Did you know veterans are twice as likely to be self-employed as non-veterans? Listen to part one of the latest podcast episode of “The Heartbeat of Main Street” to hear about the entrepreneurial priorities, drive and future of the men and women who have served their country in the military.
“The Heartbeat of Main Street” delivers timely insights tailored to the needs of small business owners and entrepreneurs. Featuring a rotating line-up of small business experts and industry leaders – and covering a range of topics – each episode explores the trends that have an impact on revenue creation for small business owners.
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Jeff Cathey: You know they've fought for this country and now they can maybe own part of it or run a piece of it. Some that we talk to are very interested in coming back maybe even to their hometown into the community and helping their own reintegration efforts in that respect.
Kate Delaney: Boy, I'm so excited. This time around we're diving into something really close to my heart to be honest. Jeff Cathey joins us. He's a Senior Military Affairs Executive for Bank of America and a former Navy captain. I'm married to an ex-Navy guy so I know what that's like. It's interesting because what we're going to talk about with Jeff is so, so significant. According to a study published, Greg, in 2017 by the U.S. Department of Veteran Affairs, when you look at the veterans they are twice as likely to be self-employed compared to non-veterans. This does not surprise me. So, Jeff, first of all, welcome, and do you think this status really widely known by veterans themselves?
Jeff Cathey: I think it is. We know that about 180 to 200,000 service members leave the Army and the Navy and the Air Force and the Marines every year. And as they do formerly they go through a transition assistance program in their individual services. And about 10% of them raise their hand and say, "I want to start my own business. I want to get in there and run a franchise or start my own business, and I'm very interested in receiving an initial primer on what that is all about. What are the resources out there? What are the barriers are there to either help me or hinder me in going forth with my efforts?" So it's a strong cohort that's interested in it.
And the services have set that up to kind of segregate them off to the side and say, "Okay, if you're interested in starting your own business come over here and we'll start talking about business plans, and marketing plans, and so forth."
Gregg Stebben: So Jeff, you're a former Navy captain, you're now the Senior Military Affairs Executive for Bank of America and I mean this is really what you focus on every day. I'm wondering looking back on your past as a Navy captain and now interacting with these veteran entrepreneurs every day, are there certain things that draw people to military service that then lead them to become great entrepreneurs? Are there things that happen in the training or in the course of their years of service that make them great at being entrepreneurs? Can you kind of see it as a whole or as a whole process for them?
Jeff Cathey: Gregg, you know I would say that those who want to come out and start their own business really probably want to control their own destiny. And maybe in some ways quit taking orders and start giving them, right? And they're going to be successful. Employers are looking for talent, work ethic, and attitude. And 70% nationwide survey of companies are looking for primarily work ethic and attitude. So, I think the ones who raise their hand and want to start their own company, that work ethic will transfer over. It’s up to them to keep the attitude on because there are going to be starts and stutters and so forth. And then the talent portion of it, that's the neat part where they're going to be intellectually curious. They're going to have to go and start a new mission, and they're going to have to learn all this stuff from the business plan to the marketing plan, to how to raise capital and so forth.
I just see them as they fought for this country and now they can maybe own part of it or run a piece of it. I think they don't lack confidence. I think they've had a ton of responsibility in the service. They've had global exposure. They worked in diverse environments. They've done some crisis action planning and they've made some decision making at high rate of speeds. So, I think they can jump right into it. Some that we talk to are very interested in coming back maybe even to their hometown into the community and helping their own reintegration efforts in that respect.
Kate Delaney: Jeff, I referenced this in the beginning because of my own family I saw this, and I talked about this study that was published in 2017 by the US Department of Veteran Affairs, and in that study they also found that self-employed veterans demonstrated higher levels of gratitude, community integration, and altruistic service to others. I'm not surprised by that because of what I've seen. Can you talk about how supporting veteran entrepreneurs and encouraging other vets to become entrepreneurs and small business owners also brings great benefits to the community at large?
Jeff Cathey: It does, Kate. To get out there and ... there's less than one percent of Americans that are putting the uniform on. And so, they are highly trained, they're very specialized, their operational tempo is high, they deploy a lot. Americans nationally and in the local communities want to support the troops so to speak, but they can't find them. And so, they're just gone. And to be able to come back and self socialize and to start up through your own initiative your own company, and get rid of the national tendency towards isolation whether you're on a military installation or you're on a Mac flight going overseas, or you're on the ground deployed in South Korea or Germany, or you're in a combat zone. That isolation has just really got to be peeled back. And to start your own company, and to put a sign up on the window kind of demystifies the whole thing. I think so many of the veterans, they're community integrators, they're going to be contributors. They want to get in there whether it's on the little league field, at the church, any kind of associations to include in the business community.
