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Do you have what It takes to be your own boss?
The correlation between military service and self-employment was recently discussed in an article that ran on CNBC.com. The story was based on a study by the Small Business Administration’s (SBA) Office of Advocacy, which had some interesting statistics (A link to the study is here: http://www.sba.gov/sites/default/files/files/rs384.pdf). It found that veterans are at least 45 percent more likely to be self-employed than people without active-duty military service. There are many potential reasons for this, but the bottom line was that an individual’s personal characteristics were considered more influential in business start-up than attributes/training gained while in military service.
The part of the article that caught my eye was a statement made by one of the veterans: the risk of starting a new business was minimal compared to the risk he faced during his time in the Army National Guard. This is a compelling point: this realization of life vs. business risk, combined with the benefits afforded to veterans who seek to become self-employed, may explain the greater tendency for servicemembers to take the leap into entrepreneurship. The article notes different examples of veterans who ventured into self-employment, each with his own unique experience in the process. One found the experience to be relatively smooth, while another had to work diligently to find financing. Another veteran worked with area SBA agencies to get a business developed.
LAFF board members Chris Rinaudo and Bart Phillips encountered their own set of challenges when acquiring their business, Baton Rouge Cargo. Given their collective background and experience, acquiring an established business should have been a relatively simple thing to do. As it turned out, it required almost a year of diligence on their parts. Both Chris and Bart had successful careers in the Navy; Chris holds an MBA and Bart was president of his class at the Naval Academy. Initially, Chris was interested in real estate development, but economic realities created challenges in the industry. He switched gears, and based on his strengths in business and Bart’s knowledge of the transportation industry, they determined the cargo business would be a viable business option for them.
Despite all they had going for them, establishing a business was anything but easy. Going through their local SBA office was unproductive and pursuing the Patriot Express loan program was unsuccessful. Although their attempts at small business start-up through the obvious openings were fruitless, they re-grouped and did some basic research. After experiencing challenges locally with advertised SBA lenders, Chris and Bart became more proactive and educated themselves on which lenders were actually lending the most in small business loans and made their pitch that way. Ultimately, they were successful and are proud owners of their own cargo business. As they work to build the business, the next step will be to position Baton Rouge Cargo to compete for contracts that are subject to veteran set-asides.
Chris and Bart’s story is a valuable lesson: business start-up is not for the weak in spirit. Regardless of prior military service, any individual who thinks it might be a neat thing to have a business must decide if self-employment is going to be worth the effort required. There is a wide variety of programs, not just for the military, to encourage small business development and ownership. The reality is that some local agencies and lenders are very responsive to would-be entrepreneurs needs while some are not. The key is to understand what is required and having the drive to make it happen.
Fortunately, the greater New Orleans area is fortunate to have a number of agencies that are involved in promoting entrepreneurship in the city. It has been well-documented that one of the positive outcomes from Hurricane Katrina has been the influx of people into the city with entrepreneurial drive and spirit. In 2010, the Brookings Institution found that for every 100,000 adults in the population, New Orleans had 427 new business startups – much higher than the national average of 333 per 100,000. The result is an atmosphere that tends to support new business efforts.
In an effort to support entrepreneurship among veterans, LAFF has worked to develop relationships with local organizations that are ready and willing to cultivate veteran-owned businesses. Most recently, we have partnered with the Louisiana Small Business Development Center (LSBDC) and the Fleet and Family Support Center of Naval Air Station Joint Reserve Base New Orleans to produce small business workshops devoted exclusively to veterans. The LSBDC has a history of promoting entrepreneurship in the area and has great expertise in helping people obtain necessary financing. Recently, it embarked on a path to encourage veteran-owned businesses in the greater New Orleans area. These workshops are the first step in that journey and will cover the following topics:
Starting and Financing a Business for Veterans – January 24, 9:00 a.m. – 11:00 a.m.
Discussion topics include writing a business plan, funding sources for business start-up and expansion, small business resources and licenses required.
Business Plan Writing for Veterans – February 14, 9:00 a.m.-11:00 a.m.
Every new business should have a business plan, which will allow the owner to develop and grow the business; however, many people are intimidated at the prospect of putting a plan together. This seminar will go through the detailed parts of a thorough business plan and will help existing business owners determine their direction. Topics include what a business plan is and what it is used for, a Full Business Plan Planner workbook and worksheets for financial projections.
