[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
MILITARY TO ENTREPRENEURSHIP: PRIVATE
SECTOR INITIATIVES TO HELP VETERANS
PURSUE BUSINESS OPPORTUNITIES
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
MAY 7, 2014
__________
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13
Small Business Committee Document Number 113-067
Available via the GPO Website: www.fdsys.gov
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HOUSE COMMITTEE ON SMALL BUSINESS
SAM GRAVES, Missouri, Chairman
STEVE CHABOT, Ohio
STEVE KING, Iowa
MIKE COFFMAN, Colorado
BLAINE LUETKEMEYER, Missouri
MICK MULVANEY, South Carolina
SCOTT TIPTON, Colorado
JAIME HERRERA BEUTLER, Washington
RICHARD HANNA, New York
TIM HUELSKAMP, Kansas
DAVID SCHWEIKERT, Arizona
KERRY BENTIVOLIO, Michigan
CHRIS COLLINS, New York
TOM RICE, South Carolina
NYDIA VELAZQUEZ, New York, Ranking Member
KURT SCHRADER, Oregon
YVETTE CLARKE, New York
JUDY CHU, California
JANICE HAHN, California
DONALD PAYNE, JR., New Jersey
GRACE MENG, New York
BRAD SCHNEIDER, Illinois
RON BARBER, Arizona
ANN McLANE KUSTER, New Hampshire
PATRICK MURPHY, Florida
Lori Salley, Staff Director
Paul Sass, Deputy Staff Director
Barry Pineles, Chief Counsel
Michael Day, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Sam Graves.................................................. 1
Hon. Nydia Velazquez............................................. 2
WITNESSES
Mr. Wade Franklin, Owner, The UPS Store Clarendon, Arlington, VA,
testifying on behalf of the International Franchise Association 3
Ms. Dawn Smith, Founder and CEO, Mystic Reme Teas, Greenville,
SC, testifying on behalf of the Business and Professional
Women's Foundation............................................. 5
Mr. Davy Leghorn, Assistant Director, National Employment and
Education Division, The American Legion, Washington, DC........ 7
Mr. Charleston Malkemus, Founder and CEO, Gozump, Inc., Miami,
FL, testifying on behalf of The U.S. Chamber of Commerce
Foundation..................................................... 9
APPENDIX
Prepared Statements:
Mr. Wade Franklin, Owner, The UPS Store Clarendon, Arlington,
VA, testifying on behalf of the International Franchise
Association................................................ 24
Ms. Dawn Smith, Founder and CEO, Mystic Reme Teas,
Greenville, SC, testifying on behalf of the Business and
Professional Women's Foundation............................ 28
Mr. Davy Leghorn, Assistant Director, National Employment and
Education Division, The American Legion, Washington, DC.... 35
Mr. Charleston Malkemus, Founder and CEO, Gozump, Inc.,
Miami, FL, testifying on behalf of The U.S. Chamber of
Commerce Foundation........................................ 42
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Honor Capital Equity for Veterans submitted by James S.
Allen, Jr., President...................................... 50
MILITARY TO ENTREPRENEURSHIP: PRIVATE SECTOR INITIATIVES TO HELP
VETERANS PURSUE BUSINESS OPPORTUNITIES
----------
WEDNESDAY, MAY 7, 2014
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 1:00 p.m., in Room
2360, Rayburn House Office Building. Hon. Sam Graves [chairman
of the Committee] presiding.
Present: Representatives Graves, Chabot, Herrera Beutler,
Hanna, Bentivolio, Collins, Rice, Velazquez, Schrader, Chu,
Hahn, Payne, Meng, Schneider, and McLane Kuster.
Chairman GRAVES. Good afternoon. We will call the hearing
to order.
Today, this hearing, I think it is going to be a very
informative hearing.
There are over 22 million veterans right now living in the
United States, and by 2040, those who served in Iraq and
Afghanistan are going to make up 50 percent of the entire
veterans population. The unemployment rate for these younger
veterans is higher than that of their civilian counterparts and
is one of the many challenges that they face transitioning into
civilian life.
Despite the obstacles associated with this readjustment
from military service, veterans possess a unique set of skills
learned in the military, such as the ability to lead,
communicate effectively, and execute tasks efficiently and with
precision. This may be why veterans tend to be more
entrepreneurial than the rest of the population. In fact, each
year since 1979, the self-employment rate for veterans has
remained higher than that of the rest of the population
overall.
Given the roadblocks faced by veterans, combined with their
propensity for small business ownership, numerous efforts have
been created in the private sector designed to assist veteran
entrepreneurs in achieving their goals. In creating programs
that provide entrepreneurial training, mentorship, financial
assistance, and networking opportunities, private organizations
have stepped up to the plate for our nation's returning heroes.
One such effort is getting started back in my district in
North Missouri. Jim Allen, a community leader in Platte County,
is forming an organization called Honor Capital. Backed by a
group of investors committed to helping veterans obtain quality
employment, Honor Capital is also planning to assist veterans
in opening their own Save-A-Lot grocery stores.
One of the group's partners, Army Captain Marc Esposito, is
in the audience today. A graduate of the U.S. Military Academy
and an Army helicopter pilot, Captain Esposito flew over 400
MEDEVAC missions in Afghanistan, and he is here with us today.
Today, we are going to learn about some of the other
efforts that are assisting our nation's heroes in transitioning
to the world of entrepreneurship. We are fortunate to have with
us a group of veteran entrepreneurs and small business owners,
and we look forward to hearing all of their stories. And I want
to thank you for your service to your country and for being
here.
I now recognize Ranking Member Velazquez for her opening
statement.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
By developing new products, advancing research, and
creating new markets, entrepreneurs are an important force in
our economy. Over the years, we have repeatedly seen the
important role veterans play in this process. Due to the
leadership, training, perseverance, knowledge of the government
procurement process and other skills acquired in the military,
veterans are often uniquely qualified to launch and manage
their own businesses. In fact, in today's private sector
workforce, veterans are 45 percent more likely to be self-
employed compared to workers without active duty military
experience.
Currently, there are about 2.5 million veteran-owned
businesses. About one in 10 that generate over one trillion
dollars in receipts. Clearly, for many men and women leaving
the service, entrepreneurship provides a promising opportunity
to continue serving their country and creating jobs in their
local communities, all while supporting their families.
Despite the rich tradition of veterans owning small
businesses, the veteran-owned employment rate sits around 9
percent. For that reason, both public and private initiatives
have been established to assist transitioning servicemembers.
Unfortunately, those initiatives often fail to develop
veterans' entrepreneurial goals. Besides the Small Business
Administration's veteran-focused program, like the Veterans
Business Outreach Centers and the Boots to Business Program,
the private sector has their own efforts to assist veterans.
Many of these projects are multidimensional, offering
everything from a basic course on running a business to helping
prospective entrepreneurs secure start-up capital.
Today we will hear from several veteran entrepreneurs about
their first-hand experiences with some of these programs. It is
my hope that they can highlight for us what they found
beneficial, where improvements can be made, and identify gaps
in how these services reach veterans.
Assisting entrepreneurs will require integrated
comprehensive solutions that leverage a combination of
government, nonprofit, and private efforts. Despite the
progress we have made, hundreds of thousands of veterans and
their families continue to struggle, demonstrating how much
more needs to be done. It is incumbent on all of us to ensure
that resources reach the veterans and servicemembers these
programs are meant to help. In that regard, as we examine
private-sector initiatives, we must consider ways they can
complement government programs to maximize effectiveness.
I thank all the witnesses for being here today. Your
testimony will help inform the committee as we move toward that
goal.
On that note, I thank the chairman for the time, and I
yield back.
Chairman GRAVES. All right. Our first witness today is Wade
Franklin, who is the owner of the UPS Store in Arlington,
Virginia. After graduating from the U.S. Naval Academy in 2005,
Mr. Franklin served seven years in the U.S. Navy, which
included multiple wartime deployments in Afghanistan, Japan,
and the Persian Gulf, where he steered ships, led teams of
sailors, and supervised a wide range of technical experts. Mr.
Franklin today is testifying on behalf of the International
Franchise Association.
Thanks for being here. We appreciate it.
STATEMENTS OF WADE FRANKLIN, OWNER, THE UPS STORE; DAWN SMITH,
FOUNDER AND CEO, MYSTIC REME TEAS; DAVY LEGHORN, ASSISTANT
DIRECTOR, NATIONAL EMPLOYMENT AND EDUCATION DIVISION, THE
AMERICAN LEGION; CHARLESTON MALKEMUS, FOUNDER AND CEO, GOZUMP,
INC.
STATEMENT OF WADE FRANKLIN
Mr. FRANKLIN. Chairman Graves, Ranking Member Velazquez,
and members of the Committee, thank you for inviting me to
testify today on ways that the private sector can assistant
veterans in pursuing business ownership and other
opportunities. My name is Wade Franklin, and I am the owner of
a UPS Store franchise in Arlington, Virginia, and a veteran of
the United States Navy. I appear before you today on behalf of
the International Franchise Association.
Franchising is a large community of diverse businesses that
all grow and operate using the franchise business model. In
this model, entrepreneurs open their own establishments and
purchase the rights to operate their business using the
trademarks, products, and business strategies of a proven
franchise system. Franchises are very common in the restaurant
and hospitality space, but franchising is also popular in
business services, personal services, retail, and automotive.
I left the Navy in February 2012, and was looking for
employment opportunities during the previous fall. The
prevalent prospects were corporate management jobs that many
junior officers are drawn to, but I did not necessarily want to
go down that path. While searching for opportunities for
veterans, I came across VetFran, the International Franchise
Association's veteran transition program, and saw the financial
incentives that hundreds of franchise systems offered to
veterans who opened franchise businesses. One of the
opportunities that most appealed to me was the UPS Store, who
at the time was offering to waive the $30,000 franchise fee for
the first 10 veterans approved as franchise owners in 2012. I
was approved to become a UPS store franchise owner in February
2012, and I was one of the 10 veterans that had their initial
franchise fee waived.
There are obvious challenges to jumping straight into
running a business without prior business experience, which few
veterans have. I went to the Naval Academy out of high school
and spent the next seven years in the Navy. While I learned
many valuable skills in the Navy, the military is not the best
form to prepare veterans to own a business. The military does a
terrific job of supporting us while serving, but the enormous
risk of opening a business in civilian life while leaving
behind many of the resources previously provided by the
military can be daunting. To that end, private sector programs,
such as VetFran, can be extremely beneficial in filling the
support gap that often exists for veterans. For me, the most
important part of the decision was assessing the financial
resources available to me, and allocating those resources as
best I could. That was, and remains, the most difficult
obstacle for me to overcome in becoming a business owner.
Franchise models have complex, yet effective operations
guidelines, and the franchise owners that can best execute the
system are those who realize the most success. Our nation's
servicemen and women have many of the qualities that make
successful franchise business owners. The attention to detail,
situational awareness, and communications skills are benefits
learned in the Armed Forces. Above all else, veterans possess
the leadership skills necessary to run a successful small
business, and to persevere through the tough times that keep
that business running.
Recognizing that franchising is a great fit for
entrepreneurial veterans, the International Franchise
Association launched VetFran in 1991 to encourage franchise
companies to recruit veterans as franchise owners. As part of
VetFran, franchisors offer special incentives to qualified
veterans who enter into franchise agreements ranging from
thousands of dollars in initial inventory to special financing
on equipment.
In a report on Veterans Day in 2013, a survey revealed that
the franchise industry has nearly doubled its hiring target
since 2011 with over 151,000 veterans having started careers in
franchising. However, we are most proud of the fact that over
5,000 veterans have been recruited as franchise owners across
hundreds of franchise systems. Unsurprising, the survey went
further to indicate that veteran-owned franchises were more
successful than other franchises, far outpacing nonveteran-
owned units in both sales and numbers of jobs created. I am
proud to say that the UPS store participates in the VetFran
initiative and note that the network has more than 150,000
veteran owners that have taken advantage of this program, and
over 280 stores are operated by those veterans.