Gregg Stebben: We're talking with Jeff Cathey, the Senior Military Affairs Executive for Bank of America—he's a former Navy captain. We're also talking about how and why veterans become so great at being small business owners and entrepreneurs. And one of the things I want to ask you Jeff is, what are some of the challenges that veterans face? And when I Googled this I actually came up with the term “vetrepreneurship,” so there's clearly a movement here, but what are some of the challenges that veterans face in starting a small business or continuing to run one, and what kinds of programs are out there? For instance, I know that BofA just launched a programto help military veteran entrepreneurs.
Jeff Cathey: We did and it's exciting. And let me just table that for a second, Gregg. But I would say the barriers are access to capital. Really where are the dollars, number one. And number two I think inside the military we have appropriated dollars from the tax payers through the Congress. And so, it's a budgetary sort of exercise, large budgets but it's different then the raising of capital in the generation of revenue. And so that is something that the vetrepreneur sort of has to learn, and then also how to manage expenses, and how to borrow money to grow that business. So I think those are the barriers. And then that business acumen part, now it's, "Okay, I gotta develop a business plan. I've gotta know my marketing plan and who's the competitors, who else is already out there." Maybe this market in Des Moines, Iowa, is saturated or over saturated in trying to do mobile automobile detailing or dog grooming, or whatever it is. So, those are the things that are out there.
And then as I said the access to capital is the big one. So, if they come to most banks, they leave the Army on Friday and want to start their business on Monday and they walk into the bank, they're just not bankable. So, a lot of them will go over to other sources of capital or maybe even a credit card and pay pretty high rates to borrow that money, and sometimes that can be crushing and put them out of business before they even start.
So, Bank of America on the 8th of June announced a $20 million veteran entrepreneur lending program whereby the non-profit lending arm of the company and some community development financial institutions, CDFI's, are out there. We funded five of them over seven states: Texas, Colorado, Oklahoma, California, New York, and both Carolinas. And it's a real solution. At about an eight percent plus or minus percent type of lending for the veteran. And so, we lent about zero to one percent to those CDFI's who turn around and lend to the business owner once they vet them and look at their credit scores, and their business plan, and all that, that we mentioned. You can start at eight percent, it opens the door, it gets them to meet their financial needs for the capital upfront and off they go. So, we're very excited about that CDFI program called Veteran Entrepreneur Lending Program. $20 million dollars over those five CDFI's, and it's just started and we're very excited about it.
Gregg Stebben: You know what's interesting Jeff is as I've been listening to you—and I did not serve in the military, I am not a veteran—I've learned so much by listening to you. And I was really excited to talk to you because I realized folks who have not served and our not veterans have so much to learn from this conversation. And one of the things I started thinking as I've been listening to you here is, there are probably some real advantages to being in the military and then getting out and starting a business, but there are probably some disadvantages.
And one of the disadvantages I thought of as you've been talking is, if I go the traditional entrepreneurial route, which I think for many people is you go to college and maybe you're studying business maybe you're not, but you're networking with other potential entrepreneurs in the community perhaps or you're just focused on a very specialized thing because you have a college major. Then maybe you go on to get a master's degree and a PhD. You've been building this whole network around you that's going to support you in your business. That's not necessarily true I would think for a veteran, so that could be a disadvantage that they're not in the same environment. And do you think programs like this BofA program or are there other programs from like the SBA that help support veterans to eliminate that disadvantage and turn it into an advantage?
Jeff Cathey: Yeah, no I hear you Gregg. And the sequence just comes in different orders. And so, I agree with you. There's a very hierarchal way and build the triangle like you said on one side. The other side is go over there and defend your countrymen and do what you're asked to do from a military for deployed perspective and so forth. And you're sort of losing ground along the way when you come back.
And that's why it's so exciting to see these veteran entrepreneur programs that have been established mostly at the land grant colleges like University of Florida, Oklahoma State University, University of Southern Calthe Marshall School of Businessand at Syracuse University at IVMF, and even here locally where I am at Hillsborough Community College they have Operation Startup. Not a set aside, but just a veteran entrepreneur program. Even Stanford has Ignite.
There's 1.1 million veterans on college campuses executing the GI Bill and most of these courses ... and I've been to the one out in LA and up in Gainesville and Stillwater, Oklahoma and most of these. There's about 80-90 veteran entrepreneurs either current existing ownership, have a business fledgling in their first or second year, or brand new. And those usually go eight or nine months or so, and they'll come in for a week and get to know the instructors, the expectations and so forth, and have some academics there. And then they'll go back to their hometowns through some online academics and some mentorship along the way, and some checkpoints and so forth. And they'll come back and graduate. So, it's good. There's a buzz around it. There's strength in numbers. Popping out of that is going to be sort of the evening out of those sort of two different paths to owning your own business.
