Entrepreneurial Veterans Battle SBA

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The Next War: Ex-Soldiers Try To Set Up Shop

by Maureen Farrell, Forbes

Bob Corcoran spent 15 years flying jets in the Air Force. He would need all that banking and rolling experience for his next dogfight–dealing with the twisted maze of government agencies established to help ex-soldiers start their own businesses.

When Corcoran (pictured left) retired in 2004 with a severe foot infection, weeks before his second tour of duty in Iraq, the government wrote a severance check for $90,000. He planned to start a gym franchise, but after a free 13-week entrepreneurship class at Robert Morris University, paid for by the federally funded Veterans Business Outreach Center in Pittsburgh, he quickly found out the numbers didn’t add up.

Disaster averted, Corcoran decided to parlay his aviation training into a new aerial photography company called Top Flight Photos in Beaver, Pa. Staff members at the local veterans’ center chipped in with tutorials in Quickbooks accounting software and introduced him to a network of local entrepreneurs. “They’ve funneled me more information and contacts and practical help than all the other organizations put together,” says Corcoran.

Yet not all of Corcoran’s attempts to get aid proved as fruitful. He ran into headwinds at the local chapter of the Small Business Administration… when he sought help securing government contracts. The SBA sent Corcoran to the local branch of SCORE (Service Corps of Retired Executives), a volunteer mentoring organization, where he was told he couldn’t meet with a counselor until he took (and paid for) a day-long class at the University of Pittsburgh that essentially covered the same material he had learned at Robert Morris. Then came more paperwork and a long delay before he met with an ultimately unhelpful SCORE representative.

Corcoran has since tried going back to the SBA for more help–with little luck. “Going there was more hassle than it’s worth,” he says. “The cost-benefit in terms of time and what I’d eventually get was pretty lame. I had a business to run.”

Corcoran’s experience highlights the challenges veterans face as they embark on yet another war: entrepreneurship. Congress tried to facilitate the process back in 1999 when it passed the Veterans Entrepreneurship and Small Business Development Act, dedicated to redressing what it calls a lack of appropriate services for veteran entrepreneurs. Its earnest pledge: “The United States must provide additional assistance and support to veterans … enabling them to realize the American dream that they fought to protect.”

Despite its lofty intentions, the law seems to have fostered as much bureaucracy as entrepreneurship. Among other things, it established something called the National Veterans Business Development Corporation–aka, the Veterans Corporation, a quasi-government agency that also solicits private funds–as well as a new layer of management at the SBA and the U.S. Department of Veteran Affairs dedicated to veteran entrepreneurs.

The law also added service-disabled vets to the list of groups eligible for fully guaranteed loans under the government’s 7A small-business loan program and created a government-wide goal that 3% of all federal contracts must go to small businesses owned by service-disabled veterans.

The result of all that lawmaking: lack of coordination, spotty sharing of best practices and ultimately, little accountability. In some cases, the most effective services–at least in the eyes of “vetpreneurs”–get the least funding.

Walter Blackwell, head of the Veterans Corporation, chalks up part of the problem to lack of funding. This year’s contribution by the federal government to the Vets Corp.: just $1.5 million–$230,000 of which went toward raising a meager $150,000 in private funds, according to Blackwell’s testimony before Congress last month.

“Given our funding and reach, we do very well,” says Blackwell. “We’re working hard to talk to Congress, and if appropriations come through, that’ll make a difference.”

According to a dozen entrepreneurs Forbes.com spoke with, the most successful programs are the walk-in veteran business centers–three funded by the Veterans Corporation in Boston, St. Louis and Flint, Mich., and five by the SBA in Pittsburgh, Albany, N.Y., Sacramento, Calif., Edinburgh, Texas, and Lynn Haven, Fla. Meanwhile, the SBA has 1,100 offices nationally to go along with 389 SCORE centers.