Five Steps to Secure Financing for Veterans – March 6, 9:00 a.m.-11:00 a.m.
This workshop helps the entrepreneur know what to do before approaching a lender, including understanding financial needs, identifying sources of capital and preparing essential documents for the potential lender/investor. Understanding what a lender is looking for and potential questions to be answered can increase the success of securing financing. Other topics include worksheets to determine start-up costs, personal financials and budgets and a resource directory.
These workshops will be presented at the Fisheries Assistance Center at 8018 Highway 23 in Belle Chasse. Pre-registration is required by calling LAFF, 504-267-9125, the Fleet and Family Support Center, 678-9024 or LSBDC at 504-831-3730.
Regardless of what the level of community support is for anyone interested in starting a business, it is vital that the would-be entrepreneur be committed to the effort. Business ownership is not easy and as LAFF’s board members demonstrate, it takes dedication and hard work to realize the goal, even in the best of circumstances.
Louisiana Armed Forces Foundation
Where the jobs are.
While much of the nation struggles with a high unemployment rate, veterans have been hit particularly hard in the recession. The national unemployment rate has hovered around nine percent; veterans, however, suffer a higher rate of unemployment. The figures released in November pegged the veteran unemployment rate at 12.1%. It appears that the younger the veteran, the more difficult finding employment can be. Veterans in the 18 to 24 age range have an unemployment rate of 30.4%.*
We are fortunate to call Louisiana home for many reasons, and in researching this post, I learned yet another reason to be grateful to live in Louisiana: it has a very low unemployment rate. The general unemployment rate was 6.9% at the end of September 2011. The unemployment rate for veterans at the same time was 4.5%. More impressive, the unemployment rate for post 9/11 veterans is 2.8%.** This indicates that Louisiana supports its veterans, which is not surprising. In our short existence we have been impressed with the number of organizations such as LAFF that are helping veterans as they transition from the military into the civilian world. It is possible that given the coming troop drawdowns from Iraq, that these figures could creep up.
Regardless of where the unemployment rate goes, it is always good business to know where the business is. LAFF did some research and found information on employment in Louisiana, including projections to 2018. The Louisiana Workforce Commission periodically prepares ten year employment forecasts for the state. In February 2011, the Commission updated the forecast for the period 2008-2018. Some of the findings are summarized below:
New Orleans Area:
The Commission’s report noted the greatest opportunities for growth in food manufacturing, primary metal manufacturing, telecommunications, health care and hospitality. Petroleum and coal products, manufacturing, truck transportation, and machinery manufacturing are expected to show some growth as well.
Baton Rouge Area:
Wood product manufacturing, insurance carriers (and related industries) and accommodations/gaming should contribute employment opportunities. Other stable/growing areas include administrative and support services ; professional, scientific and technical services; and water transportation.
Houma Area:
Long term demand seems strong for machinery manufacturing.
Lafayette Area:
Much of the Lafayette area was affected the oil spill of 2010, so there was no solid prediction for mid-term growth given the uncertainty that remains.
Lake Charles Area:
Several sectors for employment are forecasted to be lower for this area, however growth is anticipated in transportation equipment manufacturing and transportation support activities. There is potential for a new casino in the area, which may add more job opportunities in the amusements/gaming/accommodations sectors.
Alexandria Area:
Utilities are expected to see some employment gains in the next five to six years.
Shreveport Area:
Machinery manufacturing is expected to add jobs, while other sectors are not expected to fare as well (transportation equipment manufacturing, paper manufacturing).
Monroe Area:
Transportation equipment manufacturing is anticipated to grow significantly, pending an anticipated new company’s loan approval. Administrative and support services are also expected to grow modestly.
These are just forecasts based on current information, but there is benefit in having a basic understanding of what is projected. For instance, anyone who is interested in pursuing a career in the hospitality industry may want to focus an employment search in Lake Charles or Baton Rouge. The person who loves New Orleans and does not want to leave should think about developing skills in one of the sectors where growth is anticipated. Understanding where potential growth is can help determine what education or training is necessary to help make the most out of any job market.
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