I like to think I am smart and resourceful enough to have
navigated my way through opening a business without the help of
VetFran, but there is no doubt that the program was a
significant catalyst in starting my business. Legislation in
the House of Representatives, the Veterans Entrepreneurs Act of
2013, will provide a tax credit to qualified veteran franchise
owners worth up to 25 percent of the initial franchise fee,
capped at $400,000. In addition to the real estate, equipment,
and inventory necessary to operate a franchise, the initial
franchise fee is a significant investment, and remains a
barrier to opening a franchise. When coupled with the
incentives offered through VetFran, this tax credit will go a
long way towards helping veterans open new businesses and
create opportunities for both themselves and others. The
franchise community has a demonstrated record of success in
implementing veterans' programs and we believe that this
legislation will serve to expand on the success while providing
veteran entrepreneurs with significant financial resources to
realize the American dream of owning and operating their own
small business.
I believe that this type of effort, one that marshals the
information and expertise from hundreds of companies across
many industries, is a successful model to help provide
businesses opportunities for veterans.
I thank you for the opportunity to testify today and I look
forward to answering any questions you may have.
Chairman GRAVES. Thank you, Mr. Franklin.
Our next witness is Dawn Smith, who is the founder and CEO
of Mystic Reme Teas, which is an online tea retailer in
Greenville, South Carolina. Ms. Smith served eight years in the
Air Force, completing multiple deployments in Iraq,
Afghanistan, Turkey, and Germany, where she was in charge of
managing troop and cargo movement and logistics. Ms. Smith is
testifying on behalf of Business and Professional Women's
Foundation. Thank you for being here. I look forward to your
testimony.
STATEMENT OF DAWN SMITH
Ms. SMITH. Thank you, Mr. Chair, Madam Ranking Member, and
members of the Committee, thank you for the opportunity to be
here today. My name is Dawn Smith. I am the founder and CEO of
Mystic Reme Teas in Greenville, South Carolina, and testifying
today on behalf of Business and Professional Women's
Foundation.
As a woman veteran who recently started my own business, I
hope my experiences can be helpful to the committee as you
examine which government and nonprofit programs can best assist
and meet the unique needs of women veterans as they transition
back to civilian life.
I am proud of my military service. I served in the Air
Force for eight years and deployed six times to Iraq,
Afghanistan, Turkey, and Germany. My expertise in the military
was logistics, which means I was responsible for making sure
that movement of both troops and cargo got to the right place
and were on time. In both Iraq and Afghanistan, I was in charge
of terminal operations for processing and loading more than
7,000 passengers and directing the shipment of hundreds of
thousands of tons of cargo. My work was consistently recognized
for meeting excellent delivery and departure standards. I also
earned my MBA while in the military.
Because of my advanced logistics experience and MBA, I
really did not think I would have a problem finding a rewarding
career when I left the service. But when I returned home to
North Carolina to raise my children on my own, I was not even
considered for management jobs. Instead, I was offered
positions like a warehouse worker, which I did not think
utilized my skills, education, and experience. For a couple
years, I took various jobs that did not fit my background,
including working as a teacher, a secretary, since I needed to
feed my children. These jobs offered neither the career I was
seeking, nor the salary suitable for my experience.
While working, I continued to look for more rewarding and
financially secure positions. I returned to school to begin a
master's degree in accounting, but looking for a job while
managing the demands of work, school, and motherhood, I became
discouraged. I knew I needed help, so I turned to the Internet
to see what career resources might be available for a woman
veteran. I was very fortunate to find Business and Professional
Women's Foundation, a nonprofit organization that runs a free
career mentoring program for women veterans, Joining Forces
Mentoring Plus. What attracted me to the program was that
working women volunteered for women like me, to help navigate
us on a path to successful civilian careers and even pursue
entrepreneur opportunities. Participants can access a ``high-
tech/high-touch'' Internet community that includes experienced
women mentors as coaches, navigators, and supporters for free.
I immediately signed up and was assigned a wonderful,
accomplished mentor, Sandy Smith. Sandy worked with me one-on-
one and was persistent in offering advice and support on
everything from interview skills to resume development. She
pushed me, checking on how many resumes I sent out each day.
She helped me create a new mindset that gave me the courage to
apply for positions that previously I would not have thought
possible. In 2012, I was hired as an auditor by the U.S.
Defense Contract Audit Agency. I am happy to report that my
salary at this job is twice what I had been making previously.
After the job, Sandy, my mentor, did not leave me on my own but
coached me on office etiquette and protocols necessary to
successfully navigate the civilian sector workplace. All of
Sandy's mentoring and coaching paid off.
I love my job, and feel my career is now on very solid
ground. But even though I love my job, I have always dreamed of
owning my own business. With Sandy's encouragement and suitable
mentoring, I was able to start my online store that sells my
brand of tea. I am very excited that Mystic Reme Teas is
currently in the final selection round to appear on Shark Tank.
If I am chosen, I will be seeking funding to open my own tea
bar.
I truly believe that none of this would have happened
without the personal mentoring and wide array of career
resources offered by BPW Foundation. It was so successful for
me because it was designed by and for women. Other veteran-
based employment and career development programs too often miss
the unique elements and needs that matter most to women
veterans. We need awareness and guidance and employment
resources and programs that support and recognize the multiple
roles impacting women veterans and their access to jobs.
I can attest to the fact that women leaving the service
often face unique challenges, including single motherhood or
caregiving for family members, including wounded warriors.
Also, women veterans often do not identify as veterans and do
not know that they can access a wide array of benefits. We are
frequently looked at differently from our fellow male veterans.
Women who served in war zones are often not afforded the same
level of prestige as their male counterparts. Thanks to the
general support of BPW and the partners such as Alliant Credit
Foundation, Booze Allen Hamilton, Citi, CVS, and others, there
is no cost to participate in these mentoring programs. It is
absolutely free for women who participate.
Thank you for this opportunity to share my story and tell
about the resources that helped me begin my successful career
and start my business. I hope that other women veterans will
benefit from my experience and that the Committee will support
programs that are tailored for the challenges and needs that
our women veterans face as they seek meaningful lives after our
time in the military. Thank you.
Ms. VELAZQUEZ. Mr. Chairman, it is my pleasure to introduce
Mr. Davy Leghorn. Mr. Leghorn is assistant director of the
National Employment and Education Division for The American
Legion, the largest veterans' service organization in the
country. In his current capacity, Mr. Leghorn oversees the
employment and small business portfolios and administers The
American Legion's National Veterans Hiring Initiative. Prior to
joining The American Legion, he served in the United States
Army as both a mortar infantryman and a civil affairs
specialist. Welcome.
STATEMENT OF DAVY LEGHORN
Mr. LEGHORN. Chairman Graves, Ranking Member Velazquez, and
distinguished members of the Committee, on behalf of Commander
Dellinger and the two and a half million members of The
American Legion, we thank you for the opportunity to discuss
our views regarding private sector initiatives for veteran
entrepreneurs. The American Legion is one of the few
organizations that deliver privately-funded resources
exclusively to the veterans' community at no cost because we
believe that our servicemembers, veterans, and spouses have
already paid for our programs with their service. The bulk of
our entrepreneurial resources are delivered biannually,
coinciding with our winter conference and national convention.
Our convention moves from state to state each year, and as
such, we have managed to spread our services across the
regions. Boost to Business, or B2B is a modular curriculum that
has been piloted and is now being implemented. The curriculum
was designed for transitioning servicemembers as a result of an
agreement signed by various agencies to revamp the Transition
Assistance Program in compliance with the 2011 VOW to Hire
Heroes Act.
Boots to Business is a phenomenal off-the-shelf curriculum
that can be tailored to serve different segments of the
veterans' community. With minor adjustments, B2B was adapted
exclusively for female veterans and spouses. This is the second
year The American Legion has hosted a two-day women's
entrepreneurship and resources workshop based off of this
curriculum, and we have had remarkable attendance rates. One
way we know we are delivering a quality product is when
iteration after iteration we see next to zero percent attrition
rate in attendance between the two days. Going forward, The
American Legion will be working with Syracuse University and
SBA's Office of Veterans Business Development to tailor the
curriculum in a new program that will be called Reboots to
Business where we will deliver the B2B curriculum to the rest
of the veterans population. The first class of Reboots to
Business will be hosted in conjunction with our national
convention this year in Charlotte, North Carolina.
Though our programs do not receive federal funding, we are
utilizing a hybrid B2B curriculum developed by SBA's OVBD and
Syracuse University. Further, our training sessions draw
heavily upon SBA's grantees and resource partners for speakers
and facilitators that ensure our training sessions are
successful. Looking at the amount of interest from our small
business workshops, The American Legion knows that our programs
and services do not have the bandwidth to support the entire
veterans' community. For instance, registration for our women's
small business workshop recently held in Houston had to be
capped at 120 registrants and additional people were
regrettably waitlisted. Veterans came from as far as Nevada and
Missouri to attend this event. Further, The American Legion
only has one counselor on staff to assist with business
formation and VA verification issues. We rely heavily on SBA's
resource partners and our volunteers from The American Legion
Small Business Task Force to act as mentors and advocates.
While there are a few free entrepreneurial programs and
counseling services for veterans, it is hard to find services
that are both, one, exclusive to the veterans' community, and
two, do not receive federal funding. The more dependable
entrepreneurial programs for the veterans' community have been
the federally-funded programs, such as the Veterans Business
Outreach Centers (VBOCs) and the versatile Boots to Business
curriculum, and the myriad of many MBA programs for veterans
that are hosted at various universities.
Entrepreneurship training requires the kind of expertise
that is gained through experience. Veterans need counselors who
understand their culture and experience. VBOCs fill this void
and provide a unique service to veteran entrepreneurs that
cannot be duplicated by existing programs within SBA or VA.
Ideally, The American Legion prefers that VBOCs retain sole
ownership and deliver B2B to transitioning servicemembers, but
unfortunately, after 15 years of program growth, the network is
still too small and underfunded to support this task.
Small business outreach and training programs offered
through prime federal contractors only work with established
businesses and rely on proceeds from federal contracts for
support. Veteran entrepreneurship programs funded by
philanthropic support alone rarely lasts more than a couple
years. The most reliable entrepreneurship programs available
for veterans are the Training and Assistance Programs offered
through SBA's OVBD. Any discussion that seeks to reduce funding
or inhibit the operations of this office will be met with
opposition from The American Legion.
Assistance to veterans who have honorably served our nation
is an earned benefit. Historically, the support for veteran-
owned small businesses has been strong and bipartisan. The
American Legion looks forward to working with this Committee on
these issues. Thank you for the opportunity to testify, and we
look forward to any questions the Committee may have.
Chairman GRAVES. Thank you, Mr. Leghorn.
Our next witness is Charleston Malkemus, founder and CEO of
Gozump, Inc., from Miami, Florida. Gozump is a real estate
brokerage championing home buying for military families. He
serves as a major in the United States Marine Corps Reserve,
where he is a ground intelligence officer and led a scout
sniper platoon through two combat deployments in Iraq. He is
testifying on behalf of the U.S. Chamber of Commerce
Foundation. Thanks for being here, and I look forward to your
testimony.
STATEMENT OF CHARLESTON MALKEMUS
Mr. MALKEMUS. Thank you, Chairman Graves. Good afternoon,
distinguished members of the Committee. My name is Charleston
Malkemus, and I am the founder and chief executive officer of
Gozump, Inc. Thank you for providing us with an opportunity to
discuss with you veterans and entrepreneurship.
The ``next'' greatest generation of America is coming home.
