Military veterans play a significant role in the US economy – one important role, as Gusto and public data find, is their role as entrepreneurs. Census data shows that in 2021 veterans owned 305,000 businesses that collectively employed 3.3 million workers, contributing, $180 million in annual wages to those workers.

Gusto’s survey shows that this group of entrepreneurs often choose to continue serving their communities after their military service is done: they are much more likely to start firms in sectors like Health Care, Education, and Non-Profits than others who decide to strike it out on their own. They also, however, are subject to unique challenges that deserve greater support.

Veterans account for the largest share of new business owners in South and West

In Gusto’s 2023 Survey of New Business Owners, veterans made up 5% of new business owners last year, equal to shares in Census data from before the pandemic in 2019. While veterans’ share of entrepreneurship has remained steady nationally, there is significant variation in their share of new business owners across the country. The table below uses 2021 Census data to chart the top 10 cities, among the 50 largest metro areas, where veterans made up the largest share of new business owners. These cities are largely in the South and the West, with Virginia Beach at the top – where 12.7% of new business owners are military veterans.
Some of these cities, such as Atlanta and Tampa, have been among the fastest-growing cities for new businesses in recent years, and this data shows that veterans are driving that growth. Several are cities with large military presences, including Virginia Beach and San Diego, where military veterans may stay after service and found businesses that contribute to the local economy.

Metro AreaPercent of New Businesses
Veteran-Owned, 2021
Virginia Beach12.7%
Oklahoma City7.4%
San Diego5.8%
Source: Census Bureau, 2021 Annual Business Survey. “New business” is defined as   
 one less than 2 years old.

Flexibility and Financial Concerns are Motivating Entrepreneurs in 2022

Looking at the reasons that these entrepreneurs started a new business from Gusto’s New Business Survey, we see that flexibility remains the top reason veterans start a new business, as it is among the group of all entrepreneurs, selected by 61% of veterans who started a business in 2022. Beyond flexibility, veterans were much more driven by financial and business motivations than the overall cohort of entrepreneurs: 30% said they started a business because they “wanted or needed to supplement household income,” compared to 19% of all entrepreneurs; and 49% said they “seized a business opportunity,” compared to 39% of all new business owners.

Reasons for Starting a Business Among Veterans and All Entrepreneurs

FlexibilityWanted or
needed to
supplement household income
Wanted financial stability/
build an asset
Lost job/partner
lost job
Seized business opportunityTechnology advances lowered
the barriers to starting this business
All entrepeneurs63%19%34%5%39%10%
Source: Gusto New Business Survey 2023.

Veterans are more likely to start businesses in Community Services sectors

Looking at industry distribution, veterans were more likely than others to start businesses in community services sectors, including Health Care, Education, and Non-Profits: nearly one-third of veterans started a business in these sectors, compared to 24% of all owners. This data shows that veterans are using their skills and experience to continue to serve their communities even after the military service is done – while creating jobs along the way.

Source: Gusto New Business Survey 2023.

Veteran entrepreneurs are less than half as likely to access private capital

Finally, we see that veteran entrepreneurs primarily rely on personal savings to start these businesses (63% started their companies using personal savings, as does the broader cohort of new business owners – but veterans are 2.5 less than half as likely to access private capital to start their firms. Encouragingly, however, veterans are much more likely to use public sources of funds – including government stimulus programs and SBA-backed loans to start their businesses. Given how military veterans have served our country – and how they continue to do so through the businesses they start – we ought to expand our support for these entrepreneurs.

Sources of Financing Among New Business Owners

Personal savings63%63%
Private business loan10%23%
Government Stimulus/
Unemployment Insurance
Loans from family/friends5%3%
SBA backed loan3%7%
Private capital investment10%4%
No funds were needed23%23%
Source: Gusto New Business Survey 2023.
Luke Pardue Luke Pardue was an Economist at Gusto, researching how public policies help small businesses and their workers thrive. He received his Ph.D. from the University of Maryland, where he studied the effects of government programs on disadvantaged populations’ housing and labor market outcomes.
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