The Economic Impact of Veteran Entrepreneurs
MyEListings' markets and economics editor and creates content about global macro events and their impact on US commercial real estate.
The latest data from the US Census Bureau has given us fresh insight into the landscape of employer businesses, revealing that, among the approximately 5.9 million employer firms in 2021, a significant portion were owned by veterans, women, and minorities.
| Business Type | Total Businesses | Annual Receipts ($B) | Employees (M) | Annual Payroll ($B) | Receipts per Business ($M) | Payroll per Employee ($) | Receipts per Employee ($) |
|---|---|---|---|---|---|---|---|
| Veteran-Owned | 304,823 | 922.2 | 3.3 | 179.9 | 3,024 | 54,520 | 279,455 |
| Women-Owned | 1,300,000 | 2,100.0 | 10.5 | 499.4 | 1,615 | 47,561 | 200,000 |
| Minority-Owned | 1,200,000 | 1,847.9 | 9.5 | 411.7 | 1501.5 | 43,096 | 150,146 |
Looking deeper into these statistics reveals an interesting trend: Veteran-owned businesses are outperforming their counterparts in several metrics by significant amounts.
Gleaning Meaningful Information From the Data
The performance of a business can be gauged in various ways, from revenue generation to employee satisfaction.
When comparing one business to another, it can be useful to observe how much they are able to produce (receipts) using how much employee labor (number of employees), and how well that labor is compensated, as it can reveal exploitable trends.
Through this lens, a business owned by a veteran will, on average, drive higher revenues using fewer employees who each take home significantly more than a business in any of the other categories.
Regarding revenue per employee, veteran-owned businesses take the lead, driving nearly $280,000 annually, indicating veterans tend to get greater performance per employee.
Furthermore, in examining payrolls, these businesses also offer higher salaries to their employees, with an average of $54,520 per year. This figure is a significant 14.6% higher than the runner-up category: women-owned businesses.
Reasons Veteran-Owned Businesses Perform Well
Why do veteran-owned businesses perform so exceptionally well? A plausible reason lies in the rigorous military training veterans undergo. This training isn't just about physical endurance; it equips them with skills directly transferable to the business world.
The strategic planning, logistical expertise, risk management, leadership, and impeccable execution learned in military contexts often translate into business acumen, resulting in efficient and profitable operations.
In comparison, while women-owned businesses contribute substantially to the economy, they tend to generate lower annual revenue per employee, at an average of $200,000. Their payroll figures are also lower, averaging $47,560 per employee per year.
Despite these lower metrics, it's essential to recognize the sheer number of women-owned businesses as driving at least part of that divergence. They significantly contribute to bigger-picture employment opportunities, albeit with lower average wages.
Moving beyond the statistics, it's imperative to discuss avenues where these businesses, especially minority and veteran-owned, can thrive even more. One such avenue is commercial real estate (CRE).
Commercial Real Estate: An Untapped Opportunity for Diverse Business Owners
The commercial real estate landscape is evolving, with an increasing recognition of the value of diversity. Historically, CRE has been a domain with limited representation from minorities and veterans.
However, with the industry beginning to acknowledge the richness, innovation, and problem-solving capabilities that diverse perspectives bring, doors are quickly opening.
Success stories of individuals from diverse backgrounds in CRE are starting to emerge, emphasizing the immense potential for minority and veteran-owned businesses in this field.
For instance, there have been accounts of Black American women making significant strides in CRE, navigating through the challenges and setting benchmarks for others to follow.
However, the journey toward inclusivity in CRE is far from over. Even as momentum builds, there's a need to further diversify the industry. The advantages of doing so are multi-fold, and the opportunity has never been as available as it is at present.
Diverse teams lead to innovative solutions, reflecting the varied clientele and needs of modern businesses. Veteran-owned businesses, with their unique skill sets, can especially benefit from and contribute to this industry, given their background in strategy and execution.
Moreover, CRE offers a robust value proposition: With real estate being a tangible asset, it presents opportunities for consistent revenue streams and appreciation over time. With the degree of leverage employed in CRE, agent and broker incomes can be quite rewarding, as well.
The Bottom Line for CRE
By venturing into CRE, minority and veteran business owners can further consolidate their financial position and ensure sustainable growth.
While the recent data from the US Census Bureau shines a light on the commendable performance of veteran and minority-owned businesses, it also underscores the potential of untapped industries, like commercial real estate.
As the business landscape becomes more inclusive, it is up to these businesses to seize relevant opportunities and set new benchmarks for success.
Methodology
This data was obtained in raw form from the US Census Bureau, and simple calculations were made, such as dividing total receipts by number of employees to yield revenue per employee. No further machinations were performed beyond these.
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