After serving their country, many U.S. military veterans embark on a dream to start their own business and serve their communities in a different way. Under certain state and federal programs, veteran-owned small businesses receive special benefits including tax breaks, priority bidding on government contracts, easier access to capital, special loan programs as well as vital educational, training and support resources.
Historically, veteran-owned businesses have played a vital role in economic development in the United States. Major companies like RE/MAX, FedEx, Walmart, Anytime Fitness, Sports Clips, Nike, Amway, Enterprise and GoDaddy were all founded by military veterans who built a thriving business based in part on the qualities and characteristics they developed during their military service—not to mention the hundreds of thousands of other small businesses and startups founded by American veterans.
However, despite the valuable "soft skills" that service members develop in the military which often have beneficial implications in the business world—including leadership, teamwork, crisis management, self-discipline and perseverance under pressure—recent data shows that business ownership by veterans is lagging behind in many states.
A veteran is anyone who served on active duty with the United States Army, Air Force, Navy, Marine Corps, Space Force or Coast Guard for any length of time and didn't receive a dishonorable discharge. Reservists and members of the National Guard may also be considered veterans if they were called to federal service or disabled from a disease or injury that started or worsened while in the line of duty or during training.
In order to be certified as a veteran-owned small business (VOSB) and eligible for benefits under the Vets First Verification Program, the following requirements must be met:
Veteran entrepreneurs can also get certified by the Small Business Administration under the 8a Service Disabled Veteran Owned Small Business (SDVOSB) program. However, the eligibility requirements for this program are more restrictive as only veterans with a service-connected disability can apply.
Here are some general statistics about VOSBs in the U.S.:
The number of veteran-owned businesses in the United States. (source)
The approximate percentage of business owners who were military veterans in 2018. As a whole, veterans represent less than 10% of the total U.S. adult population. (source)
The total annual revenues of veteran-owned businesses. (source)
The approximate number of employees who work for veteran-owned businesses. (source)
The majority (54.5 percent) of veteran-owned employer firms have just 1 to 4 employees. Only 9 percent of firms have 20+ employees and 3.2 percent have more than 50 workers on their payroll.
The vast majority (about 74 percent) of veteran-owned businesses are owned by people over the age of 55. What's more, 84.3 percent of veteran-owned business owners are male.
Some of the industries with the largest share of veteran-owned firms include:
Some sectors with the smallest shares of veteran owners in 2015 include:
The map above indicates which states have the highest and lowest rates of veteran-owned employers. States in green have the highest percentages of veteran-owned employers compared to the total number of employers in the state (as reported by 2018 Census data), whereas states in orange have among the lowest percentages of veteran-owned employers in the U.S.
|STATE||RANK||NUMBER OF VETERAN EMPLOYERS||TOTAL NUMBER OF EMPLOYERS||PERCENTAGE OF VETERAN EMPLOYERS|
SOURCE: The U.S. Census Bureau, 2019 Annual Business Survey (covering reference year 2018, released to the public on Jan. 28, 2021)
NOTE: It's important to note that the ABS only includes tabulations for employer businesses, which are businesses with paid employees. The survey does not include veteran-owned businesses with no paid employees.
DISCLAIMER: MaxFilings assumes no responsibility for inaccuracies or for changes in such information that may occur after publication.
When comparing small business data, it's important to keep in mind the general population demographics since certain states have larger populations of veterans and therefore logically may have higher rates of veteran-owned businesses.
General population demographics also help expose inconsistencies where the percentage of veteran-owned businesses does not match up to the state's overall ranking of veteran residents, indicating that the state either over-performs or under-performs in supporting veteran entrepreneurs.
When comparing the Census map above with our map of veteran-owned employers by state, a number of disparities come sharply into focus.
For instance, while you might think that states with higher populations of veterans would also have higher rates of veteran employers (since the state government would have more incentive to support veteran-owned small businesses and entrepreneurs), the data shows that this isn't necessarily the case.
While the underlying causes behind these disparities are complicated and beyond the scope of this report, it's clear that the many obstacles and barriers veterans face when starting a business are having a sizable impact on economic opportunity for the men and women who have served our country.
There are many possible explanations for this stark free-fall in veteran entrepreneurship, including:
MaxFilings assists entrepreneurs in all 50 states and the District of Columbia with incorporating and satisfying the requirements for their state. Our online incorporation system is secure, user-friendly and provides upfront pricing for your state and corporate structure. You can begin forming your corporation and come back later to finish.
Check out our incorporation blog for up-to-date news and tips for not only forming your corporation or LLC, but also keeping your company in good status with your particular state's authorities. And as always, please feel free to contact us with any questions or comments about your company's incorporation.
View MaxFilings Incorporation Fees by State and Business Entity
Not ready to start forming your LLC yet?
See our related articles to learn more: