This article originally appeared on Military.com. Follow Military.com on Twitter.
Small, veteran-owned businesses are a big deal, and not just for the veteran entrepreneurs who start them. According to the U.S. Small Business Administration (SBA), there are 2.4 million veteran-owned firms in America, and those businesses employ some 5.8 million of their fellow vets. That’s what we call a force multiplier.
The SBA also says that veterans are 45% more likely to start their own businesses than their civilian counterparts. The Veterans Future Lab at the New York University Tandon School of Engineering conducted a study to find out why that is, what their challenges are, the resources they use to overcome those challenges and the lessons they learned from the experience.
This research, The 2021 Military and Veteran Journey to Entrepreneurship Study, looked at 581 veteran entrepreneurs and military members interested in running their own business. It looked into their backgrounds, experience, education and even their states of mind. It broke down the results into six phases.
Veterans looking to start an enterprise of their own can look at these six phases and how they can shape a path toward becoming an entrepreneur.
1. Military Service
The first phase describes a budding entrepreneur’s time spent in service. Here, they acquire and hone their skills and interests, along with the training, experience and education provided throughout their time in the military. This is the entire time period they spend in any branch of service.
Participants in the study say their service created a personal culture of determination, grit and perseverance that they carried with them into their civilian lives and, ultimately, their businesses. Respondents also believe military service inherently attracts those with a baseline level of courage and perseverance that make them natural entrepreneurs. Veteran business owners believe their tenacity, drive, sense of responsibility, leadership and goal-oriented nature are why vets are more likely to start businesses.
The study does note that mental health challenges related to military service can have a negative effect on business ownership aspirations – the veterans needed to take the time to address those issues before moving forward.
2. Transition to Civilian Life
This time period encompasses any educational, vocational or other experience after leaving the military. It can be time spent going to school, getting a job (or series of jobs) or taking time off before doing anything else. Any time a veteran spends building their education or experience after service, but before actually launching a business, is considered the transitional period.
No one’s post-military path is exactly the same. Newly separated veterans can experience varying degrees of unemployment and underemployment after leaving the military. Whether choosing to go into academia or into the workforce, vets can have both positive and negative experiences. But all of them, the study notes, will encounter at least one significant challenge.
Many of the respondents of the study reported using Department of Defense programs and resources to overcome those challenges, including mental health services. Many also lamented the fact that the military usually discusses two paths for veterans leaving the military: education or employment. They would like the military to add entrepreneurship to their post-military training regimens.
For separating veterans, the entrepreneurs interviewed in the study suggest finding a mentor to help guide them in their new lives, no matter which of the three paths they choose.
An education period can occur at any stage throughout the journey to business ownership and can even happen multiple times along the way. This includes getting degrees while still in the military or getting multiple degrees at different times after leaving the service.
Many veteran entrepreneurs interviewed used their GI Bill benefits to pursue some kind of university-level education, as the provisions in the bill eased their financial hardships during their transition periods. They also said the process was easier when attending schools with dedicated veterans offices or large veteran populations.
4. Entrepreneurship Exploration
Exploring the idea of entrepreneurship also can occur at multiple points throughout the journey. This is the time veterans feel inspired to start a business, consider which business to go into or have any real thoughts related to their entrepreneurial aspirations.
The top three reasons cited for wanting to start a business were freedom, flexibility and control of being one’s own boss, their personal skills, interests, and education or civilian career background and the possibility of financial independence or additional income.
5. Becoming an Entrepreneur
When a veteran actually starts their business, using resources to overcome the challenges involved with getting their business off the ground, they enter this phase. It also includes any resources used to improve their social or emotional well-being as an entrepreneur. Remember: Getting a business started is hard work.
The top three challenges they experienced were related to marketing and promotion, personal finances and initial capital. Despite numerous studies related to veteran entrepreneurship and success, vets have a harder time getting approved for loans and often struggle with finding adequate financing.
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The study also revealed that younger, non-white or not college-educated veterans will have a much harder time with promotion and financing. This is especially troubling because the study also found that marketing and promotion were also the key to sustaining and growing these same businesses.
To overcome these challenges, veteran entrepreneurs most commonly cited three resources they used to help in problem areas: their professional networks, informal relationships and professional development programs. These are networks, networking opportunities and programs like business incubators that can provide information, along with potential sources of capital when needed.
6. Growing and Maintaining a Business
This phase begins when the business started by a veteran becomes relatively stable and the veteran begins to take stock of the journey. They look at the lessons they learned along the way when considering how to sustain or scale up their new enterprise.
Unsurprisingly, given the findings for phase five of their journey, veteran entrepreneurs emphasized the importance of networking, building a community of like-minded people and conducting regular self-assessments as important to sustaining their business. Networks provide not only business support through experience-based information, but are also sources of positivity in the process.
They also note that networking should not be centered around building transactional relationships, but should instead be a real friendship based on communication and authenticity. These relationships can be with investors, partners and mentors, but building real, personal relationships can be critical in times of need.
To read the results of the entire study, look deeper into the six phases of veteran entrepreneurship and look at the challenges and resources for each, visit NYU’s 2021 Military and Veteran Journey to Entrepreneurship Study.