By David Bruce
The path for military veterans to entrepreneurship can be difficult, but there are certain common factors that lead some to succeed and others to fail.
For startup businesses, the rates of success are extremely low. According to a 2022 report, by Startup Genome, a research firm focused on business development, 90% of startups will completely fail. With such dismal odds, it’s no wonder veteran entrepreneurial rates are at an all-time low of 4.5% compared to last century where almost 50% of WWII veterans opened their own businesses.
The factors are “patience, degree of planning and access to proper and diverse guidance,” said Ken Vennera, chief of staff of Warrior Rising, a 501(c)(3) for veteran entrepreneurs.
“There are no magic answers in business, no crystal ball into the future,” Vennara said. “Translating the skills taught and honed in the military into success in business is possible with the right people giving the right guidance. Being there to help you through it is why we are here,” he said.
Guidance in the form of mentorship can make or break a business. For Eric Dinoto and Kyle Moore, co-owners of Regimental Spirits, a veteran-owned whiskey company in Melrose, Mass., the idea may have been born on the abandoned rooftop of the former Ba’ath Party Headquarters in Iraq, but the idea became a reality when a third owner with experience in the business got involved.
“Gabriel Garcia-Pons had been in the booze business for 25 years – he went to college with my wife at the University of Miami,” said Dinoto. “He took us under his wing and served as a mentor. He walked us through all the ins and outs. We really skipped to the chase. It’s like the two-mile run we do, but with him we only had to do the last 10 meters,” he said.
For Regimental Spirits, the introduction of a mentor sped the clock up towards launching and helped to avoid many of the pitfalls that entrepreneurs often find themselves in. That is what the right mentor does for a business. Through experience and understanding of the market the right mentor can make or break a business. But that’s not the only asset the team had on their side, they also had enough seed money to get off the ground.
The initial seed money was over $90,000. Garcia-Pons, put up his money, and Dinoto and Moore tapped their 401Ks to match his contribution. The access to money allowed the men to weather the storm of the COVID-19 Pandemic and the ensuing supply chain issues that followed.
For many veteran startups, capital can be an issue, but there are several loan programs administered by military credit unions and the U.S. Small Business Administration (SBA). But like many programs in the veteran benefits space, navigating these bureaucracies is often difficult if not impossible for veterans.
For Kurt Vied, owner of 20,000 Leagues Brazilian Jiu Jitsu, the allure of entrepreneurship represented freedom. After working a career as a state trooper and deployments as a Navy Intelligence Officer, he no longer wanted to ask permission to do the things he wanted to do. Soon after starting a business, he found himself in need of a line of credit after spending $15,000 of his own money to get the business started. For Vied, the whole process was confusing and a bit daunting.
“I didn’t want to buy a used mat, I wanted a new one,” said Vied. “I reached out to Navy Credit Union for a loan and they shot me down immediately. So, I went to my local bank in Marblehead and saw my buddy. He was like, why take that much money? Why not just do a line of credit and only take what you need? He processed it that day, it just made sense. For me, it’s just about relationships, I had that relationship locally.”
Vied found success at a local bank when he had failed to secure money from a large lender that specializes in supporting military and veterans. He is not alone in this experience, Anne Villano, a social worker that specializes in caring for veterans describes much of the process of obtaining veteran services as “exhausting.”
“I don’t think it has anything to do with intelligence or mental ability, it’s just very difficult to transition back into the civilian world,” said Villano. “If you’re transitioning, can you even afford to move back home? Are you financially prepared? You know, how far is the VA from where you live? There are a lot of issues that are systemic and everyone knows there is nothing being done about it.”
One of the issues and barriers for veterans is red tape. For Regimental Spirits, one of the most difficult processes they tried to overcome was getting designated as a Veteran Owned Business (VOB), through the SBA. Dinoto and co-owner Kyle Moore applied multiple times for this designation, and each time their application was kicked back for some new discrepancy. The co-owners abandoned this process. It was just too difficult to navigate.
A perks of being designated as a VOB is the ability to compete for set aside contracts, noncompete contracts and sole-source contracts. The criteria set forth by the SBA is simple, at least on its face: At least 51% ownership by veterans, registered as a small business, meet SBA size standards.
“Kyle and I would jump on it, then Gabe would jump on, we would upload all of our stuff,” said Dinoto. “And then they would say that you’re missing one document, which wasn’t missing, and then they would shut it down. And you would have to start over and apply once again. But we did that a total of 16 times to the point where we realize the veteran owned sticker on our bottle just didn’t matter to us that much,” he said.
One thing that the successful veteran entrepreneurs leveraged from their military experience was their ability to pivot when plan A fails and also a high level of tenacity.
A group within the group of veterans that has been able to exceptionally navigate the business world is former special operations soldiers. For example, Black Rifle Coffee Company, which just went public with a valuation of $1.11 Billion. Founder Evan Hafer, was able to turn a hobby of roasting coffee beans while on deployment to a successful franchise.
“The degree of tenacity, enhanced resourcefulness and ability to pivot easily and level of sophistication, including ability to talk with complete strangers with confidence is a factor,” said Vennera. “From needing to do that in special operations situations and persuade them to cooperate. Business is about selling to your funding sources as well as your customers and those skills help,” he said.
While the road to owning a successful company is filled with proverbial landmines, for veterans that seek out mentorship from qualified individuals in their established sector and secure seed money early the dream can become a reality, but it requires thick skin and a never quit attitude.
“With every startup, one of the biggest stumbling blocks is working capital,” said Dinoto. “We are self-funded. And we actually have zero debt on the business as of today. But everything we make goes right back into the business and just continues rolling. That’s how you build anything,” he said.