This report provides data from the 2002 Survey of Business Owners (SBO) for an estimated 2 million U.S. firms reporting one or more U.S. military veterans as majority interest owners. These veteran-owned firms comprised 12.2 percent of the businesses that responded to the 2002 SBO. Businesses with paid employees accounted for 486 thousand or 23.8 percent of the 2 million veteran-owned respondent firms. Nearly 1.6 million of these veteran-owned respondent firms (76.2 percent) were owner-operated with no paid employees.

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The Characteristics of Veteran-Owned Businesses: 2002 (CVOB) report is a supplement to the 2002 SBO publication series with statistics on the selected economic and demographic characteristics for all respondent firms and veteran-owned respondent firms.

Data aggregates are presented for the United States by 2002 North American Industry Classification System (NAICS) industry category, receipts size, and employment size of firm. Additional statistics for both employer and nonemployer respondent firms cover:

• Year that the business was originally established, purchased, or acquired;
• Whether the business was home-based, family-owned, and/or franchised;
• Sources of financing for expansion, capital improvements, or start-up; and
• Types of customers and workers.

The data in this report were compiled by combining data collected on businesses and business owners in the 2002 SBO with data collected by the main economic census and from administrative records. Included are businesses that filed 2002 tax forms as individual proprietorships, partnerships, or any type of corporation, and with receipts of $1,000 or more.

Veteran business ownership is based on the characteristics of the veteran owners that possessed 51 percent or more of the stock or equity in the business (Tables 1 - 18). Data on veteran-owned firms and veteran owners are only representative of respondent firms (other than publicly held and other firms whose owners' characteristics are indeterminate) that answered the veteran ownership question. No adjustments were made to the data to account for nonresponse to the veteran ownership question.

Table 19 provides estimates by receipts and employment size of firm of the number of publicly held and other firms whose owners' characteristics are indeterminate. This table allows the data user when making comparisons to remove the publicly held respondent firms and other firms whose owners' characteristics are indeterminate.

For more information on veteran characteristics, access the summary of findings from the 2002 Characteristics of Business Owners (CBO), specifically the section titled "Nearly Fifteen Percent of Respondent Business Owners are U.S. Military Veterans," and Table 4, "Statistics for Owners of Respondent Firms by Owner's Veteran Status and Business Interest: 2002,". Please note that the CBO data only refer to veteran owners and not veteran-owned businesses.

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Age of Veteran-Owned Businesses

Overall, SBO veteran-owned respondent firms were older than all U.S. respondent firms. In 2002, 54.6 percent of veteran-owned employer respondent firms and 33.1 percent of veteran-owned nonemployer respondent firms reported that their businesses were established, purchased, or acquired before 1990. In contrast, only 35.7 percent of all employer respondent firms and 20.8 percent of all nonemployer respondent firms were established, purchased, or acquired before 1990.

Compared with all respondent businesses, however, smaller percentages of veteran-owned businesses were established, purchased, or acquired after 1999. Nine percent of veteran-owned employer respondent firms and 19.1 percent of veteran-owned nonemployer respondent firms reported that their businesses were established, purchased, or acquired after 1999, compared with 14.6 percent of all employer respondent firms and 26.6 percent of all nonemployer respondent firms.

Home-based Veteran-Owned Businesses

In 2002, over half (51.8 percent) of the 2 million veteran-owned respondent businesses were operating from somebody's home. Percentages of home-based veteran-owned respondent firms varied by kind of business, employer status, and size of firm in proportions similar to those of the 49.4 percent of all respondent firms reporting that they were home-based.

The largest proportions of home-based veteran-owned respondent firms by kind of business were in construction (72.6 percent compared with 67.9 percent for all respondent firms) and administrative and support and waste management and remediation service (63.1 percent compared with 60.0 percent for all respondent firms).

