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Can Veteran Small Businesses Jumpstart the Economy?

Monday, 12 Nov 2012 | 11:21 AM ET

An engineering degree and business school training gave Justin Ashton the background he needed to start a high tech company, but it was serving six years as an Air Force intelligence officer that taught him the skills he needs to lead the firm.

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"In the military you're faced with uncertainty in just about every decision you make, when it comes to the combat zone," explains the co-founder of Boston-based XL Hybrids. "Uncertainty is part of the lifestyle, and you really have to embrace that as an entrepreneur."

For Donna Sanders, after eight years in the Marines, launching her energy efficiency auditing business this past year has been the hardest thing she's ever done.

"Everybody in the military, at least in the Marine Corps, operates at a very high level," but it's not always that way with her vendors, said the founder of 106 Greenway in Kansas City, Mo.

Accepting that the rest of the world doesn't operate with military precision proved a steep learning curve. "I've learned a lot of patience, basically," she said.

Both veterans said their small business are thriving and both expect to make at least a couple of new hires in the year ahead to keep up with demand. Veterans' advocates are not surprised.

"Veterans have typically started businesses at twice the rate of non-veterans," said James Schmeling, Managing Director of the Institute for Veterans and Military Families (IVMF) at Syracuse University. "And they've sustained those businesses at four times the rate of non-veterans, historically going back to World War II."

Training Vets in Entrepreneurship

With the anticipated wind down of the U.S. military's presence in Iraq and Afghanistan, more than quarter million military members are expected to leave active service annually over the next five years. The transition comes at a time when unemployment for post-9/11 veterans remains above the national average — 10 percent in October according to the Labor Department.

Working with the Department of Defense, and Small Business Administration, IVMF is betting that helping returning vets explore entrepreneurship and opportunities in small business could help address high unemployment, while potentially providing a boost to the nation's slow economic growth.

"We expect between 13,000 and 15,0000 of those folks every year will look at small business opportunities as a serious opportunity for them," said IVMF' Schmeling. "If they each, in turn, hire three to four veterans that could be significant."

The Kauffman Foundation for entrepreneurship trained 300 veterans to start and develop their own companies this year and plans to train 500 in 2013, through an intensive program called FastTrac NewVenture for the Veteran Entrepreneur.

The new course helps veteran entrepreneurs gain certification as veteran-owned small businesses, which the government has given priority when it comes to federal contracts.

More important, FastTrac President Alana Muller said the classes have given veterans a framework to use the teambuilding they used in service, in order to build the kind of networks they'll need in business.

"Not only did they connect with one another," she said, "they really supported one another through the entrepreneurship process."

"Someone would say, 'Oh I have a banker that can help you with this,' or 'I know someone who can do a brochure for you,' " said Donna Sanders, who completed the FastTrac program before launching 106 Greenway in the past year. "That was really pretty amazing."

In Boston, Justin Ashton says he has tapped his corporate and veteran networks trying to find former military vets to hire for his hybrid conversion business, but so far has not found a candidate with the needed skills.

In addition to encouraging entrepreneurship, Ashton says returning vets should be encouraged to use their access to GI Bill to training in high-tech manufacturing and other new technology fields where jobs are in demand.

"Veterans have the capacity to learn these new skills quickly," he said. "I think we can go a step further to make sure we train veterans for the jobs of the future and not the jobs of the past."

—Buy CNBC's Bertha Coombs; Follow Her on Twitter @coombscnbc