No. 242

November 2004

SMALL BUSINESS

RESEARCH

SUMMARY

Entrepreneurship and Business Ownership

In the Veteran Population 

by Waldman Associates, Arlington, VA

under contract no. SBAHQ-00-R-0029 (2004, 82 pages)

This Small Business Research Summary (ISSN 1076-8904) summarizes one of a series of research papers prepared under contracts

issued by the U.S. Small Business Administration’s Office of Advocacy. The opinions and recommendations of the authors of this study do

not necessarily reflect official policies of the SBA or other agencies of the U.S. government. For more information, write to the Office of

Advocacy at 409 Third Street S.W., Washington, DC 20416, or visit the office’s Internet site at www.sba.gov/advo.

Purpose

In recent years, increasing attention has been called

to the entrepreneurial needs of America’s veterans,

particularly those veterans who have service-connected

disabilities. Section 702 of P.L. 106-50 tasked the

Office of Advocacy to develop information on the use

of programs to assist small businesses owned and

controlled by veterans and service-disabled veterans.

This study addresses these and other questions:

• What is the current state of programs for veterans

and/or service-disabled veterans who wish to start a

small business or who currently own or operate a

small business?

• What is the level of entrepreneurship interest and

activity in the veteran population?

• What are the characteristics of businesses that

veterans own or wish to start?

• What obstacles do veterans encounter in starting

or managing a small business?

New data on these questions can guide policymakers on the types of assistance and the rational level of

resources to commit to veteran entrepreneurship programs and activities.

Overall Findings

• An investment in small business programs for

veterans and service-disabled veterans is economically rational. 

• The great majority of both “new veteran entrepreneurs” and current veteran business owners either

started or were planning to start their own businesses

rather than purchase existing concerns.

• More than one-third of both new veteran entrepreneurs and current veteran business owners had

gained skills from their active duty service that were

directly relevant to business ownership.

• Prior business ownership and employment experience had a positive impact on an even higher percentage of both new veteran entrepreneurs and current

veteran business owners than did military experience.

• A focus on addressing the challenges of home

business ownership and Internet use in the business

would be useful to veterans.

• Service-disabled veterans tended to have less

prior business ownership experience than veterans

without such disabilities.

Highlights

• About 22 percent of veterans in the U.S. household population were either purchasing or starting a

new business or considering purchasing or starting one.

• Almost 72 percent of these new veteran entrepreneurs planned to employ at least one person at the

outset of their new venture.

• Of new veteran entrepreneurs, 62 percent

planned to initially locate their business entirely in

their home; more than 67 percent planned to expand

beyond their residence in the near future.

• Almost 39 percent of current veteran business

owners were entirely home-based. Of these, nearly
36 percent planned to expand outside of their home

in the future.

• A greater proportion of service-disabled business

owners were home-based than veteran owners who

were not service-disabled (52 versus 38 percent).

• Eleven percent of new veteran entrepreneurs

planned to be entirely Internet-dependent, while 32

percent said their business would be 50 percent or

more Internet-dependent.

• Almost 23 percent of current veteran business

owners said that their concern was 50 percent or

more Internet-dependent.

• Military service appeared to have provided a significant proportion of both new veteran entrepreneurs

and current veteran business owners with necessary

business skills.

• A higher proportion of service-disabled veterans

than of veterans without such disabilities (52 versus

37 percent) benefited from technological training during active duty that was later of use in their business.

• Difficulty in obtaining financing and access to

useful small business programs were high on the list

of problems of both new veteran entrepreneurs and

current business owners.

• A greater proportion of service-disabled veteran

business owners had used veteran-specific small

business programs (16.7 percent) than had veterans

without service-connected disabilities (5.1 percent).

Scope and Methodology

This project relies on a telephone survey of samples

from two veteran populations: 1) a residential population of veterans who began their active duty service

after the Korean War period, and 2) a population of

veteran business owners from all conflicts and peacetime periods. Veterans in the residential population

were screened for current business start-up activity

or interest. Those with such activity or interest are

referred to as new veteran entrepreneurs. Both populations were screened for service-connected disability status. 

Pursuant to the Paperwork Reduction Act,

approval to conduct this survey was obtained from

the Office of Management and Budget’s (OMB)

Office of Information and Regulatory Affairs under

OMB Approval Number 3245-0340 (Expiration date:

April 30, 2006). This report was peer-reviewed consistent with Advocacy’s data quality guidelines.

More information on this process can be obtained by

contacting the Director of Economic Research at

advocacy@sba.gov or (202) 205-6533.

Ordering Information

The full text of this report and summaries of other

studies performed under contract to the U.S. Small

Business Administration’s Office of Advocacy are

available at www.sba.gov/advo/research. Copies are

also available from:

National Technical Information Service

U.S. Department of Commerce

5285 Port Royal Road

Springfield, VA 22161

(800) 553-6847 or (703) 605-6000

(703) 487-4639 (TDD)

www.ntis.gov

NTIS order number: PB2005-100008

Pricing information:

Paper copy, AO6 ($34.00)

CD-ROM, A00 ($18.95)

Microfiche, A01 ($14.00)

Electronic download, A00 ($ 8.95)

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