Thursday, May 18, 2017

Who's Gonna Fill Their Shoes *

The Federal Government has established statutory goals for ensuring that small businesses get their fair share of Government contracts. For example, 23 percent of prime contracts must go to small businesses. Three percent of prime and subcontracts must go to service-disable veteran-owned small businesses. Given the size of Government procurement, that represents a lot of money.

The U.S. Small Business Administration, Office of Advocacy issued a report last month based on data from the U.S. Census Bureau's Survey of Business Owners. The SBA reported that there are 2.5 million businesses were majority owned by veterans but only 442 thousand of them had employees. The other 2.1 million were non-employers. 99.9 percent of the businesses were "small businesses. 7.3 percent of veteran owners had service-connected disabilities.

Veteran business owners are much older than business owners in general. In 2012, 74 percent of veteran business owners were age 55 and over. This is much higher than the national average of 41 percent. But here's the problem as we see it. There are not enough veterans or service-disabled veterans in the pipeline to take over when the current generation  retires.

More than half of all veterans are age 65 and older. 70 percent are 55 and older. Compare that with non-veterans where only 27 percent of the populations is 55 and older. Only 15 percent of veterans are in the age group of 25 - 45 when they are most likely to be starting businesses. This disparity is largely due to the "Viet Nam" bubble but its this View Nam bubble that is running businesses right now.

Many prime contractors are having difficulty meeting their small-business subcontracting goals including the three percent that goes to service-disabled veteran-owned small businesses. This problem will become even more chronic as the numbers of such businesses decline. Perhaps Congress will need to reduce the targets.

In the meantime, there are and will be great business opportunities out there for veteran-owned small business enterprises, especially those owned by service-disabled veterans (SDVOSBs).

* With apologies to George Jones

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