Over the next five years, America will have more than a million
servicemembers transitioning, who have been fighting this
nation's battles for over a decade. They have endured every
hardship known to man. They have been diplomats and community
leaders, restored people's homes and freedoms, solved problems
of unparalleled complexity, and led some of our nation's best
and brightest. All of them volunteered to serve and potentially
sacrifice for the greater good of America. They represent less
than half a percent of the population and are this country's
greatest resource.
We have an opportunity today to capitalize on the surge of
veteran talent coming home in order to move America forward.
Whether through America's small businesses or leading new
ventures, veterans have a wealth of capabilities that are
ideally suited to solving this nation's problems. While they
will be confronted with many challenges reintegrating into
civilian life, none will be greater than finding a way to
continue to serve. Communities and businesses will benefit the
most from directly engaging veterans with their problems and
providing them with the resources and equipment to overcome
them.
Private sector initiatives have to be prepared for
transitioning veterans. Hiring Our Heroes, a program of the
U.S. Chamber of Commerce Foundation, is an excellent example of
the efforts that are necessary. Working with their vast network
of chambers and strategic partners, Hiring Our Heroes has been
creating a movement across America. They are rallying
communities to find veterans, and their spouses, meaningful
employment while supporting the work of veteran-friendly
businesses like Gozump.
Gozump's story began way back on the battlefields of Iraq.
Like many entrepreneurs, I had a personal friction point, and
during my second deployment, I was leading a scout sniper
platoon through Operation Steel Curtain. I received an email
that said the real estate market back home was not looking so
good, so I realized, okay, I am going to have to do something
about it. When I got home, I was confronted with the very real
challenges of having to go through the friction points of
selling my home, very similar to what I had to go through when
I was trying to buy my home, being relocated out to Camp
Pendleton, California. When I started to investigate this
problem, I realized there really was not any sort of
application or solution that was out there at that time, a very
comparable story to many entrepreneurs across America.
I quickly realized not too soon after that, when the real
estate market started to come crashing down, that this was some
friction points that more than myself and many Americans were
feeling. After many years of research, a lot of sweat and
equity, recruiting, I was eventually able to lead a team of
Marines that all decided to go out and combat this problem, and
today, home buying still persists as probably one of the most
frustrating problems in America within the Internet age.
We had the fortunate opportunity of being selected last
year for a competition within the Chamber of Commerce. They
were trying to find one of the most veteran-friendly small
businesses in America, and we were honored with being selected
as one of the top four for that competition. But my initial
introduction to the U.S. Chamber of Commerce went back to when
I was a unit commander of 156 marines in Hialeah, Florida. And
I will be honest with you. A lot of those marines were having
trouble finding employment. Some of them were sleeping in their
cars. People who had gone over to Iraq and fought, they were
sleeping in their cars, and these were distinguished men and
women of America. They were struggling to go to school, have a
better life, feed their families. They were trying to
transition into civilian life as best they could, and for the
most part, they were met with a lot of frustration.
Me and my team decided to volunteer. We got involved. We
got committed. We spent hundreds of hours--Joint Task Force,
regional boards, business breakfasts. And I will be honest with
you. The commentary that we heard from most of the business
leaders is that there is a great feeling of alienation with
their military. They do not identify, and PTSD and the campaign
for post-traumatic stress disorder has really only increased
that feeling of separation. It is an unfortunate situation
because so many men and women who have served obviously have
those type of conditions, but the lack of knowledge around it
has fostered this kind of impression that they do not know how
to effectively deal with it.
As an American veteran and entrepreneur, I have enjoyed
great satisfaction working in the start-up community, and it
was not until attending a Hiring Our Heroes job fair that I
realized that veterans themselves as a community are ideally
situated for start-ups and small businesses. A start-up is the
closest professional replacement for military life. Veterans
are not only familiar with high stress, fast-paced and volatile
working conditions, many of them thrive in them. They have been
conditioned to work insane hours to accomplish incredible
objectives and never worry about yesterday's disappointments.
Over the next five years, small businesses in America will have
this unique opportunity to tap into this veteran talent pool.
Now, as Chairman Graves had alluded to earlier, studies
have shown that over 45 percent of military veterans are more
likely to start a business, twice as likely to succeed, and
favored by consumers 70 percent of the time. Despite these
odds, they will need both direction and resources to be
successful. Unfortunately, a national veteran program for
entrepreneurship on par with the Chamber Foundation's
Initiative for Employment does not exist. As a team, we have
recognized this as a critical shortfall to a veteran's
successful transition and have decided to launch a program in
South Florida. Veterans are best positioned to solve problems,
whether as valuable team members in America's small businesses
or leading new ventures.
Chairman Graves, distinguished members of the Committee, I
thank you again for the opportunity to testify and look forward
to answering your questions.
Chairman GRAVES. Thank you all very much, and we are going
to start questions with Mr. Bentivolio.
Mr. BENTIVOLIO. Thank you very much, Mr. Chairman, and
thank each and every one of you fellow veterans. Good job. I am
very proud, Mr. Franklin, great organization, UPS, but I have a
question, Ms. Smith, you have experience in the Air Force as a
logistics person, and it seems to me that you might be more UPS
oriented. So did you look into UPS at all?
Ms. SMITH. No, sir. I did not look into UPS.
Mr. BENTIVOLIO. Okay. While, I was thinking about this and
reading over the briefing that I have for this hearing, I was
going through it and I just wanted to point out to the chairman
and anybody else who cares to listen, that this is a field
manual from the United States Army. It is 101-5. And in the
back here you will find a document called an operational or op
plan. Are you familiar with that, op plan? You know, it does
not--go ahead.
Ms. SMITH. Yes, sir. I am.
Mr. BENTIVOLIO. Yeah. It does not take much to--well, if
you are familiar with this, you can apply this for a business
plan, could you not? And I think just recently, business plans
have become more important when we start a business. And I
think the surge in the military of teaching soldiers what an
operational plan is all about, you know, with little
imagination they can apply that same format to a marketing
plan. Am I correct?
Ms. SMITH. Yes, you are, sir.
Mr. BENTIVOLIO. So being in the military, you are not only
learning the job and a skill may not be related to your
civilian career, but there are things in the military you can
apply as the chairman and the ranking member pointed out--
communication skills, leadership skills, that kind of thing;
right?
Ms. SMITH. Yes, sir.
Mr. BENTIVOLIO. Mr. Malkemus, you focused on post-traumatic
stress. You mentioned that in your testimony.
Mr. MALKEMUS. I did. I did. Yes, Congressman.
Mr. BENTIVOLIO. Just a little sidebar here. I do not
consider that a disorder. I think it is misnamed because every
veteran that has experienced combat comes back with some post-
traumatic stress, and I think it is a natural thing. They have
experienced something few people have experienced, and to call
it a disorder is the wrong thing. I think it is discriminating
and it is unwarranted. But soldiers that have been in combat
know what it is like to take a lot of stress and still do the
right thing; correct?
Mr. MALKEMUS. Oh, I agree completely with you, Congressman.
Mr. BENTIVOLIO. Just like in business.
And Mr. Franklin, if you do not mind here, how would you
describe to the Committee, or would you describe to the
Committee how you initially found VetFran initiative? Did you
say that or did I miss it?
Mr. FRANKLIN. No, sir. I did not. I shortened my written
testimony, shortened it for the speech. It is actually Google.
I found it through Google. As I said, briefly, I was
transitioning and saw the opportunities for me to go into
different management jobs and decided I wanted to do something
completely different and decided--I wanted to look to see what
opportunities I could have to work for myself. That is what
seemed most appealing.
Mr. BENTIVOLIO. Every soldier knows how to use social
network after they have been deployed.
Mr. FRANKLIN. Absolutely. Absolutely. I agree.
Mr. BENTIVOLIO. Go ahead.
Mr. FRANKLIN. I was just going to say, so I just Googled
veteran franchise opportunities and VetFran came up. I went
there and it is more of a resource, just connecting information
with veterans that are interested. It lists how much it costs
to get into the different franchises, hundreds of different
franchises, and every veteran has a different personal
financial ability, and then I was able to match up what I could
do with what was available and that is really how VetFran
helped me out and that is how I found it.
Mr. BENTIVOLIO. Very good. God bless the UPS for giving
this opportunity to our veterans.
Mr. FRANKLIN. Absolutely.
Mr. BENTIVOLIO. What advice would you give to other
returning veterans searching for business opportunities?
Mr. FRANKLIN. Do not limit yourself. I guess one of the
things I think that VetFran can help someone do--and this is my
own personal experience talking to other veterans is, you know,
veterans do not really consider franchising as an option
because they see the price tag. And there was this price tag
and it required me to take a loan and use a lot of my personal
savings to get into it, but it required me to sort of ignore a
lot of risk, which I know most veterans probably are a little
more willing to accept a little risk. But I think do not limit
yourself.
Mr. BENTIVOLIO. Veterans willing to accept a little risk?
Mr. FRANKLIN. A lot of risk. We will put it at a lot of
risk, sir.
I think not limiting yourself. That is probably one of the
biggest things is just do not look to see what the
opportunities are and then say, well, I cannot do that. I think
going in with an attitude of let us at least try. Let us give
it a try.
Mr. BENTIVOLIO. Speaking of risk, veterans know about risk
assessment, do they not?
Mr. FRANKLIN. Absolutely, sir.
Mr. BENTIVOLIO. They know how to evaluate a situation or a
mission and put together a risk analysis, do they not?
Mr. FRANKLIN. Sometimes to a painful point.
Mr. BENTIVOLIO. Yes, very good.
I see I have run out of time. Mr. Chairman, thank you very
much. I yield back.
Chairman GRAVES. Ranking Member Velazquez?
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Mr. Leghorn, in testimony given to the committee, witnesses
have stated that veterans generally hire other veterans.
Moreover, disabled veteran businesses are much more likely to
hire other veterans with disabilities or join with other such
businesses to compete for a contract. Therefore, at a time when
the unemployment rate for veterans returning from Iraq and
Afghanistan is over nine percent, it is vital that we get
contracts to these businesses. I would like for you to share
with this committee, do you feel that breakdowns at individual
agencies have impeded the ability of veterans small businesses
to get contracts within the federal marketplace? Do you think
that the federal marketplace contracting practices in any way
do not provide a level playing field for veterans to be able to
do business with the federal government?
Mr. LEGHORN. Thank you for your question, ma'am.
We do feel that there are certain barriers for veterans to
get contracts in the federal procurement space. Namely, a lot
of that comes from the Department of Veteran Affairs. Granted,
they are doing a better job of verification. There are still
some lapses in I would say judgment calls in some of the cases
that I have worked with. So, for example, I have had a recent
case, a small business, very complex structure. She had a lot
of her joint ventures stripped of a CVOSB status because of the
lengthy verification process. So administratively, there are
barriers. Again, it is at the Department of Veteran Affairs.
Ms. VELAZQUEZ. Okay.
Ms. Smith, because of limited access to credit and
lingering economic uncertainty, many VC firms are hesitant to
invest in startup firms. Besides tax policies, how can we
encourage more angel investors and private foundations to
invest in new veteran-owned enterprises?
Ms. SMITH. Madam Ranking Member, that is a very good
question. I think the problem is a lot of people are scared to
invest in businesses, and I would just suggest that they take a
chance for veterans because we have really great resources with
veterans and veteran-owned businesses.
Ms. VELAZQUEZ. Okay.
The SBA offers average programs designed to provide a wide
array of services to both prospective and established business
owners. Before you reached out to the foundation, had you
pursued any services from the SBA, like the Veterans Business
Outreach Center? And if you did, would you share your
experience?
Ms. SMITH. Yes, ma'am. I am glad you asked that question
because honestly, to start my business, I was aware of the
Patriot Express Loan through the SBA and I tried initially to
go through them to get funding for my business. Actually, my
business is completely my own investment. I strapped the whole
thing. I was denied, and I thought the process was supposed to
be easy and simple for veterans, especially if you have great
credit, like I do, and you have a great business plan.
Ms. VELAZQUEZ. So you applied for a loan and the loan was
declined?
