Amid Battered US Economy, Veterans Turn to Start-ups

Unemployment for war vets was 11.1 percent

Veterans owned 2.4 million businesses in 2007

Shaun So served two years in Afghanistan and Pakistan in Army counterintelligence. Like thousands of other American troops returning home from the wars in Iraq and Afghanistan, he was faced with a new battle — finding a job.

Source: Shaun So

With this month's completion of the U.S. military pullout of Iraq in mind, lawmakers have made veterans’ employment a priority by creating new job-training tools, and new tax credits for companies that hire veterans. But many returning members of the military are taking matters into their own hands, starting their own businesses.

A recent survey by the Small Business Administration’s Office of Advocacyfound that veterans are 45 percent more likely than those without active-duty military experience to be self-employed. One-quarter said they are interested in starting or buying their own business.

“There’s a higher tolerance for failure coming from the military,” So says. “We’ve been told ‘no’ a lot of times, and still had to press on. Part of the job of being an entrepreneur is being able to take a no.”

The SBA study suggests that a key reason for veterans’ interest in starting a business is the high level of unemployment. The unemployment rate for those returning home from Iraq and Afghanistan was 11.1 percent in November, well above the 8.6 percent national average, according to theBureau of Labor Statistics. For veterans under age 25, it is 22 percent — 5.3 points higher than for all Americans ages 16 to 24.

So, 31, decided to take advantage of the G.I. Bill to enroll in a master’s program in entrepreneurship at the Zicklin School of Business at Baruch College in 2009 while continuing various Army missions stateside.

He also took random jobs in New York, including working as a bartender and bike courier. One day after work, he met his wife, Anna, an actress, who was carrying a suitcase for her job. That image inspired him to start a niche business that picks up, stores and delivers people’s luggage.

Source: Shaun So

He and a school friend, Paul Harrison, submitted the idea into a business plan competition. They came in third place. Although the idea didn’t win, So says his Army experience gave him the discipline and confidence to start the business.

“I spent a year in a pretty dangerous place, with a couple close calls. I got a swift kick in the butt from life’s risk professors and decided that start-up risk is nothing compared to life risk,” said So, who spent eight years in the Army Reserve and worked at the Pentagon’s Defense Intelligence Agency.

So had difficulty getting a VA/Small Business loan for his start-up, so he tapped into his friends and family network. In February, he incorporated his bag check business, Cubby.

Other vets, such as 37-year-old graphics designer David Lester, have taken advantage of government programs that help veteran-owned businesses. Lester returned from his last tour of Iraq in 2007 and completed his service in the National Guard in February 2009. With the help of mentoring services from the Small Business Administration, he is now starting a print and design station business.

Some vets have trouble marketing their military job skills in the civilian world. Not 39-year-old Jonathan Quinn, whose military experience included leading a team of 40 and managing a budget of several million dollars. He started Captain Quinn’s Fitness Boot Camp, a personal training service in Brooklyn that employs two people. He says he expects to hire two more employees and is on course to generate $300,000 in sales next year.

“I was able to continue in a service position and take several things I learned about group fitness in the military and use those in my current programs,” says Quinn, who served in the Air Force from 1992 to 1999. “I brought all of the fun with none of the yelling.”

Veterans owned 2.4 million businesses in 2007, generating $1.2 trillion in receipts, according to the most recent figures available in the Census Bureau’s survey of business owners. These veteran-owned businesses had 5.8 million employees and an annual payroll of $210 billion, according to the report.

Under the Obama administration many provisions have gone into effect to help veterans and their families, including the American Jobs Act, which will offer private businesses a $9,600 tax credit for hiring disabled veterans. It will also create additional tax credits for employers who hire veterans who have spent four weeks or more out of work. Another initiative, Joining Forces,set out to help hire more than 100,000 veterans and military spouses by 2014. The Defense Department’s Transition Assistance Programhelps veterans compose resumes and offers a variety of regional workshops.

Source: Shaun So

Since its opening in September on Park Avenue, So's baggage business, Cubby, has served about 700 customers and handled 1,400 bags, “storing anything that fits,” for $7 or $12, depending on size. So says he has spent $2,000 on advertising through Google Adwords, but everything else has been through word of mouth and press. While the Cubby concept may be gaining traction, So says store rent on Park Avenue is too high.

“We're going to be relocating so our cost structure matches our growth projections," says So, who has raised nearly $150,000. So says he has reached out to other veteran mentors for guidance, and while many incentive programs offer support for military veterans opening or developing a business, he is looking to seed investors for larger expansion.

“Not trying is the biggest risk; it’s like failure to yourself,” So says.

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