Tuesday, October 23, 2012


One of the most important books on entrepreneurship written in the last two decades is “Start-Up Nation”, which describes the way that Israel transformed itself into an economic powerhouse through the development of a vibrant and entrepreneurial high technology sector.

According to the book’s authors, a key factor in the success of this innovation hotspot has been that, at the age of 18, Israelis must serve in their country’s defence forces for at least two years, with many young people therefore being directly exposed to utilising technologies at the cutting edge of areas such as telecommunications and information technology.

And with the nature of the Israeli Armed Forces valuing improvisation and, despite their military focus, having an anti-hierarchical structure, potential entrepreneurs emerge not only with skills in teamwork and leadership, but also with experience of technologies that are the base for many new innovative sectors of the economy.

However, the entrepreneurial potential of those who have served their country in the Armed Forces should not be surprising.

Recent research suggests that previous military service has one of the largest marginal effects on self-employment, with “veterans” being 45 per cent more likely to be self-employed than non-veterans.

One of the countries which values its veterans and their potential contribution to developing an entrepreneurial economy is perhaps unsurprisingly the United States of America, where it is estimated that there are over 2.4 million businesses owned by veterans, equivalent to around 9 per cent of the total business population.

Unlike many countries, the US Government provides specific and targeted support for military veterans to start and develop their own business. This is largely driven by its national enterprise agency, the Small Business Administration (SBA), which has established an Office of Veterans Business Development for this purpose. Its mission is to maximise the availability, applicability and usability of all existing small business programmes for veterans and reservists as well as their dependents or survivors.

These include Veterans Business Outreach Centres, which are organisations set up to specifically provide entrepreneurial development services for eligible veterans owning or considering starting a small business.

There are also training programmes, such as the “Boots to Business” initiative, that have been introduced by the Obama Administration to train service members who are moving from military life to business ownership through courses focused on creating a feasible business plan.

Most importantly, the SBA has a range of small business loan programmes that are specifically targeted towards supporting veterans who wish to start up their own business.  For example, the Patriot Express Loan Initiative for veterans and members of the military community wanting to establish or expand small businesses gives a decision on loan applications within thirty six hours and on the lowest interest rates available from the SBA.

Therefore these programmes, in addition to many others at state and local level, mean that those leaving military service are given the backing they need to set up their own businesses after serving their country.

But what about the UK? What support is provided to British veterans when they leave the Army, Navy or Air Force?

Last year, the UK Government published an Armed Forces Covenant that sets out the relationship between the Nation, the State and the Armed Forces.

Long overdue, the Covenant recognises that the whole nation has a moral obligation to members of the Armed Forces and their families and establishes how they should expect to be treated.

Yet, despite the introduction of actions such as improved council tax relief, the establishment of a veterans card for commercial discounts and a pupil premium for service children, there seems to be no specific support, as found in the USA, for those who leave the Armed Forces to set up their own business.

And with the Ministry of Defence aiming to cut 29,000 military and 25,000 civilian posts by 2015, it is critical that the UK Government, along with the devolved administrations, puts into place the relevant backing to help with training, education and business support for those UK veterans who wish to undertake the transition into self-employment.

The US model shows how this can be done and, more importantly, how veterans can be helped when they return to civilian life. Certainly, there is no reason why those who have served our nation bravely should not get all the backing needed to make a real and sustainable contribution to their local economy.