Ms. SMITH. Yes. And they made it seem like it was a lot of
different loops and barriers that you had to go through. And
that seems to me very discouraging for veterans, especially
when you have all these avenues for veterans that are supposed
to make the system easier. So it was discouraging and then I
just decided to go for it myself with my own money. And
thankfully, I am, like I said, at the final rounds for Shark
Tank because I took that initiative on my own. But I think
there is a breakdown, some type of disconnect with the programs
that they say are available and funding that is actually
available to the veterans.
Ms. VELAZQUEZ. Well, maybe later you can share with me the
specific reasons for them not approving your loan.
Ms. SMITH. I would love to, ma'am.
Ms. VELAZQUEZ. Okay. Thank you.
Thank you, Mr. Chairman.
Chairman GRAVES. Mr. Collins?
Mr. COLLINS. Thank you, Mr. Chairman.
You know, again, thank you all for your service. And what I
am trying to get my arms around a little bit is when I look at
some of the preparation materials here it says that basically
today the unemployment rate for veterans is 6.9 and for the
rest of the population 6.7. So not to say 6.9 and 6.7--I think
they are fairly similar. I am just wondering as I look at
veterans and knowing myself as an employer, I will hire a
veteran over someone else every day of the week because of what
you have been through and all the training you have gone
through. So I am wondering if some of the unemployment numbers
have to do with the fact you have got a lot of veterans coming
out just starting to look for jobs. For instance, if you looked
at the unemployment rate of recent college graduates, God only
knows what that is. That is probably 20 percent. Veterans
coming out of the war are new to the workforce looking versus
when you look at the entire civilian population. That includes
everyone that has been working 10 years, whatever. I just
wonder, you know, maybe Mr. Leghorn, do you think it is
statistically significant the 6.9, the 6.7 and you are
measuring folks just entering the workforce against folks that
have been in the workforce?
Mr. LEGHORN. I will admit the overall unemployment rates
are really similar right now, but we, of course, focus on our
post-9/11 veterans, which is substantially higher compared to
their civilian counterparts. And when administering our
services, as of right now that is what we are attacking,
because if we can lower it there, we can lower the entire
unemployment.
Mr. COLLINS. I think maybe the point I am trying to make is
what we should be doing is looking for jobs for everybody. We
need the economy to move. If the entire economy was growing
three and a half percent, we might not even be having this
hearing. I do not know. I think the biggest issue I see is an
economy that is stuck for a lot of reasons, tax policy being
foremost.
The remaining time, certainly, Ms. Smith and Mr. Franklin,
when I look at starting a business, and I have done that,
number one, you need a good business plan. Number two, you need
access to capital. And number three, you have to have a
willingness to give up equity. That is the most painful piece.
You are going to do the work. You are going to put your neck on
the line and somebody else wants half your company. What do you
say to folks, veterans trying to start their company? Do you
agree that those are the three key ingredients, and if you do
it right, as frustrating as it is to get turned down on a loan,
you just go find one another way?
Ms. SMITH. Sir, I would have to agree with you 100 percent
because, like I spoke earlier, I was turned down on a loan but
I believed in my company and I believed in what I could do. And
I knew I had a sound business plan, so I just invested in
myself. And sometimes you have to take that risk. Fortunate for
me, I had enough resources to start my business. Right now it
is online, but I plan to actually have a storefront at some
point.
Mr. COLLINS. So if somebody had said to you, ``I will give
you the money. I am not going to loan it to you. I will be an
equity investor but I get 40 percent of your company, 40,''
would you have taken their money?
Ms. SMITH. I would probably try to negotiate at first. But
I would consider it simply because I want to make my company
successful. But ultimately, I would have to negotiate, sir.
Mr. COLLINS. What about you, Mr. Franklin? As a franchise
owner, I am assuming you own it.
Mr. FRANKLIN. Yes, sir. Sole proprietor. As far as putting
it all together, I did. I liquidated all of my personal assets,
which was pretty much everything I had. I did not have a
mortgage or anything. Luckily, the Navy did not give me the
time to really settle down in any one place. So I took that and
I leveraged that position where I was at when I transitioned to
say, okay, I am willing to risk it all, and I did that. And
actually, I got a SBA loan to finance part of the startup. And
actually, the first bank I went to I was denied a loan, too. It
was their own internal happenings that they did that. But then
I was approved from a few other banks. It is one of those
things that not only did I invest all of my personal assets, I
then went and put myself in a lot of debt and that is something
that I think is a real consideration that someone with a
family, I would not want to do that.
Mr. COLLINS. I think veterans make perfect entrepreneurs
coming from where they do and whether it is the SBA or other
resources, it starts with a business plan that is real and it
is realistic and so forth. And then access to capital. But the
killer many times I have found is the willingness or
unwillingness to give up equity because you say I am going to
do all the work and somebody else is going to take 30 percent,
40 percent. Welcome to the real world. And that is part of my
message to anyone starting a new business is he who has the
gold makes the rule.
Thank you, Mr. Chairman. I yield back.
Chairman GRAVES. Ms. Hahn?
Ms. HAHN. Thank you, Mr. Chairman. Thank you for holding
this hearing. It is really important. And I would also like to
take a moment to thank all of you for being here. Each of you
have served our country and now you have found your own way to
break into entrepreneurship, showing again that our brave men
and women in our Armed Forces are clearly the best of the best,
and we appreciate it.
I hope what we are hearing today is going to help us as we
move forward trying to connect our veterans with jobs and with
business opportunities. This unemployment rate of our veterans
since 9/11 is really disturbing that it is so much higher than
the national unemployment rate. Women veterans have the highest
unemployment rate in this country. And then there are the
homeless veterans, which is so disturbing to me. In Los Angeles
County where my district is, we have over 6,000 homeless
veterans, the largest concentration of homeless veterans in
this country. So this is a real problem, and we all say we want
to support our veterans and support our troops, but the fact of
the matter is when you come home, it looks like there is very
little support in really having you transition to the civilian
life.
I wanted to follow up a little bit, Mr. Malkemus, with the
issue of PTSD. And as one of our colleagues said earlier, maybe
we are labeling it wrong as a disorder and maybe if we change
the name of it, it might be different. It is something that
every veteran suffers. But clearly there is a stigma, as you
said. Even when you look at the facts of the Hire Our Heroes
Program through the Chamber of Commerce, we have got pledges to
hire like 409,000 veterans, but it is not matching up with the
actual veterans hired. So is it true that some business owners
are admitting publicly or privately that they are less likely
to hire a veteran because of the stigma of PTSD? And maybe you
could speak a little bit more about this stigma because it does
exist, and maybe what we can do to address this issue without
downplaying the seriousness of this issue for our veterans?
Mr. MALKEMUS. Sure, Congresswoman.
I would say privately I do not think most business leaders
at this point are anything but supportive of veterans. But
clearly, if you are evaluating two candidates and one has
something that could be a potential risk that they do not know
how to deal with professionally, which right there is already a
lack of understanding that they would think that they may need
to deal with something as opposed to these are some very
talented people that could come in and probably restructure
whole departments or divisions of your operation based off of
their skillset and what they have already done for us in the
country.
I will tell you just a good caveat for Hiring Our Heroes
and their job fairs which I think in terms of an organization
for finding meaningful employment, they have done more than any
other that I have come across. And I think they have probably
brought the business community more to the veteran table than
anyone else. But I will say they have their work cut out for
them, and a lot of that is on the business community side.
I was a graduate of the University of Pennsylvania. When
you graduated from that university, you had managing directors,
top level executives coming to cherry-pick off the best and
brightest talented out of that university. They were going
straight to Wall Street in banking jobs. You go to even a top
level--you could have colonels at that job fair. You will not
see those type of recruiters at that job fair. So clearly those
companies are sending who they think they are going to find
there. I mean, that right there tells you already how they are
valuing the veteran talent that is coming out.
Ms. HAHN. Thank you.
Before my time is up, Ms. Smith, I really appreciated your
testimony. It is very inspiring. You talked about how only four
percent of veteran-owned small businesses are owned by women,
and as a female veteran and mother, you struggled for a while
to find a job that both supported your family and matched your
skillset. I am happy, and it was great to hear about the
Business and Professional Women's Foundation and your mentor,
Sandy Smith. What do you think we can do to improve services
that are available so that we can connect with women veterans
sooner before they run up against so many obstacles and so many
frustrations? What can we do better?
Ms. SMITH. Well, ma'am, I am glad you asked that question
because normally when we leave the military we are offered the
Transition Assistance Program, and that program it is supposed
to gear you for the civilian life. However, it did not help as
much as it says it will. I think if we put programs like
Business Professional Women's Foundation in touch with veterans
or, excuse me, soon-to-be veterans as they transition out of
the military on bases and actually let them be aware, promote
them more, get their name out so that people will know that
there is a program that is 100 percent free for women veterans
who are there to help you, and I really love that program. I
love what they have done for me. And they really changed my
life. So I believe in that program because it is has helped me
tremendously. I just think getting the name out and making
veterans or military females aware this type of program exists
and there are people out there that really care about you.
Ms. HAHN. Thank you. That is an interesting concept to put
these resources on the bases before you transition, and a lot
of you are shaking your head on that. I know I am out of time,
Mr. Chairman. Thank you. I yield back.
Chairman GRAVES. Mr. Rice?
Mr. RICE. Thank each of you for your service.
Ms. Smith, a special thanks to you since you are from my
home state of South Carolina.
I just have one question I want each one of you to answer,
and maybe you cannot think of it right now, but if you had one
thing, if each one of you could be Congress for a day and there
was one thing that we could do to make it better for veterans,
what would it be?
I will start with you, Mr. Leghorn.
Mr. LEGHORN. Wow, it is kind of hard to be put on the spot.
If I was a congressperson what I would do is I would definitely
try to bring some of the programs that Ms. Smith talked about
onto the DoD's Transition Assistance Program. That is just off
the top of my head what I would do. There needs to be a little
more private sector involvement in that program.
Mr. RICE. Thank you, sir.
Mr. Malkemus?
Mr. MALKEMUS. Congressman, thank you. I would say change
the conversation. Right now about veterans you hear a lot about
certain aspects of what they have dealt with, and I would say
why does it matter? Why do we care about veterans coming home
and transitioning? And I would say the truth of the matter from
my perspective is it is talent. This country needs talented
people to start leading itself out of economic stagnation or
whatever else you want to say. Whatever problems we have, these
are people that have been out there solving problems in foreign
countries and doing incredible things. Americans need to
understand that from a different perspective. So I would say
change the conversation.
Mr. RICE. Thank you, sir.
Ms. Smith?
Ms. SMITH. Sir, what I would do is really provide funding
to the veterans in the programs that actually benefit the
veterans, because there are very few programs that truly
benefit the veteran and are willing to help them 100 percent.
Mr. RICE. Can you help us identify those?
Ms. SMITH. Well, one, of course, is DPW. I can attest to
that. Hire Our Heroes. I also know about them as well, and they
help veterans as well. So yes, really providing the funding and
actually getting the funding in place and also getting the
veterans connected with these programs. That would be the
thing.
Mr. RICE. I would like your opinion on some that do not
help as much.
Ms. SMITH. Yes, sir.
Mr. RICE. You do not have to do it right now.
Ms. SMITH. Yes, sir.
Mr. RICE. Maybe we could follow up after.
Ms. SMITH. Yes, sir. I would love to do that.
Mr. RICE. Thank you.
Mr. Franklin?
Mr. FRANKLIN. I think to follow up on what Ms. Smith was
saying and maybe to help answer your last question was I was
thinking how can we help the veteran, connect the veteran with
opportunities. And I think the VA does a very good job of
helping, of offering services to veterans, but if we truly want
to help us make a decision on what we want to do with our life
rather than say here is an example. The GI Bill is great. I do
not want anything to happen to it. But say, ``Go to school.
