Of all of the small businesses operating in the U.S, one in ten are veteran-owned. Businesses owned by veterans contribute over $1 trillion in annual receipts and employ almost 5.5 million people nationwide. In fact, veterans are twice as likely to own a business than non-veterans.
As President and CEO of the National Veteran-Owned Business Association (NaVOBA), Matthew Pavelek leads efforts to ensure veteran-owned businesses have equal access and inclusion in corporate supplier diversity programs. Prior to this work, he served as an infantryman in the U.S. Army.
I recently had the opportunity to speak with Matthew about the state of veteran-owned businesses and NaVOBA’s work. Below is our conversation, edited for clarity.
Rhett Buttle: How does NaVOBA support veterans in launching and operating small businesses?
Matthew Pavelek: The National Veteran-Owned Business Association (NaVOBA) is a collaborative partner in the resource ecosystem that leads U.S. Military Veterans to attain post-military prosperity through entrepreneurship. NaVOBA strives to ensure veteran-owned businesses are granted equal access and inclusion in corporate supplier diversity programs.
NaVOBA is an independent 501(c)(3) nonprofit organization governed and led by Corporate America and our mission is to create corporate contracting opportunities for America’s Veteran’s and Service-Disabled Veteran’s Business Enterprises™ (VBEs/SDVBEs) through certification, advocacy, outreach, recognition, and education. As such, we don’t directly aid in helping veterans start businesses. Rather, we work with our partners like Bunker Labs and the Institute for Veterans and Military Families and the Veterans Business Outreach Centers to help veterans find the right partner resources to get the expert training they need and, when they’re ready, get certified as a Veteran’s Business Enterprise (VBE) so we can introduce them to our Corporate Allies.
Rhett Buttle: Can you describe the current landscape of veteran small business ownership and some of the unique traits veterans acquire during their service that prepares them for entrepreneurship?
Matthew Pavelek: Absolutely. The outlook for veteran-owned businesses has never been better. First of all, the most recent National Defense Authorization Act increased the percentage of prime and subcontract awards issued by the federal government from 3 to 5% – creating an opportunity of more than $25 billion. In addition, our State Tracker lists more than 35 with programs to increase opportunities for veteran-owned businesses.
But, the opportunity in Corporate America is by far the greatest marketplace for veterans to compete. More than 900 FORTUNE 1000 companies include Veteran’s Business Enterprises as preferred vendors in their supplier diversity programs.
Regarding how service prepares veterans for entrepreneurship, I’m reminded of the old Army recruitment campaign from the 1980s that insisted soldiers “do more before 9:00 a.m. than most people do all day.” Well, this really is more than just an effective use of hyperbole; it’s symbolic of the old-fashioned work ethic instilled through military training and service. The lessons learned and lived in military service like leadership, teamwork, competitive spirit, mission-orientation and ambition are the same attributes needed to succeed in business.
According to Census data, there are currently more than 3 million veteran-owned businesses and military veterans are twice as likely to own a business as non-veterans. In fact, one-in-seven veterans own a business, while only one-in-14 Americans own a business. Some of our nation’s greatest entrepreneurs are military veterans. Fred Smith, founder and CEO of FedEx, and Little Caesars Pizza founder Mike Ilitch both served in the U.S. Marine Corps, and Phil Knight, founder and CEO of Nike, served in the U.S. Army Reserve, just to name a few.
Rhett Buttle: What are some of the challenges veterans face in starting and running a small business?
Matthew Pavelek: Veterans are similar to many small businesses and struggle with getting the capital necessary to get started and scale. They also must overcome challenges to find and keep the right people and understand all the complexities that come with running your own business. What I’ve found that is unique to veterans, however, is the knowledge gap about opportunities in the private sector with Corporate America.