Kate Delaney: So, Jeff I can imagine you just talked about some of the programs that are there, can you share with us some stories from some of the vets, some of the entrepreneurs and small business owners that you've worked with in your position with Bank of America?
Jeff Cathey: You know Kate, I’d say most of those that I know that are running organizations, and I'd equate them to a small business, they're leading non-profits. And these are sort of millennial led non-profits that Bank of America's associated with such as Student Veterans of America, such as America's Warrior Partnership, or Team Red, White, and Blue, or Mission Continues, or Team Rubicon. And these are young men and women as executive directors of these organizations that essentially are doing the same thing. Even a non-profit, you've gotta generate revenue, you've gotta fundraise, you've gotta control expenses, and staffing, and travel, and everything else, and you have to lead a team. And that's exactly what they're doing. And so, we have great partnerships, long lasting partnerships sustained with all of those non-profits, and some of the smaller veteran owned businesses.
We went out to People Fundwhose one of those five CDFI's that we spoke about. They're in Texas, they're in Austin, Texas. And we went out and met Gary Lindner and he runs them. And we looked at all their books, met some of their veteran entrepreneurs. Looked at how they vet who they're going to lend to. We looked at their loss rates. We looked at their sustained efforts to support these veterans as they start up their business, because it's more than just veteran entrepreneur leadership program I talked about. It's more than just writing a check and the $20 million dollars to those five CDFI's. It's lending, and learning, and technical assistance. And so, that is a huddle up, that's support network, that is we've all go the same target, but there's going to be some off ramps, there's going to be some unexpected barriers and so forth. But this is the learning part of it through Syracuse University, and IVMF the Institute of Veteran and Military Families, their V-Wise, their women veterans programs. There are ways and technical assistance for those business plans, and control of money, and expenses, and so forth to make this a go. So it's not “here's your check good luck, see you later.”
Gregg Stebben: Well that makes perfect sense. And in fact, Jeff when I was getting ready for this interview and just Googled the phrase military veteran entrepreneurs and veteran entrepreneurs, that's when I began to discover that there's this whole world that includes networking, and programs like you've described for learning in addition to access to capital and things like that.
We're talking with Jeff Cathey, he's the Senior Military Affairs Executive for Bank of America, and a former Navy captain. I want to ask you Jeff, we're talking here about veterans starting businesses or continuing to run businesses and getting the kind of support that can help them continue to be successful. I'm wondering if you have any suggestions for people who are listening who are family or friends of a veteran and they know that their family member or their friend has always talked about or dreamed of starting a business, but maybe just needs a little bit of a push. Are there things those of us who are family or friends can do to support that veteran to enable them to take the first step?
Jeff Cathey: I think so, Gregg. I think beside lending them a few dollars is to really get them into the community and even the SCORE. The senior former executives that are out there in most markets around the country that lend their expertise, so they have come and gone in their business entrepreneurship and been successful, and they know what the minefields are, and they know what the success metrics are. These are companies big and small. If you look back at current or recent executives, CEO's of large companies like Lockheed Martin, and FedEx, and Proctor and Gamble—Proctor and Gamble's Bob McDonald is a West Point graduate who was most recent secretary of the VA. And so, these are good leaders. Bank of America was run by a Marine, Hugh McColl, General Motors same thing. And so, they all somewhere in there whether they served like I did for 29 years or they came in and did an honorable service for four years and then left, and struck out on their own.
As I said, everybody's wanting to support the troops and more than just writing a check. So, if you get in the local area, what is it that community ... and these are where communities can be led by all of us as collaborators and integrators through the economic development part of a local community, or the Chambers of Commerce and other ways to do this, and figure out where the belly button is to push it to collaborate, because it's just really a bit of an opening of a door just like our CDFI program. Just open that door, get it going, and it's going to flush out in the right direction. And it's really just the socialization, sort of a networking, the exchange of ideas, the engagement. As I said, these veterans and these former servicemen, they're going to come and they're going to contribute. They're going to show up early, they're going to wrap it up, they're going to work on a weekend, they're going to figure it out until it goes. And just a little bit of a push from those in the know, this is an economic stimulator, this is a very good and a righteous way to help veterans reintegrate into the community and not be so isolated.
Kate Delaney: I can only image what it's going to look like in 10 years, so exciting. Jeff Cathey, Senior Military Affairs Executive for Bank of America, former Navy captain. Thanks so much for joining us.
Jeff Cathey: Kate, thank you very much. Gregg, likewise.