Here is your only option.'' I wanted to open a business. I was
actually in grad school. I was funding it myself. I gave up
grad school and decided to use my money to open my business.
There was no support from the VA for any type of financial
incentives to open a business. Maybe have the organization look
into doing something like that.
Mr. RICE. In lieu of?
Mr. MALKEMUS. I understand that there is a budget. As a
business owner, I understand a budget. You just cannot create
capital.
Mr. RICE. I almost got the impression you were saying in
lieu of tuition assistance.
Mr. MALKEMUS. And again, I said I do not want to take away
from the GI Bill, but maybe create a separate program. We
already have a framework of successful programs, like the VA
home loan or the GI bill, but what about veterans that want to
do something else with their life than own a home or go to
school, veterans that want to open a business? I think maybe
trying to look into something like that to support the
veterans. That would be one of the things I would want to do.
Mr. RICE. Ms. Smith, I heard you say that the Transitional
Program was not that helpful to you. And you are not the first
person I have heard say that. What can we do to improve that?
What can we make it better? Because I have never heard anybody
say positive things about it. All I have ever heard people
mention is negative. Maybe that is only because we only hear
the negative, but what can we do to make that transitional
program useful?
Ms. SMITH. Sir, honestly, my experience with the Transition
Program is just kind of like you get pamphlets saying a brief
overview of what to expect in the civilian world. I think that
it is not the people that are actually in the civilian sector
who are running these programs or who benefit. That is why I
said maybe putting programs like BPW or even some civilian
companies that, okay, this is what I am looking for, this is
the type of skillsets that I would like you to have, so the
transition would be smoother for veterans leaving the military.
They will say, ``Oh, yes. I have this skillset.'' Or ``Yes, I
have this knowledge.'' And it would make it, I think, a lot
easier.
Mr. RICE. Thank you, ma'am. My time is up.
Chairman GRAVES. Ms. Chu?
Ms. CHU. Yes. Mr. Leghorn, your testimony makes it very
clear that The American Legion and other veteran service
organizations are strongly supportive of the Small Business
Administration's efforts to assist veterans in realizing their
dreams of entrepreneurship. And in fact, I noted with interest
your testimony with that said that The American Legion is
disappointed in the recommendations of the House Committee on
Small Business that proposes federal budget cuts that would
eliminate the Veteran Business Outreach Center in the most
recent publication of Views and Estimates. I would like to make
it clear that I am not supportive of these cuts, and in fact, I
agree that the Veterans Business Outreach Centers fill a
critical void that cannot be filled or duplicated by other
programs, such as mentoring and veteran-specific assistance.
Can you tell us how the services provided by the centers
differ from private sector initiatives?
Mr. LEGHORN. Thank you for your question, ma'am.
The VBOCs, I have only visited a few of them, but from the
few that I have visited, they are run by people that have been
in the military. They understand the experiences that veterans
have and they offer programs and services that cater to a
certain set of experiences. And a lot of times, because they
have a smaller caseload--well, not a smaller caseload but the
one-on-one type really ``high touch'' services are a little bit
better in terms of they really become friends with the people
that they counsel, and a lot of times I know some of these
VBOCs are open or are accessible to the veterans on weekends
and even on the holidays and even at nights because, again, it
is kind of like a military courtesy. And that is, yeah.
Ms. CHU. Okay. Last week, the Small Business Committee held
a hearing entitled ``SBA Initiatives: Necessary or Redundant
Spending,'' and I asked a lot of questions about the Boots to
Business Program. Could you tell us why this program is unique
and not redundant, because I understand that that is your view?
Mr. LEGHORN. We feel that it is a really good curriculum
because it is modular. You could take modules and by changing
the guest speakers or the panels, you could address different
segments or you could apply it to different segments of the
veteran population. We did it successfully for female veterans
and spouses. And this curriculum is not really redundant
because it is not on par with the mini MBA courses that are
happening at the universities. It is like a really--it is a
crash course. It is a two-day crash course that pretty much
tells somebody that maybe did not know anything about
entrepreneurship and lets them know what is involved and really
sits them down and makes sure that they know what they are
getting into. We do not see too many programs and services like
that. A lot of these programs go really deep into the weeds,
which is really good, but when we are dealing with
transitioning veterans or transitioning servicemembers and
veterans that do not even have a business plan, a lot of them
have not even registered their business, that is who this
program is geared towards.
Ms. CHU. In fact, you talked about the unique set of
challenges that veterans have because of their experience of
being in the military. Could you talk about that a little bit,
such as the lack of accumulation of assets and things like
that?
Mr. LEGHORN. Yes. Most of our veterans coming out of
military service do not have collateral for loans, and in fact,
that is the reason why the Patriot Express was so underutilized
because we lack collateral. If we had collateral, we would be
able to use a regular loan product and would not have to rely
on the PXL. So that, of course, is one of our challenges. And
of course, for those that do have collateral or a really good
business plan and were able to get a loan, a lot of times they
find themselves paying off their loan, and that is principal
and interest, with the money that they had just taken out from
the bank because, again, a lot of my small businesses that I
counsel do not make money in the first months, maybe year.
Ms. CHU. Thank you. I yield back.
Chairman GRAVES. Ms. Meng?
Oh, she is not here.
Mr. Schrader?
Mr. SCHRADER. Thank you, Mr. Chairman.
Just a general question. Mr. Franklin indicated some
familiarity already but were all of you aware of the Small
Business Administration when you got out of the service?
Okay. Nodding heads. Good. That is good.
So then maybe start with Mr. Franklin. You had some
experience in trying to get a loan and you say you actually
were able to get a loan or part of a loan. Could you describe
your experience and what particular challenges you came up
against?
Mr. FRANKLIN. Yes, sir. The challenges I faced I think were
more internal. Every bank operates differently, even under the
terms of the SBA loan. And all the banks that I went to were
preferred SBA lenders, which means that the bank internally
does all the paperwork and in the end they make the final
decision and then they notify the SBA. And I think that is
something that until you actually go get an SBA loan you do not
realize that that is part of the process. So I was really
adamant educating myself and I was going to go get a Patriot
Express loan. And I found out that it really did not offer any
benefit that a regular SBA loan could give me. And so going
from there I was, like, okay, that is fair. But getting an SBA
loan, it was more the banks themselves, and that is what I
started talking about is the way every bank did their math
differently. And two of the banks I was approved from wanted me
to liquidate my IRA which I thought was a little too much. And
so essentially, I actually went back to both banks and said,
``So you are asking me to give up every cent that I have,
because I am already putting else I have, and then liquidate my
IRA. What happens when I run out of capital, which you are
going to loan me? I now have no money to come back and say can
you loan me some more. You are not going to want to do that.''
And they said, ``Oh, really?'' I was like, ``Yeah, that is how
math works.''
That was the biggest struggle was the banks, the way they
did their math was very protective. So it was not necessarily a
problem with the SBA, it was the banks themselves.
Mr. SCHRADER. Okay.
Ms. Smith, any comments? Did you try for a loan?
Ms. SMITH. Yes, sir. I did. With my experience it was, like
he said, the collateral and I did try for the Patriot Express
Loan because I thought it was a small amount to ask for. And as
I said, what I was doing, I also have children, so I was really
willing to give up a lot just to get my business off the
ground. So it just did not turn out, but fortunately, I was
able to have enough funding from myself to start my company.
Mr. SCHRADER. Good.
Mr. Malkemus?
Mr. MALKEMUS. Sir, not for this company but I had the same
experiences as both Ms. Smith and Mr. Franklin. The Patriot
Express Loan was one of those things that you thought you had
as a benefit being a veteran, and you walked into any bank and
they basically explained to you that it was just a regular
small business loan, 30 percent collateral required.
Mr. SCHRADER. That is sad. That is sad, because that was
not our intent obviously at the end of the day.
How about the Small Business Centers? Do you guys have any
experience with them? Do you get any education or frustration
with them?
Mr. Malkemus?
Mr. MALKEMUS. I can comment. I have had exposure to a
variety of the SBA resources for almost 15 years when I
initially started trying to do my first startup company. And
back when I was doing that, they were the only people on the
block that you could go to for resources and networks and
access to anything, any information on entrepreneurship. And I
went to Penn. They had a lot of wealth there for an
entrepreneur. Today, there is just so much. I mean, especially
in the last eight years, there has been an explosion in the
knowledge base from the startup community on lessons learned on
how to launch startups faster, cheaper, and more effectively
than ever before. And I would say a lot of that information
that is out there, a lot of those methodologies are still kind
of only found in certain pockets and communities that have
that. But there are veterans in those pockets and communities
and they are trying to tap into the veteran community.
Mr. SCHRADER. Do you think most of your colleagues,
veterans coming out know anything about the SBA and small
Business Development Centers?
Mr. MALKEMUS. I would say they have a better understanding
of the SBA than they do the wealth and knowledge within the
startup communities.
Mr. SCHRADER. Okay.
Mr. MALKEMUS. And that is a bit of a disconnect because a
lot of those lessons learned would help them.
Mr. SCHRADER. Yeah.
Ms. Smith, do you agree?
Ms. SMITH. Yes, sir. I do.
Mr. SCHRADER. All right. Very good.
Well, you all are a lot smarter than I was. I was not a
veteran, so I honor you for your service, but I was an
entrepreneur and I was a lot more ignorant than you all are. So
you are coming out a lot further ahead than a lot of young
people in my day, and hopefully we will fine tune these
programs and partner with the private sector. Like you said,
there are a plethora of new programs out there where people can
put people together in a much, much more intelligent way. The
important thing is to get the word out, and I again thank you
for your service.
I yield back.
Chairman GRAVES. Ms. Herrera Beutler?
Mr. Payne?
Mr. PAYNE. Thank you, Mr. Chairman. I also want to thank
the ranking member. I would also like to thank all of you for
your service and commitment to this nation and your service to
this country and the military.
Let us see. Mr. Leghorn, in your testimony you mentioned
that you believe small businesses are a community of
individuals. You also mentioned that extended and multiple
deployments by Coast Guard and Reserve members are destructive
to a business. With this in mind, what are your thoughts on a
program that creates business-to-business opportunities for
civilian small business owners to link up with veteran
entrepreneurs?
Mr. LEGHORN. We would definitely be in favor of more
private sector involvement in veteran hiring space.
Mr. PAYNE. Sure. We believe that civilian owners could
provide the stability while the veterans could bring a unique
perspective and expertise. Can you speak on the pros and cons a
bit more in reference to that?
Mr. LEGHORN. Can you repeat the question?
Mr. PAYNE. What the idea is is to create a linkature, as we
call it, business-to-business opportunities, for civilian small
business owners to link with veteran entrepreneurs. And when
people have multiple deployments, a partnership of such would
allow continuity for that business not to be disrupted by the
member returning to a deployment.
Mr. LEGHORN. So are you saying that this program would
somehow let--when the veteran deploys he would sub out his jobs
or his----
Mr. PAYNE. That could be a way to look at it. You know,
this is a concept, an idea, and to that point that could be
something that potentially could evolve into as we look at it.
But I mean, you know, part of the issue that was raised was
that when a member gets deployed multiple times it disrupts
their business, and then they have to come back and try to put
it together and move forward. So if there was a civilian
partnership in that business, then the continuity and the
consistency would remain during this military person's time of
deployment if it is multiple occasions. So do you see where
that concept could evolve into something that would help
military members?
Mr. LEGHORN. Yes, sir. I do. With the up tempo of
deployments, I think this is something that we could definitely
work with your office on.
Mr. PAYNE. Okay.
Thank you. I yield back.
Chairman GRAVES. I want to thank all of you for
participating today. As most everybody has said, thank you for
your service very much. Your testimony today is going to help
us better understand the importance of the training programs
supporting our nation's veterans as they pursue business
opportunities that are out there, and it is encouraging to hear
about all the private sector initiatives that are truly helping
our nation's heroes. And I do believe it is important to
consider our federal programs in the context of what is
happening in the private sector. So instead of duplicating the
programs, we can focus on filling those gaps.