Iraq veteran Curtis Ridgeway, the co-founder of Urban Improvement Construction, a real estate development, design and construction firm, discovered the Veterans Corporation center in St. Louis after he had a business plan in place. The office introduced him to several local bankers and helped him land a city zoning license, something Ridgeway had burned months trying to get. “As a last resort, I called [center director] Pat Heavey and told him we’re losing money every day,” says Ridgeway. “Within a few days, he had everything straightened out.”

Sadly, most of these local outposts have suffered a funding cut in recent years. Heavey himself says his center received $175,000 in government funding in 2003, but only $140,000 this year; next year is anyone’s guess. “To run [a veteran business center], you basically have to be prepared to fire up a non-profit from scratch,” he says. “We’re all working on shoestring operations.”

The stakes here aren’t small. By next February, some 2 million servicemen and women who did tours of duty in Iraq and Afghanistan (including all the Armed Forces and the National Guard) will have retired from the military. More than a few will try to set up their own shops: According to a recent survey by the Small Business Administration, about 22% of all veterans have launched, or have considered starting their own businesses.

West Point grad Dawn Halfaker, who retired after losing her right arm in a 2004 grenade attack in Iraq, tried and failed to navigate the system. “I’d try to call numbers on the SBA’s Web site. I couldn’t ever get anyone to talk to, and when I did it was never the same person and they never knew answers to my questions,” she says. Instead, Halfaker leaned on West Point contacts to land several government contracts to bolster her information technology consulting business, which employs six service-disabled veterans.

While the SBA’s Web site promises a wealth of resources, it also confounds. Upon deeper inspection, the links to services for veteran entrepreneurs lead back to themselves. “The Web site for the SBA makes veterans think there are far more opportunities than what actually exists,” says Lou Celli, who runs the Northeast Veterans Business Resource Center in Boston. “There’s no real one-stop resource center.”

As for those eight local veteran outreach centers established by that 1999 law, critics say they are generally isolated from one another and receive minimal guidance from a central authority. “The Veterans Corporation has never encouraged community-based organizations to work together,” says Celli. “They keep us separate and never link us up with the Small Business Administration’s efforts.”

It’s hard to seek help when you don’t know the help is out there. The lack of marketing coordination is even evident from simple Web searches. While the Veterans Corporation’s Web site links to the SBA’s resources, the SBA fails to mention any of the Vet Corp’s programs on its list of veterans’ resources.

Phone calls may not yield much better results. Iraq vet Mark Ahlrich sought counseling services from the Boston chapters of SBA and SCORE to help him with his Byfield, Mass.-based Gaming Green Pages, which publishes directories and other guides for the casino industry. He called the Boston chapter of the SBA several times, but after waiting several weeks for a response, they only offered assistance with writing his business plan–help Ahlrich says he didn’t need.

“I kept getting bounced around and sent to different people,” he says. “Navigating the SBA and SCORE could be a full-time job in itself.” No thanks to the SBA, Ahlrich eventually happened upon the Veterans Corporation’s Boston center, which quickly gave him the counseling he did need.

The cavalry may be coming–if at a glacial pace. This week the House passed the ”SBA Veterans’ Programs Act of 2007″ aimed at expanding resources and untangling some of those bureaucratic Gordian knots.

Sponsored by Republican Congressman Vern Buchanan of Florida, the bill would provide funding for two additional Veteran Business Outreach Centers and allow existing SBA centers to apply for grants between $75,000 and $250,000 to add specific veteran services. Meanwhile, Sen. John Kerry has introduced a bill primarily focused on adding grants, loan assistance and services for reservist business owners called to duty.

Good ideas. Too bad there’s no price for failure–except, of course, for the one paid by veteran entrepreneurs. “The Veterans Corporation was supposed to be that central organization that would tie everyone together,” says Celli. “Unfortunately, there’s been no oversight and no federal thumb on everyone’s neck to make sure everyone did what they were supposed to.”

Source: Forbes.com

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SOURCEForbes.com
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