Veteran businesses represent an important, but frequently overlooked, segment of the U.S. economy. A veteran business is generally defined as a company in which one or more veterans own more than 50 percent of the enterprise. There are more than 2.4 million veteran businesses in the U.S. representing 9 percent of all domestic firms. These enterprises employ 5.8 million people and pay more than $210 billion in annual wages and salaries. Seventy-five percent of veteran business owners are at least 55 years old because these founders started their enterprises after completing their military service.
Unfortunately, most veteran businesses are “mom and pop” enterprises that, because they receive little tax and regulation relief, have thin profit margins. These businesses are among the largest employers in the country yet their needs are rarely discussed in Washington or state capitals because they do not have the kind of money that big businesses and unions have to hire influential lobbyists.
The coronavirus pandemic has affected millions of people. Tragically, this ailment has led to the death of some patients who were already suffering from an illness. And the damage to society extends beyond these deaths because the panic about the virus has reached epic proportions.
The stock market has had its worst slide since 1987. Broadway theaters have been closed and conferences in every state have been cancelled. Multiple professional sports leagues have ended their season early for the first time in history. Consumer spending on travel and entertainment has dropped precipitously, having a devastating impact on veteran businesses. Most people recognize that this crisis will have a negative effect on the economy. However, few realize that coronavirus fears are having a devastating impact on veteran businesses.
People spend a large percentage of their money with these businesses yet they don’t know anything about them or even how they survive with small profit margins. More important, the proposed coronavirus relief measures proposed by Congress ignore the need to help veteran businesses continue to provide millions of jobs to local residents.
Veteran businesses, because their margins are thin and they cannot afford staff turnover, treat employees better than more profitable companies because there is a high cost to losing employees. Many of these businesses pay a higher percentage of employee health care costs than big businesses and unions. Veteran businesses often pay for medical bills and funeral expenses of the family members of employees. If the coronavirus fears continue, and there is no economic relief provided directly to veteran businesses, thousands of local concerns will close, many individuals will lose their jobs and be pushed into poverty.
The legislation that Congress is considering does a good job of guaranteeing free services for individuals. However, these provisions will not help veteran businesses losing revenue because of coronavirus fears. Veterans have served the country and deserve to be protected from the current economic challenges. To address this major crisis, I believe that the federal government should develop “Veteran Business Recovery” initiatives that do the following four things.
First, prevent banks from initiating foreclosures on veteran businesses during the pandemic. Second, provide tax credits, grants and employment incentives to veteran businesses that hire new employees during the current pandemic emergency. Third, approve low interest rate job retention loans to veteran businesses (regardless of their credit history) to prevent business failures and the laying off of employees. And fourth, require that all public organizations report how much they are spending on Veteran Certified Businesses on their websites. This provision will help veteran businesses providing goods and services to public entities generate millions of dollars of much needed revenue they would not have otherwise.
Coronavirus fears are causing significant damage to the long-term viability of veteran businesses. If the government does not provide much needed support directly to veteran businesses, these organizations, run by people who have sacrificed for the country, will fail and millions of jobs will be lost. The government has bailed out big banks during a major economic crisis, it is time that government leaders support the largest employers in America — family, small and veteran businesses.
Dr. Dale G. Caldwell is a professor and the executive director of the Fairleigh Dickinson University Rothman Institute of Innovation and Entrepreneurship which has operated the Veterans Launching Ventures program for 10 years.
Mike Ferraro is the executive director and founder of Bridging the Gap for Veterans Career Transition & Resource Center located in Wall. He served in the U.S. Air Force active and reserve components for 32 years retiring as command chief master sergeant with oversight of nearly 28,000 airmen and 18 air mobility wings across the nation.