It has been an honor for me and the Committee members to
have you here today. Again, we appreciate it, and with that, I
would ask unanimous consent that all members have five
legislative days to submit statements and supporting materials
for the record.
Without objection, that is so ordered.
And with that, the hearing is adjourned.
[Whereupon, at 2:14 p.m., the Committee was adjourned.]
A P P E N D I X
TESTIMONY OF WADE FRANKLIN
Owner, The UPS Store of Clarendon, Arlington, VA
Before the
U.S. HOUSE OF REPRESENTATIVES COMMITTEE ON SMALL BUSINESS
``Military to Entrepreneurship: Private Sector Initiatives to Help
Veterans Pursue Business Opportunities''
May 7, 2014
Chairman Graves, Ranking Member Velazquez, and members of
the Committee, thank you for inviting me to testify on ways
that the private sector can assist veterans in pursuing
business ownership and other opportunities. My name is Wade
Franklin, and I am the owner of a franchise of The UPS Store in
Arlington, Virginia and a veteran of the United States Navy. I
appear before you today on behalf of the International
Franchise Association. I operate my store seven days a week,
and I currently have three employees.
Franchising is a large community of diverse business
concepts that all grow and operate using the franchise business
model. In this model, entrepreneurs open their own businesses
and purchase the rights to operate their business using the
trademarks, products, and business strategies of a proven
franchise system. Franchise businesses are very common in the
restaurant and hospitality space, but franchising is also
popular in business services, personal services, retail, and
automotive.
With nearly one million veterans transitioning out of
military service over the next five years, it is more important
than ever that we help veterans re-integrate into the civilian
economy. Our service men and women are looking forward to
rejoining their families, going back to school, or starting
their own businesses. It is both an economic necessity and a
moral obligation for our country to facilitate this transition.
From Honor to Owner
I left the Navy in February of 2012, and was looking for
employment opportunities during the previous fall. The most
prevalent prospects were corporate management jobs that many
former junior officers are draw to. I saw many of my friends
take jobs in various corporations, but I did not necessarily
want to go down that path. However, I also was not sure where
else to look. The idea of working for myself seemed appealing,
but I did not know how to get the ball rolling on starting a
business, and I did not have an original idea or product to
form a business around. While searching for veteran
opportunities, I came across VetFran, the International
Franchise Association's veterans transition program, and saw
the financial incentives that hundreds of franchise systems
offered to veterans who opened franchise businesses. One of the
franchises that most appealed to me was The UPS Store, who also
offered to waive their $30,000 franchise fee for the first ten
veterans approved as franchise owners in 2012. In addition to
their generous financial incentive for veteran franchise
owners, The UPS Store also partners with the USO, IFA, and
Georgetown University to offer the Small Business and Franchise
Management program to educate franchise executives and owners
on franchising. Needless to say, a brand with an excellent
reputation that was so actively recruiting veterans as
franchise owners was obviously an appealing choice. I applied
to become a franchise owner of a The UPS Store in January 2012
and was approved for a franchise the next month. I was one of
the ten veterans that had their initial franchise fee waived.
There are obvious challenges to jumping straight into
running a business without prior business experience, which few
average veterans have. I went to the Naval Academy out of high
school and spent seven years in the Navy after. My education
and employment in the Navy was not focused on being a future
business owner, and there should be no expectation that the
military prepare future veterans to own a business. Opening a
business is a unique challenge, and even more so for
transitioning veterans. The military does a terrific job of
supporting us while serving, but the enormous risk of opening a
business in civilian life while leaving behind many of the
resources previously provided by the military can be daunting,
especially when there is such a large financial risk involved.
To that end, private sector programs such as the International
Franchise Association's VetFran program can be extremely
beneficial in filling the support gap that often exists for
veterans once they exit the military. For me, opening a
business was not just a choice of which brand or business line
appealed most to me. The most important part of the decision
was assessing the financial resources available to me, and
allocating those resources as best I could. That was, and
remains, the most difficult obstacle for me to overcome in
becoming a business owner.
Veterans and Franchising - A Good Fit
Franchise systems have complex yet effective operations
guidelines, and the franchise owners that can best execute the
system are the owners who can realize the most success in their
businesses. Many of the qualities that make successful
franchise business owners are found in our nation's service men
and women, while the training techniques used in the military
provide a significant skill set that is especially valuable in
franchise owners. The attention to detail, situational
awareness, and communications skills I learned in the Navy also
translate very well to business ownership, and I don't think I
could have learned those skills better in any other
environment. Above all else, veterans possess the leadership
skills necessary to run a successful small business, and to
persevere through tough times to keep that business running.
For these obvious reasons, franchise companies actively recruit
veterans as franchisees, knowing that veteran-owned franchises
tend to out-perform other locations.
VetFran
Recognizing that franchising is a great fit for
entrepreneurial veterans, the International Franchise
Association launched the Veterans Franchising Initiative, or
VetFran, in 1991 in an effort led by Don Dwyer, a United States
Air Force veteran and founder of The Dwyer Group, a family of
franchise brands. The initiative was launched to support
veterans returning from the Gulf War in their transition to the
civilian economy. VetFran is an industry-wide initiative to
encourage franchise companies to both hire veterans as team
members and recruit them as franchise owners. As part of
VetFran, franchisors offer special incentives to qualified
veterans who enter into franchise agreements. Incentives range
from thousands of dollars in initial inventory, special
financing on equipment, or a discount on the initial franchise
fee, like what The UPS Store offered me when I opened my
franchise. Some franchise systems even offer one free franchise
to a qualified veteran franchisee each year.
VetFran members are also able to share best practices
concerning the veterans having initiatives within their own
companies, and the IFA's online VetFran portal helps
prospective veteran franchisees connect with experienced store
owners who are also military veterans. Just as veteran business
owners are more likely to hire fellow veterans, dozens have
also volunteered their time to guide prospective owners through
the complex application process as a part of VetFran's
mentorship program.
A survey of VetFran members reveals that the program has
achieved impressive results. In 2011, IFA launched Operation
Enduring Opportunity, a campaign to hire, and recruit as
business owners, 80,000 veterans, wounded warriors and their
spouses through 2014. In a report on Veterans Day in 2013, a
survey revealed that the franchise industry has nearly doubled
its hiring target. Since 2011, over 151,000 veterans have
started careers in franchising. However, we are most proud of
the fact that over 5,000 veterans have been recruited as
franchise owners across hundreds of franchise systems.
Unsurprisingly, the survey went further to indicate that
veteran-owned franchises were more successful than other
franchises, far out-pacing non-veteran-owned units in both
sales and number of jobs created.
I like to think I'm smart and resourceful enough to have
navigated my way through opening a business without the help of
VetFran, but there's no doubt that the program was a
significant catalyst in starting my business. All franchise
systems are different, each had different benefits and
disadvantages and the tools and resources provided by VetFran
gave me the ability to compare opportunities and decide which
one was best for me. There are many places where veterans can
find information on a variety of different topics, especially
with the increased public awareness and attention drawn to the
issue of veteran unemployment. However, there infrequently are
these resources comprehensive enough to bring a prospective
business owner from the beginning of the process all the way
through to the end.*
Veterans Entrepreneurs Act of 2013
H.R. 3725, the Veterans Entrepreneurs Act of 2013, was
introduced last year to assist veterans in opening franchise
small businesses. It would provide a tax credit to qualified
veteran franchise owners, worth up to 25 percent of the initial
franchise fee, capped at $400,000. In addition to the real
estate, equipment and inventory necessary to open a franchise,
the initial franchise fee is a significant investment, and
remains a barrier to opening a franchise. I would not have been
approved to open a The UPS Store without the franchise fee
being waived. I did not have the personal financial resources
to either produce an extra $30,000 or borrow an extra $30,000
from a financial institution. When coupled with the incentives
offered by franchise systems through the VetFran program, this
tax credit will go a long way towards helping veterans open new
businesses and create opportunities for both themselves and
others. A similar bill, called the Help Veterans Own Franchises
Act, also exists in the Senate. The franchise community already
has a demonstrated record of success in implementing veterans
programs, and we believe that this legislation will serve to
expand on that success while providing veteran entrepreneurs
with a significant financial incentive to realize the American
Dream of owning and operating their own small business. I
believe that this type of effort, one that can marshal the
information and expertise from hundreds of businesses across
many industries, is a model of a successful toolkit to help
provide business opportunities for veterans. I thank you for
the opportunity to testify today, and I look forward to
answering any questions you may have.
Testimony
of
Dawn Smith
Founder and CEO, Mystic Reme Teas
Greenville, SC
before the
Committee on Small Business
U.S. House of Representatives
May 7, 2014
Mr. Chair, Madam Ranking Member, and members of the
Committee, thank you for the opportunity to testify regarding
the importance of supporting women veterans through mentorship
to realize their career and entrepreneurship goals. My name is
Dawn Smith. I am the Founder and CEO of Mystic Reme Teas in
Greenville, South Carolina, and testifying today on behalf of
Business and Professional Women's Foundation.
As a woman veteran who recently started my own business, I
hope my experiences can be helpful to the committee as you
examine which government and nonprofit programs can best assist
and meet the unique needs of women veterans as they transition
back to civilian life. The importance of recognizing and
sustaining women veteran focused career development programs or
subsets that specifically address women needs is supported by
my personal experience and that of many of my peers, as well as
validated by research that demonstrates the difference in our
needs relative to male veterans and all men.
Women-owned firms account for 30% (7.8 million) of all non-
farms privately held U.S. businesses with potential to grow
almost twice as fast as male-owned firms. Although there is so
much potential for entrepreneurship, women veterans are
significantly underrepresented among business owners. Veteran
owned businesses account for approximately 14% (2.4 million) of
U.S. small businesses, approximately 4% of which are owned by
women. Obviously women veteran business ownership is not
keeping pace with the overall growth of women's business
ownership, which is growing faster than men's.
Proud to serve my country
I am very proud of my military service. I served in the Air
Force for eight years and was deployed six times to Iraq,
Afghanistan, Turkey and Germany. My expertise in the military
was logistics, which means I was responsible for making sure
that the movement of both troops and cargo got to the right
place and were on time. In both Iraq and Afghanistan I was a
Terminal Operations Manager responsible for processing and
loading more than 7,000 passengers and directing the shipment
of hundreds of thousands of tons of cargo. My work was
consistently recognized for meeting excellent delivery and
departure standards. I also earned by MBA while in the
military.
Road Blocks in the military to civilian career transition
Because of my advanced logistics experience and MBA, I
really didn't think I would have a problem finding a rewarding
career when I left the service. But when I returned home to
North Carolina to raise my children on my own, I was not even
considered for management jobs; instead, I was offered
positions like a warehouse worker, which I did not think
utilized my skills, education and experience. For a couple of
years I took various jobs that did not fit my background
including working as a high school teacher and secretary since
I needed to feed my children. These jobs offered neither the
career I was seeking nor the salary commensurate with my
experience.
While working, I continued to look for a more rewarding and
financially secure position, I returned to school to begin a
master's program in accounting. But looking for a job while
managing the demands of work, school and motherhood, I became
discouraged. I knew I needed some help, so I turned to the
internet to see what career resources might be available for a
woman veteran. I was very fortunate to find Business and
Professional Women's Foundation, a non-profit organization that
runs a free career mentoring program for women veterans. What
attracted me to their program, Joining Forces Mentoring Plus,
was that working women volunteers mentor women veterans, like
me, to help them navigate the path to successful civilian
careers, and if they desire, pursue entrepreneurial
opportunities. Participants can access a free ``high-tech/high-
touch'' internet community that includes experienced women
mentors as coaches, navigators and supporters. Women veterans
can be from all branches, eras, ranks and levels. And Joining
Forces Mentoring Plus meets the woman veteran where she is--
getting prepared to lave the service, just leaving the service,
out a while but hasn't found the right job, unemployed or
under-employed, has been working for some time but wants to
take that next step to move up the career ladder or even start
her own business.
