Why Veterans are Becoming Great Entrepreneurs

Posted on June 20, 2011 by Bryan Nisperos

A recent study by the Small Business Administration's Office of Advocacy shows the, perhaps surprising result, that a military background makes a person as much as 50% more likely to become an entrepreneur, with the odds increasing for anyone reaching the rank of officer. 

The study found that officers are 55.6 percent more likely to become entrepreneurs than their enlisted counterparts, offering the explanation that officers are much more likely to have a college education, which translated to a higher entrepreneurial score in all individuals.

This study may seem counter intuitive, since an outsider's perspective of military jobs paints the picture of chain of command and following orders, which would seem to make for a good employee rather than an entrepreneur.  In the book "Administrative behavior: a study of decision-making processes in administrative organizations", however, author Herbert Alexander Simon makes the case that although supervisors will make the high-level decisions, "It is clear that the actual physical task of carrying out an organization's objectives falls to the persons at the lowest level of the administrative hierarchy." 

Simon goes on to say that "in (organizations) of any size there are interposed between the top supervisors who are themselves subject to influences from above, and who transmit, elaborate, and modify these influences before they reach the operatives."  This essentially makes the case that in a large organization, such as the military, all up and down the chain of command, there is an inversely proportional relation between administration and execution.  All recruits enter the service at the lowest levels, learning how to execute scores of different tasks, then as they climb the ranks, they begin to shed more and more of the actual execution of tasks, while they take on more and more high level decision making.

This is the perfect work experience for an entrepreneur.  In the beginning stages of a startup, the staff is often only one or two people, meaning that in order to survive and grow, the entrepreneur must possess the ability to not only know what needs to be done, but be able to personally execute all of the tasks associated with the day-to-day operations.  As the business grows, and more employees are brought on, the entrepreneur must begin to shift his or her focus to more high level decisions, while still being able to jump into whatever job needs a little extra attention.

The SBA study goes on to state that the longer a person serves in the military, the more likely they become to be a successful entrepreneur.  Simon's model perfectly explains the higher success rate of entrepreneurs that have risen through the ranks within the military organization, as well, showing that the adaptability of recruits that can ascend to the rank of officer means that they understand how to do the work as well as direct other to do it. 

Nothing can guarantee success as an entrepreneur, but having the well-rounded training of a military officer seems to show that excellent entrepreneurial skills can be developed much more readily as a military officer than by climbing the ranks in the corporate world.