By Elizabeth Olson
Within months of James J. Maddix's departure for Iraq, his Big Daddy Taxi service in Kalamazoo, Mich., bit the dust.
Big Daddy, which specialized in driving people home from bars, was bringing in about $175,000 a year when Mr. Maddix, 30, was sent on active duty in December 2003. Without him at the helm to orchestrate an operation that paid part-timers to operate his 10 vans, the business quickly fell apart. "I hired a manager, but within a month, it wasn't working out," Mr. Maddix said.
When he came home in February after 14 months overseas, mostly at Camp Anaconda northwest of Baghdad, he found himself $110,000 in debt. Now, he says, his only way to survive and start a new business is probably to declare bankruptcy.
In ways that do not make headlines, the war on terror is taking a rising toll on small business, and Congress is aiming to do something about it.
Reserve call-ups were rare before the 1991 gulf war, but in the three years leading up to last November, 410,000 of the soldiers who were deployed in Afghanistan and Iraq were reservists. About 9 percent, or 55,000, were self-employed and 18 percent worked in companies with fewer than 100 employees, according to statistics from the United States military.
Typically, the small businesses that lose owners or essential employees to active duty face financial setbacks from recruiting, hiring and training new workers, from retraining current workers, from unrealized business or from insolvency.
"We need to find a way to reduce the hardships," said Senator Olympia J. Snowe, Republican of Maine, the chairwoman of the Small Business Committee. Not only does Maine have a huge proportion of small businesses, it also has one of the highest percentages of National Guard soldiers on active duty. That prompted Senator Snowe to ask the Congressional Budget Office to look into the situation.
In a report that it issued in May, the office said that as many as 15,000 businesses led by deployed reservists may have had financial losses or significant problems in managing schedules or workloads. (Other experts estimate that anywhere from 8,000 to 30,000 mobilized reservists held crucial jobs at their small businesses.)
"The current trend toward longer and more frequent reserve deployments raises questions about the ability of civilian employers, particularly small businesses, to absorb the costs they experience when their reservist employees are called up," said Douglas J. Holtz-Eakin, the office's director.
The usual notice of two weeks (and sometimes less) before deployment, and the uncertainty over the length of service, can worsen the problems small businesses face, according to the 31-page report. Temporary workers can be expensive to recruit, hire and train. And sometimes, as in the case of the manager Mr. Maddix employed, they do not work out.
Among the ideas being considered to help small businesses are tax credits, subsidized loans and insurance and the exemption of certain workers from being called up for military service.
Senator Snowe also wants to increase the financing for a program run by the Small Business Administration that provides low-interest loans of up to $1.5 million for small businesses when owners or employees are deployed. The S.B.A. Office of Veterans Business Development approved $6.6 million in such loans in 2003, almost double what it approved in 2002. Reflecting increased call-ups, the loans rose again last year, to $7 million.
The ranking Democrat on the committee, Senator John Kerry, favors giving businesses with 50 employees or fewer up to $21,000 in tax credits to cover salary shortfalls for mobilized reservists and the hiring costs for temporary replacements.
He also proposed up to $25,000 in economic-injury disaster grants for small businesses when a crucial employee is called for active duty. In addition, his legislation, called the Military Family Bill of Rights, would set up a task force to examine how to aid small-business owners with management, financial planning, contracting and marketing issues during employee deployments.
"It simply shouldn't be the case that people who have spent their lives building up a business and volunteer to serve our country have to wonder if their businesses will be there when they return home," Senator Kerry said.
Meantime, entrepreneurs who are pulled away from their businesses by military duty continue to struggle against the odds. Sandra Buckles had just started Lockhart Technology, a firm in Oak Hill, Va., that provides security analysis for companies, when she was called up from the Navy Reserve's ranks on Sept. 11, 2001, in the middle of the night.
It was just a three-week stint to help with air defense, but it "certainly put a hold on the momentum" of getting her business going, Captain Buckles said in an e-mail message from Iraq, where she has been serving, as she put it, a "permanent recall to active duty" since December 2002.