Mentorship: the Missing Link
I immediately signed up and was assigned a wonderfully
accomplished and enthusiastic mentor, Sandy Smith. Sandy worked
with me one-on-one and was persistent in offering advice and
support on everything from interviewing skills to resume
development. She pushed me, checking on how many resumes I had
sent out each day. She also encouraged me and helped me to
develop a new attitude and mindset that gave me the courage to
apply for positions that previously I would not have thought
possible. As result, in 2012, I was hired as an auditor by the
U.S. Defense Contract Audit Agency, which required me to move
to Greenville, South Carolina. I am happy to report that my
salary at this job was twice what I had been making previously.
After landing the job, Sandy, my mentor, did not leave me on my
own but coached me on office etiquette and protocols necessary
to successfully navigate the civilian sector workplace.
I loved my job and felt that my career was on very solid
ground, but felt like something was missing because I had
always dreamed of owning my own business. With Sandy's
encouragement and sustained mentoring last year, I started an
online store that sells my own brand of tea. I am very excited
that Mystic Reme Teas is currently in the final selection round
to appear on the ABC show Shark Tank. If I am chosen, I will be
seeking funding to open my own tea bar.
I truly believe that none of this would have happened
without the personal mentoring and wide array of high tech-high
touch resources offered by BPW Foundation. Through my exposure
to the organization and as a result of working with them, I
have learned that BPW Foundation has always been concerned with
the welfare of working women. From its early history BPW
Foundation has worked to advance untapped populations in every
facet of the workplace, including women in the green economy,
young careerists, women with chronic illness, innovative
employers, women business owners and women who have served our
country. Having studied and elevated issues important to
working women--particularly women in non-traditional
occupations--for nearly a century, BPW is uniquely qualified to
respond to the domestic and workplace needs of women veterans.
I also feel this program was so successful for me because
it was designed to meet the needs of women veterans. The
success of JFMP is directly related to its being designed by
and for women. It is critical that women veterans be able to
access targeted support that specifically addresses our needs.
Generic veteran-based employment and career development
programs too often miss the unique elements and needs that
matter most to women veterans.
BPW Foundation's interest in women veterans began almost
ten years ago, when they wondered how the growing number of
women veterans was handling the transition back into the
civilian workforce. What they discovered was that no one really
knew; and worse yet, no one was asking. So BPW Foundation
conducted a national survey of 1,600 women veterans--the first
of its kind--and found that we have many unique needs. That, in
turn, led to BPW Foundation's Joining Forces for Women Veterans
2010 National Summit and the resulting report that found career
mentoring to be a key factor missing from our post-military
transition into civilian careers.
My experiences are a great example of the amazing results
mentoring can have on someone's career--particularly as they
transition out of the military. And we know that mentoring
works. Study after study has shown the benefits of mentoring
including more career satisfaction, higher earnings and better
productivity. And not just the mentee benefits from a mentoring
program. Mentors also benefit with learning new skills and ways
of looking at problems. And not surprisingly, since both the
mentee and mentor benefit, so do businesses that support
mentoring programs. Not only do many top companies have
mentoring programs but they benefit from more satisfied
employees and show an extraordinary Return on Investment.
Addressing the Unique Challenges Women Veterans Face
I can attest to the fact that women leaving the service
often face unique challenges and have unique needs including
single motherhood or care giving for family members, including
wounded warriors. Also women veterans often do not identify as
veterans and don't know they can access a wide array of
benefits. We are frequently looked at differently from our
fellow male veterans. Women who served in war zones are not
afforded the same level of prestige as their male counterparts.
This unacceptable situation resulted in BPW Foundation's
call to action. With input from their Women Joining Forces
Advisory Council, a career mentoring model was developed to
respond specifically to women veteran needs for awareness and
guidance about available support and employment resources; and
one that recognizes multiple roles impacting women veterans and
their access to jobs. It is based on a workforce transition
model--Working Women Helping Women Work--which brings
experience, expertise, guidance and encouragement. Joining
Forces Mentoring Plus was launched in 2012, and now includes
women veterans, military spouses, female caregivers of wounded
warriors, and women who have lost a loved one serving in the
military.
It is important to me that a core principle of BPW
Foundation is to rely on evidence-based research to improve and
upgrade the program. Programs that serve women veterans must
respond to their unique needs, so BPW Foundation regularly
surveys and speaks with program participants. They apply those
suggestions and input to continually improve the design and
development of the program.
For example, in 2013 they added a new ``member'' category,
to allow participants to achieve a certain comfort level with
the program before having to connect with a mentor (while still
having full access to JFMP resources). This addition has met
with much success, as many members choose to become mentees
after a short amount of time.
BPW Foundation also learned that many women who have served
our country are overwhelmed by the amount of information and
choices out there, and are not comfortable trying a new
program. Many rely on personal recommendations they receive via
social media and networking. Thanks to Citi (a JFMP Leadership
partner), BPW Foundation's JFMP program was selected as a
participant in ``Citi Skills Day''--a pro-bono opportunity to
have a team of their in-house experts give advice to
nonprofits. As a result of this training, a social media/
internet marketing professional, a woman veteran business
owner, was hired in the first quarter of 2014, to help better
communicate with women veterans that JFMP serves and wants to
serve. This move has resulted in access to an even broader
audience of women veterans and military spouses.
Finally, as demonstrated by my testimony today, BPW
Foundation felt it was important to let a JFMP program
participant tell her own story. Again the goal is to increase
their confidence and comfort level; and provide experiential
opportunities to women in the veteran community to advocate on
behalf of themselves. Mentees and mentors have been interviewed
and their experiences compiled into concise case-studies as
well as magazine articles, exemplifying how this program can
help women, like me, in specific areas such as employment,
transitioning a successful military career to the civilian
workplace; interview preparation and salary negotiation;
starting or building a business and getting to that next career
step.
Building Support for Women Veterans through public-private
partnerships
I am not surprised that this program has been recognized on
the national stage both through the White House's Joining
Forces effort and the Clinton Global Initiative in 2012 and
2013. The value of JFMP mentorship was also showcased during
the Veterans on Wall Street conference in November 2012 and
2013 and has been featured in a wide range of media. For
example, my story was actually covered on NBC Nightly News.
One very important aspect of the program is the ongoing
best practice of leveraging the strengths of JFMP public and
private-sector partners, which have grown from 40 in 2013 to 70
in 2014. These partnerships have also enabled BPW Foundation to
expand the reach of JFMP to include female caregivers of
wounded warriors and women who have lost a loved one serving in
the military. As a partner in the Department of Defense's
Military Spouse Employment Program, mentoring resources for
spouses are shared. In January 2014, a partnership was forged
with Tragedy Assistance Program for Survivors (TAPS), which
enabled JFMP to reach out to women who have lost a loved one
serving in the military.
In their effort to reach even more women veterans and
military/veteran spouses and recognizing the need for
grassroots, state-level resources and mentoring, BPW now
partners with the California Commission on the Status of Women
and Girls, through a state-level portal, California Joining
Forces Mentoring Plus. The program reaches out to California
women veterans providing the same high quality free employment
and career development resources, including identifying
education needs, training, and credentialing programs, and job
opportunities. The goal is for this type of state-level,
public-private partnership to serve as a model for other
states, particularly those with heavy veteran populations.
Collaboration and Information Sharing as a Resource
Multiplier
We all know that government budgets are tightly stretched.
That's why BPW Foundation focuses on collaboration and
information-sharing among partners as a resource multiplier.
More than ever, coordination among service providers and across
sectors is needed to most effectively deploy dwindling
resources. This is especially true given the draw-down of
troops in Iraq and Afghanistan, and the increasing number of
military service members transitioning back to civilian life
over the next few years. BPW Foundation is part of a coalition
of veteran and military service organizations that meets
regularly with the Army Public Affairs office to proactively
address these concerns and to find solutions to meet the needs
of this growing veteran population.
In addition to public-sector partnerships, several JFMP
private-sector and nonprofit partners have renewed their
commitment (Alliant Credit Union, Citi, Booz Allen Hamilton,
CVS, Cengage, and others.) and been joined by newer partners
(Direct Employers, JPMorgan Chase, Northrup Grumman, MTCI, NBC
Universal, Newman's Own Foundation, and more.) Partners augment
the resource rich internet platform with career tools, job
banks and much more, all of which is available free of charge
to JFMP participants. Thanks to the generous support of BPW
Foundation and its partners, there is no cost to participate.
Members benefit from free financial, career transition and
entrepreneurial/small business tools, products and services
tailored to meet our unique needs. In addition, many JFMP
partners' networks of women employees act as mentors also
providing inside information on specific industries. Focusing
on and leveraging the strengths of these partners benefits
everyone, but most importantly, the women JFMP serves.
BPW Foundation has also targeted its efforts to help JFMP
participants establish careers in ``non-traditional'' (but
urgently needed) STEM and IT fields. In 2013 they partnered
with the National Council for Women and Technology (NCWIT) to
assist JFMP participants with IT career opportunities and
resources. In 2014, a partnership with Million Women Mentors
will also open up STEM career opportunities.
Support for Women Veteran Small Business Owners
BPW Foundation has always been a champion of women small
business owners and many of its members are women business
owners. Therefore it was natural for BPW Foundation to expand
their 2013 CGI America commitment to include building resources
for women veteran entrepreneurs and women veteran small
business owners. They wanted to step up to help women who have
served our country, like me, to start and grow our own
businesses. In May 2013, BPW Foundation conducted a survey of
women small business owners, to gauge the current environment
and outline recommendations for improving it. Partnerships with
Dell/Intel and the National Association for the Self-Employed
were key to this effort.
Conclusion
Thank you, Mr. Chair, for the opportunity to testify and
share my story about the resources that helped me launch my
successful career and start my small business. I hope that
other women veterans will benefit from my experience, and that
the committee will support programs like the BPW Foundation's
Joining Forces Mentoring Plus that are tailored for the
challenges and needs that our women veterans face as we week
meaningful lives after our time in the military.
###
About BPW Foundation: BPW Foundation is a 501 (c)(3)
located in Washington, DC and has the mission of empowering
women to reach their full potential. It receives no government
funding, and is backed by numerous corporations such as Citi,
Booz Allen Hamilton, Alliant Credit Union Foundation, CVS
Caremark, Cengage, JPMorgan Chase and Northrop Grumman. Visit
www.joiningforcesmentoringplus.org or www.bpwfoundation.org to
learn more.
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BEFORE THE COMMITTEE ON SMALL BUSINESS OF THE U.S. HOUSE OF
REPRESENTATIVES
``Military to Entrepreneurship: Private Sector Initiatives to Help
Veterans Pursue Business Opportunities.''
Testimony of Charleston Malkemus
Founder and CEO, Gozump, Inc.
Good morning, Chairman Graves, Ranking Member Velazquez,
and distinguished members of the Committee. My name is
Charleston Malkemus and I am the founder and chief executive of
Gozump, Inc. Thank you for providing us with an opportunity to
share our understanding of the importance of aiding a service
member's transition to entrepreneurship.
The ``next'' greatest generation of America is coming home.
Over the next 5 years America will have more than a million
service members coming home, who have been fighting this
nation's battles for over a decade. They have endured every
hardship known to man. They have been diplomats and community
leaders, restoring people's homes and freedoms, problem solvers
of unparalleled complexity, and, leaders of some the nation's
best and brightest. All of them volunteered to serve and
potentially sacrifice for the greatness of this country. They
represent less than half a percent of America and are this
country's greatest resource.
We have an opportunity to capitalize on the surge of
veteran talent coming home in order to move America forward.
