No. 244

December 2004

SMALL BUSINESS

RESEARCH

SUMMARY

Evaluating Veteran Business Owner Data

An Advocacy Research Report (2004, 64 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

Veteran business owners as a group have received

increasing attention in recent years, particularly since

enactment of the Veterans Entrepreneurship and

Small Business Development Act of 1999, P.L. 106-

50. This legislation included provisions calling for the

development of more information about businesses

owned by veterans and by service-disabled veterans

and about the role they play in the Nation's economy.

Unfortunately, data available for these groups of

entrepreneurs are limited. The last authoritative

Census Bureau data on veteran-owned firms dates

from 1992. Currently, there are some lists of businesses that include veteran status; however, their

information is thought to be incomplete, and at best

they include data on only a small fraction of all 

veteran-owned businesses. 

The purpose of this study is to examine currently

available data sources on veteran business ownership,

to compare the quality of major data sources, to

review existing literature on veteran business ownership, and to make recommendations. Policymakers

need good data in order to make informed decisions

on how best to serve veteran entrepreneurs. This

study attempts to advance this purpose.

Overall Findings

• At the macroeconomic level, the Census Bureau's

1992 Characteristics of Business Owners (CBO) is

the most authoritative source available on veteranowned firms, although it is now seriously dated.

• The Bureau's pending 2002 Survey of Business

Owners and Self-Employed-Persons (SBO) will 

provide a fresh and comprehensive picture of veteranowned businesses and veteran business owners. It

will also provide important first-time data on firms

owned by service-disabled veterans. SBO data is

expected in 2005.

• At the microeconomic level, among private-sector

business listing databases, those maintained by Dun

& Bradstreet (D&B) and Austin-Tetra, Inc. included

the largest number of veteran-owned businesses. 

• Most veteran-owned businesses are so small that

they do not appear in any listing or directory. 

• Most veteran-owned businesses are selfdeclared. Since FY 2001, there have been markers in

the Federal Procurement Data System to identify

contracts to firms owned by veterans and by servicedisabled veterans. However, the reported data is spotty and is probably inaccurate. 

• Efforts need to be made to improve the data

quality on identified veteran-owned businesses (especially verification that they are in fact veteranowned) and to capture true veteran-owned businesses

that are not yet identified in any source. 

• Veteran-owned businesses must do a better job

of identifying their status as veteran-owned or service-disabled veteran-owned. 

• More publicity, education, and incentives may be

required to encourage veteran-owned businesses to

identify themselves as such.

• Business surveys conducted by both government

agencies and private sector organizations should

include identifiers for veteran status and service-disabled veteran status in their survey instruments.
Highlights

• The number of veteran-owned businesses identified in various business listing databases (about

100,000 in the largest of these) was much lower than

commonly used estimates of the actual number of

veteran-owned businesses based on Census Bureau

data (from 4.2 to 5.5 million).

• The share of firms identified as veteran-owned

among all U.S. firms in the 2004 D&B database,

0.53 percent, was much lower than the 1992 Census

estimate of 24.2 percent veteran ownership. 

• Reasons for this disparity may have included the

exclusion of certain classes of firms from one dataset

or the other, methodological differences in how the

data was collected, purpose and use-related biases in

the D&B database, the age differential in the underlying datasets, and other causes.

• Comparison of veteran business data in the

Census and D&B datasets is of limited value.

Macroeconomic analysis is not the purpose of the

D&B dataset; conclusions on the characteristics of

all veteran-owned firms should not be inferred from

its data.

Scope and Methodology

This project includes detailed analyses of 1992

Census data, including distributions by ethnicity and

gender of all firm owners and veteran, non-veteran,

Vietnam-veteran and disabled-veteran owners.

Additional analyses compare data on all firms with

data on veteran-owned firms in both the Census and

D&B datasets by: 1) major industry group; 2) firm

size by receipts; 3) firm size by number of employees: and 4) firm organization type. An identification,

crossmatch and distribution analysis was also conducted of veteran-owned firms registered in the

Federal Procurement Data System, the DoD's Central

Contract Registration (CCR) System, SBA's PRONet database, and the D&B dataset.

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: PB2005-101236

Pricing information:

Paper copy, A05 ($31.50)

Microfiche, A01 ($14.00)

CD-ROM, AOO (18.95)

Electronic download, A00 ($ 8.95)

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