Franchised Veteran-Owned Businesses

Franchised businesses comprised 3.3 percent of veteran-owned employer respondent firms with the incidence of franchised businesses greater for firms in the higher employment size categories. Eleven percent of veteran-owned firms with 50 to 99 employees, 13.0 percent with 100 to 499 employees, and 8.9 percent with 500 or more employees reported that they were franchises.

Capital Requirements

Compared with all respondent businesses, veteran-owned respondent businesses reported similar access to the capital they needed for business start-up or acquisition.

Sixty-four percent of the nation's veteran-owned respondent businesses reported using "personal/family savings" and/or "other personal/family assets" as sources of capital to start or acquire the business-the same percentage that was reported by all SBO respondent firms.

Use of a personal/business credit card as a source of capital was reported by 7.4 percent of veteran-owned respondent firms and 8.8 percent of all respondent firms.

Percentages of veteran-owned respondent firms and all respondent firms originally financed by banks or outside investors were also nearly identical (14.8 percent vs. 14.2 percent), as were the percentages financed directly by government loans or government-guaranteed bank loans (1.6 percent vs. 1.3 percent).

Twenty-eight percent of veteran-owned respondent businesses and 27.7 percent of all respondent businesses reported that they did not need capital to start or acquire their businesses.

Veteran-owned respondent businesses and all respondent businesses also reported comparable access to the capital used to finance expansion or capital improvements.

Types of Customers

Percentages of veteran-owned respondent firms vs. all respondent firms varied slightly by types of customers.

Forty-six percent of veteran-owned respondent firms vs. 49.2 percent of all respondent firms reported that household consumers and individuals accounted for total sales of 10 percent or more in 2002; 36.0 percent vs. 32.0 percent reported total sales of 10 percent or more received from other businesses and organizations; 6.0 percent vs. 5.3 percent reported total sales of 10 percent or more received from state and local governments; 2.6 vs. 2.0 percent reported total sales of 10 percent or more received from the federal government, and 1.3 percent vs. 1.4 percent reported total sales of 10 percent or more received from exports.

Workforce

Percentages of veteran-owned employer respondent firms vs. all employer respondent firms varied slightly in regards to types of workers employed by the business. In four cases, however, the percentages were identical.

Eighty-three percent of both veteran-owned employer respondent firms and all employer respondent firms reported using full- and part-time paid employees to operate the business; 7.3 percent used temporary staff from a temporary help service; 5.8 percent used paid day laborers; and 1.3 percent leased employees from a leasing service or a professional employer organization.

Thirty-one percent of veteran-owned employer respondent firms vs. 34.1 percent of all employer respondent firms used contractors, subcontractors, independent contractors and/or outside consultants; and 5.4 percent vs. 5.8 percent reported using paid day laborers to supplement their workforce.

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Expansions and improvements are made each time the quinquennial SBO is conducted in order to keep up with the changing needs of data users. First conducted in its current form in 2002, the SBO incorporates many of the purposes and survey questions of three predecessor surveys-the Survey of Minority-Owned Business Enterprises (SMOBE), the Survey of Women-Owned Business Enterprises (SWOBE), and the 1992 Characteristics of Business Owners (CBO) survey. While the SMOBE/SWOBE program continued, the CBO survey was discontinued after 1992.

The 2002 SBO survey restored much of what had been in the CBO survey (including the veteran and service-disabled veteran owner questions) and merged these materials with the SMOBE/SWOBE questions.

However, the 2002 kind-of-business data are not comparable to the 1992 CBO data due to the transition from the 1987 Standard Industrial Classification (SIC) system to the 2002 North American Industry Classification System (NAICS). Additional changes affecting data comparability are discussed in detail in the Methodology section, "Comparability of the 2002 CB/CBO and 1992 CBO Data," of the 2002 Characteristics of Businesses (CB) and 2002 CBO reports, which are part of the SBO publication series.

^[1] Firms were asked to report information about the characteristics of up to three individuals with the largest share of ownership; additional owners were not surveyed regarding characteristics.

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