributions (21.9 percent), profit-sharing options (6 percent), paid time off (49.7 percent—slightly higher than 46.5 percent of all employers), and tuition assistance/reimbursement (4.4 percent).
In terms of demographics, the majority of veteran owned firms are owned by white, non-Hispanic men. Women-owned veteran firms accounted for 15.2 percent, while minority-owned firms accounted for 20.6 percent. Among minority-owned firms, African Americans accounted for 10.7 percent, Hispanics for 7 percent, Asian Americans for 2.1 percent, American Indians or Alaska Natives for 1.3 percent, Native Hawaiian or Pacific Islander for 0.3 percent, and others for 2.2 percent.
Veteran-owned firms tended to be older than the average, with 74 percent aged 55 and over (compared to 41 percent of all businesses). They were also more likely to be more experienced, with 42.4 percent of veteran owners reporting previous experience compared to 35.7 percent of all owners.
California, Texas, Florida, New York, and Pennsylvania ranked at the top for both the number of veteran-owned firms and veteran-owned firm sales. North Carolina ranks 8th for both the number of veteran-owned firms and sales, with 86,571 firms totaling $36.9 billion in sales. Interestingly, North Carolina bumps down to 13th when it comes to percentage of veteran-owned firms in the state and 10th for percentage of veteran-owned firms’ sales.
For both start-up and expansion capital, the largest source used by veteran-owned firms was personal or family savings. For startup capital other than personal savings, veteran-owned firms turned to either loans from banks or other commercial lenders (7.8 percent) or personal credit cards (7.5 percent). For expansion capital, other than personal savings, 5.5 percent of veteran owned firms used business profits and/or assets, while 4.5 percent used personal and business credit cards.
A majority of veteran-owned firms also report using very small amounts of startup capital, with the largest percentage (34.1) requiring less than $5,000. Just over half of firms (51.4 percent) required less than $50,000. Veteran-owned firms with employees appear to have slightly larger capital needs, compared to firms without employers, but still about half of firms in both categories remained under $50,000.
Entrepreneurship is strong among veterans. 22 percent of veterans were starting a business or considering it, and military service was reported as contributing significantly to the business skills of current and prospective business owners. The report notes that military experience is a stronger predictor of self-employment than graduate education, and that veterans in the private sector are 45 percent more likely to be self-employed than non-veterans, particularly those with four or fewer years of service. Military experience also seems to contribute to higher household incomes, as veteran households with small businesses had higher incomes than non-veteran small business households.
All in all, veteran-owned businesses are important in our national and state economies, not just for the income and jobs that they generate, but because self-employment represents an economic opportunity for veterans and their households. The data on sources of capital is particularly useful. As shown, most veteran-owned businesses do not require large investments in order to startup or acquire a business. If these business owners could rely more on safe financial products, such as those offered by CDFIs, rather than relying on personal savings, their financial position and business success could be improved in the long-term. Making a small investment in a veteran-owned business could yield a significant return for the business owner, CDFIs, and our economy.