Whether through America's small businesses or leading new
ventures, veterans have a wealth of capabilities that are
ideally suited to solving this nation's problems. While they
will be confronted with many challenges reintegrating into
civilian life, none will be greater than finding a way to
continue to serve. Communities and businesses will benefit the
most from directly engaging veterans with their problems and
providing them with the resources and equipment to overcome
them.
Private sector initiatives have to be prepared for
transitioning veterans. Hiring Our Heroes, a program of the
U.S. Chamber of Commerce Foundation, is an excellent example of
the efforts necessary. Working with their vast network of
chambers and strategic partners, Hiring Our Heroes has been
creating a movement across America. They are rallying
communities to find veterans and their spouses meaningful
employment while supporting the work of veteran-friendly
businesses, like Gozump, who have made ongoing commitments to
veterans in their community.
Background on Gozump
Gozump's story began way back on the battlefields of Iraq.
During my second deployment I was leading a Scout Sniper
Platoon through OPERATION STEEL CURTAIN when I received an
email about the real estate market back home. In late 2005 the
market was already showing signs of weakening and I needed to
sell my townhome in San Clemente, California. I remembered the
process of moving across the country when I was transferred to
Camp Pendleton California and how difficult it was to find,
finance, insure, and move into a new home. Now I was being
confronted with the challenges of selling my home. I needed an
application capable of connecting me remotely and giving me
control over the process. Unfortunately one did not exist. I
realized very quickly these were not isolated issues, but
problems that were about to rock the nation.
When the real estate market came crashing down in 2008, I
recognized the same friction points where sweeping across the
country. Americans needed a simpler and more affordable way to
understand and manage the process of buying and selling a home.
Fully aware of the magnitude of this problem I began a very
deliberate endeavor to solve it. After years of research,
planning, and recruiting, Gozump launched in June of 2012 with
a team of Marines on a mission to combat one of the most
frustrating and inefficient processes in the Internet age,
buying a home.
Buying a home requires the concerted collaboration of
multiple parties. One transaction often encompasses three major
industries, a dozen specialists, and thousands of dollars. Each
party comes with its own regulations, licensing, conduct and
costs. In other words there is a reason this is complicated.
Gozump's mission is to champion home buying for military
families across America in order for them to achieve financial
freedom. We accomplish this through technology, training, and
advocacy. When we began building one of the most comprehensive
technology platforms for home owners and buyers, we understood
the inherent complexities of real estate could not be reduced
beyond a certain point. We immediately began developing a
curriculum around real estate to pair with our technology.
While this will give consumers the tools and knowledge they
sorely lack to make better decisions much of the inefficiencies
we would change are in the hands of regulators. At every
opportunity we continue to advocate for a more optimal
administration of real estate transactions particularly on
behalf of military families.
Active duty Service Members are often required to relocate
every three years. The sheer velocity of movements around the
country make this a particularly distressing problem in terms
of cost, friction, and stress for the military household. We
are one hundred percent committed to the elimination of this
problem for the US Military. When we began reaching out to
community organizations to tackle this and other issues facing
military families, we had the honor of working and partnering
with some incredible organizations: the American Red Cross, the
United Way, and the U.S. Chamber of Commerce Foundation to name
a few. Many of which have come out in force to support the
military community and the variety of issues facing them.
U.S. Chamber of Commerce Foundation
My initial interaction with the U.S. Chamber of Commerce
Foundation and their Hiring our Heroes program goes back to
when I was the unit commander of a 156 Marine reserve
detachment. Most of the Marines under my charge were struggling
to find employment. Some were sleeping in their cars, because
they couldn't make ends meet. Others were trying to go to
school to have a better future. All of them were hard working
Americans with too much pride to seek out relief. I had a lot
of active duty Marines, who joined the reserve unit to ease the
transition, and saw first hand how difficult it was for them.
I sat on Joint Task Forces for veterans, participated in
regional board discussions, and attended enough business
breakfasts to make this assessment. The campaign to support
posttraumatic stress disorder (PTSD) appears to have had a
negative impact. While sympathetic, many American business
owners feel completely alienated from their military and PTSD
has only increased this feeling. Most business leaders, who
struggle with hiring veterans, cite the liability of PTSD as
the number one concern. Others question their capabilities,
business skills, or how best to manage them. Despite these
potential concerns, veterans in business remain unaffected and
consistently lead the charge for recruiting and hiring other
veterans. While veteran led businesses continue to be a
cornerstone for veteran employment, the Hiring Our Heroes
program has greatly reduced the separation between America's
military and businesses.
The US Chamber of Commerce Foundation with its vast network
of state and local chambers as well as their extensive list of
strategic partners has convinced a lot of mainstream companies
to hire veterans through their Hiring Our Heroes program.
Having sent many of my Marines to their job fairs I've had
ample feedback on their experiences. For those companies
interested in tapping into the talent of America's fighting men
and women it is one of the best places to be.
When we began Gozump we recognized that Hiring Our Heroes
and their job fairs was an incredible resource for engaging the
veteran community. We've used their job fairs for both
awareness and recruiting campaigns with much success. In fact a
Hiring Our Heroes job fair is where we shaped a lot of our
opinions about transitioning service members.
Many of them were immediately drawn to Gozump purely
because we were a team of Marines. They craved to be valued,
respected, and understood for who they were and what they had
accomplished as Military men and women. They commented on our
camaraderie and commitment to each other, which resonated with
their military experiences. Most importantly they deeply
desired to continue to serve. In choosing the military they had
chosen a life of purpose and now they were confronted with the
challenging task of finding one in corporate America. Our
mission to change real estate forever captured the same
idealistic fervor that led many of them to enlist.
This knowledge has fueled my active support for veterans in
startups. As an American veteran I've enjoyed great
satisfaction working in the startup community and have found
combat veterans to be ideal candidates for startups. With a
high operational tempo, grand mission statements, and equity-
based compensation a startup is the closest replacement for
military life. Veterans are not only familiar with high stress,
volatile, fast paced working conditions; many of them thrive in
them. Most have already worked in small, driven, and focused
teams like those found in startups across the country and
perform better. They've been conditioned to work insane hours
to accomplish incredible objectives. Startups and even small
businesses simply give veterans an ability to be rewarded in
proportion to their achievements either through compensation,
promotion, or both; and, most smaller companies can do it
better than larger ones.
With 1.5 million military members transitioning over the
next five years small businesses have a tremendous opportunity
to tap into this talent pool and propel their operations
forward. Hiring Our Heroes job fairs already provide access to
the veteran community. All small businesses have to do is
effectively communication their objectives and allow veterans
to use their tactical abilities to engineer solutions and make
things happen.
Hiring Our Heroes is leading the charge for transitioning
veterans and their spouses into meaningful employment
opportunities. Their active network of businesses, strong
reputation with the military, and pervasive job fairs have done
more than other organization to bring military and business
communities together. Even with this much success they persist,
finding ways to catalyze communities and advance their mission.
Last year Gozump had the great honor of being selected for
a national competition, which highlighted the efforts of
veteran-friendly small businesses. Small businesses are 96% of
the Chamber's member companies. They recognized an opportunity
to support those small businesses showing dedication and
innovation in hiring our veterans. Through Hiring Our Heroes,
the U.S. Chamber of Commerce Foundation teamed up with Spike
TV's Hire A Vet campaign to host the first national competition
to find the most veteran-friendly small business in America.
After receiving strong applications from across the
country, Gozump was selected as one of the eight finalists and
continued to advance to the Final Four. As part of the
competition we were judged on our innovative recruiting and
retention strategies for veterans, our leadership and
engagement in the veteran community, and our ongoing
commitments. This allowed us to form relationships with our
fellow contestants and learn a lot from their initiatives. The
competition was a great platform for rallying local communities
around their contestants and encouraging other small businesses
to join this movement. We received active support from Members
of Congress, local commissioners, mayors, and business leaders,
which really helped to highlight the vital role veterans and
veteran-owned businesses play in our local economy.
In an effort to build on this momentum and carry on the
spirit of the Chamber Foundation's initiative, Gozump led an
81-mile march. Over Labor Day weekend we marched from Palm
Beach to Miami Florida carrying a flag from the battle of
Fallujah. We picked up supporters in every town en route to the
Mayor of Miami's office where we presented him with the flag as
a symbol of American heroism. We urged community members to
turn to the next greatest generation of Americans coming home.
After over a decade of war and sacrifice their perseverance
would be crucial to moving America forward.
Moving America Forward
Startups across America are continuing to find ways to
advance processes and industries through technology. Their
access to data is not only a vital component of their success,
but often a primary factor in preventing it. If we are to fully
realize the benefits of American innovation, government efforts
at all levels to modernize and make available public
information are necessary.
Entrepreneurs and small businesses remain the beating heart
of the American economy. When I was first introduced to the
Small Business Administration (SBA), about 15 years ago, their
resources and networks were the dominant ones available to
entrepreneurs. Over the years I've engaged, or made us of, a
variety of their programs, including, Veteran Business Outreach
Centers, Small Business Investment Companies, and the Service
Corps of Retired Executives. Since then, the landscape for
entrepreneurs has changed dramatically. Cities across America
are developing startup incubators, accelerators, Meetup groups,
and networks of advisors and investors. The access to capital
is shifting away from traditional lending in favor of equity. A
plethora of bloggers, events, and conferences have given
entrepreneurs access to an endless supply of resources and
advice. The process of launching a business has been completely
disrupted and accelerated.
Today the private sector has a strong bias for lean
startups that find creative ways to bring minimally viable
products to market. This type of methodology has caused a
fundamental shift in the way entrepreneurs start businesses. A
business canvas model is replacing the traditional business
plan. Product research and development happen concurrently with
market feedback. And traction in many cases is prioritized
before revenue. Entrepreneurs skilled in executing these
methods reduce their risks, costs, and time to launch.
Many veterans with their financial resources, independent
spirit, risk tolerance, commitment to serve, and management
capabilities will naturally choose entrepreneurship. Studies
have shown they are forty-five percent (45%) more likely to
start a business, twice as likely to succeed, and favored by
consumers seventy percent (70%) of the time. Those coming home,
who do choose entrepreneurship, are going to need both
direction and resources to be successful. Unfortunately a
national veteran program for entrepreneurship on par with the
Chamber Foundation's initiative for employment does not exist.
Even within the private sector we've noticed a shortfall in
programs focused on veterans transitioning into
entrepreneurship, and resources on startups available to
veterans. As a result, our team has decided to initiate a
veteran focused program in South Florida and we encourage other
communities and established programs to do the same.
Veterans are best positioned to solve problems, whether as
valuable team members in America's small businesses, or leading
new ventures. This absolute commitment to service is what we
love about America's military, and happens to be the most
powerful ingredient to a successful transition. With or without
direction they will find problems to be solved. We are already
beginning to see the formation of non-profits, enterprises, and
initiatives all across the country helmed by veteran leaders.
The communities and businesses that effectively orient our
veterans will benefit dramatically from their efforts. They
only need to direct them toward problems at home and provide
them with the limited resources and equipment to overcome them.
Conclusion
Paving the way for America's future begins with the next
greatest generation. The U.S. Chamber of Commerce Foundation
and the private sector are both poised to play pivotal roles in
the countries ability to capitalize on the surge of talented
veterans coming home. Programs like Hiring Our Heroes, which
can orchestrate action at the local, state, and national level,
are vital to veterans finding employment where they can create
value for our small businesses. Programs that can prepare and
equip veterans for entrepreneurship will equally benefit the
future of America's economic competitiveness.
Gozump is one small example of the impact these programs
can have and how beneficial they can be in supporting America's
current and future small businesses. As a team we've been
active participants in both the veteran and startup communities
of South Florida. Collectively we have volunteered hundreds of
hours in support of regional initiatives to advance both of
these causes and will continue to do so on behalf of moving
America forward.
Chairman Graves, Ranking Member Velazquez, and members of
the Committee, I thank you again for the opportunity to testify
and look forward to answering your questions.
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