Most veteran-owned businesses who identify as a veteran-owned business (VOB) are aware of and trying to compete for government contracts. While this can be very lucrative, it’s dwarfed by the opportunity in Corporate America simply since there are so many more potential customers. In fact, that same 5% I mentioned earlier of private sector spending is more than $150 Billion annually.
Rhett Buttle: In what ways can corporate allies support veteran-owned businesses?
Matthew Pavelek: There are many ways our Corporate Allies do an outstanding job of helping our VBEs compete to become suppliers. First, having a dedicated supplier diversity professional who works as an advocate to connect the veteran supplier to the procurement professionals within their organizations is a vital advantage that doesn’t exist in the public sector.
Second, we’ve been fortunate to have excellent corporate professionals serving on our Board of Directors and our Committees to ensure our programming maximizes veterans’ competitiveness and procurement-readiness. Also, our Corporate Allies have been tremendous about being present at networking events and matchmakers to ensure veterans are consistently engaging in fruitful business conversations. Our quarterly Operation Matchmaker program is an excellent opportunity for our Corporate Allies to send their buyers and category managers to one-on-one meetings with pre-screened prospective VBE suppliers.
Rhett Buttle: How do supplier inclusion programs help veteran-owned businesses access capital and contracts and does NaVOBA play a role in this effort?
Matthew Pavelek: Capital access is always a challenge. The old adage that the only people who can get a loan are those who don’t need one is pervasive for a reason. Lenders are risk-averse, But, there are several programs that do offer some advantages to diverse suppliers in terms of modified underwriting criteria. For example, the U.S. Bank Business Diversity Lending Program is a type of special purpose credit program, or SPCP, permitted by the Equal Credit Opportunity Act (ECOA). These programs are specifically designed to improve access to capital for businesses owned by veterans and other communities.
NaVOBA works with our VBEs to ensure they have all the information possible about capital access programs available to them. In addition, we work to educate veterans about creditworthiness and how to present a valuable business case to funders through our Marching Forward Mondays Education series as well as our partners at the IVMF and VBOCs.
Rhett Buttle: How does NaVOBA partner with other organizations including corporations and entrepreneurs? What should they do?
Matthew Pavelek: In April of 2019, NaVOBA joined the National Business Inclusion Consortium (NBIC) joining our partners at the National LGBT Chamber of Commerce (NGLCC), Disability:IN, the National Minority Supplier Development Council (NMSDC), US Black Chamber of Commerce (USBCCC), US Hispanic Chamber of Commerce (USHCC), US Pan Asian American Chamber of Commerce (USPAAC), WEConnect International, Women Impacting Public Policy (WIPP), and the Women’s Business Enterprise National Council (WBENC).
Collectively, the NBIC launched the Certified Shared Database in early 2024. This is the first ever sourcing tool inclusive of multiple diverse business communities. Corporations have been asking for a joint sourcing tool for a long time and this is a shining example of collaboration between corporations and certifying organizations that leads to maximum visibility for our certified suppliers.
Rhett Buttle: Is there anything else that you would like to add?
Matthew Pavelek: Yes, we couldn’t be more excited about the VIP Commercial program. There has never been any public sector investment to train veterans about private sector opportunities – which is the most significant factor on that knowledge gap I mentioned earlier. On October 16 and 17, 2024, NaVOBA kicked off our Inaugural Joint Forces Forum. The event began with a celebration of our Best Corporations for Veteran’s Business Enterprises (BCVBE) Dinner Reception where we recognized the top performing corporations that include Certified VBEs as suppliers.
The ceremony followed up the next morning with a full day of networking and knowledge and the graduation ceremony for the first cohort of 55 veteran-owned businesses completing the first-ever corporate-focused procurement readiness program with our friends and partners at the National Veterans Institute for Procurement (VIP). In addition to the 55 graduates, we welcomed 23 large corporations to spend time meeting with our VBE graduates with more than 500 unique conversations during the roundtables and networking opportunities.
This is just the beginning of work to close that knowledge gap with much more to come in 2025 and beyond.
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