This time, she has not been so lucky. In 2003, she said, "my company stayed afloat with my constant intervention." But military work pressures made it impossible to continue that, so Lockhart "now is more or less on the shelf," she said, because "I am not allowed to work on security contracts or marketing due to conflict of interest."
All but one of her seven employees has been able to find other work, Captain Buckles, 50, said.
The tale is not always so grim. Some people, like Mark Auer, who runs Entec Services, a heating and air-conditioning contractor in Peoria, Ill., got lucky. When his Illinois Air National Guard unit was called up in February 2003, and Mr. Auer was sent to fly fighter jets at a secret Middle East location, his boss, who was the owner, stepped in to take over his management duties.
Entec's workers -- minus one reservist who was also called up -- also pitched in, doing double duty, in Mr. Auer's words. Before his departure, Entec had also cross-trained some workers for a greater variety of jobs.
While he was gone, the company "didn't lose any big clients," Mr. Auer, 41, said. On the other hand, he said, "patriotism lasted just a few days" for some fellow companies, which bumped Entec off construction projects when it fell temporarily behind on deadlines because of a worker shortage. "It's a lot different than a Fortune 500 company," Mr. Auer said. "When 2 out of 32 are called up, it is a lot more difficult for those left behind."
At a small company, the most careful planning can come to naught. Larry Audet, a 30-year Army National Guard veteran, hired a professional to take over as funeral director at his Greenlawn Memorial Funeral Home in Bangor, Me., while he ferried the military brass around Afghanistan.
But four months later, the man he hired died of a heart attack. So, Mr. Audet's son Joel took up the slack and kept the business running smoothly, handling as best he could problems like billing errors made by a new employee. "Actually, I didn't find out about the problems until I came back," Mr. Audet said. "And that was a good thing. I had to keep focused on the job I was doing there because we were being shot at and landing on unimproved airfields."
Even so, he calculates that his absence cost his business $65,000, mostly in payments to other people to do building and vehicle maintenance that he would have done himself.
Entrepreneurs are used to adversity, of course, and have a habit of bouncing back from it. When Captain Buckles finishes a coming tour in Japan and retires from the Navy in 2009, she says, she and her remaining part-time employee plan to rebuild Lockhart Technology.
"I did it once," she declared. "I can do it again."
Within months of James J. Maddix's departure for Iraq, his Big Daddy Taxi service in Kalamazoo, Mich., bit the dust.
Big Daddy, which specialized in driving people home from bars, was bringing in about $175,000 a year when Mr. Maddix, 30, was sent on active duty in December 2003. Without him at the helm to orchestrate an operation that paid part-timers to operate his 10 vans, the business quickly fell apart. "I hired a manager, but within a month, it wasn't working out," Mr. Maddix said.
When he came home in February after 14 months overseas, mostly at Camp Anaconda northwest of Baghdad, he found himself $110,000 in debt. Now, he says, his only way to survive and start a new business is probably to declare bankruptcy.
In ways that do not make headlines, the war on terror is taking a rising toll on small business, and Congress is aiming to do something about it.
Reserve call-ups were rare before the 1991 gulf war, but in the three years leading up to last November, 410,000 of the soldiers who were deployed in Afghanistan and Iraq were reservists. About 9 percent, or 55,000, were self-employed and 18 percent worked in companies with fewer than 100 employees, according to statistics from the United States military.
Typically, the small businesses that lose owners or essential employees to active duty face financial setbacks from recruiting, hiring and training new workers, from retraining current workers, from unrealized business or from insolvency.
"We need to find a way to reduce the hardships," said Senator Olympia J. Snowe, Republican of Maine, the chairwoman of the Small Business Committee. Not only does Maine have a huge proportion of small businesses, it also has one of the highest percentages of National Guard soldiers on active duty. That prompted Senator Snowe to ask the Congressional Budget Office to look into the situation.
In a report that it issued in May, the office said that as many as 15,000 businesses led by deployed reservists may have had financial losses or significant problems in managing schedules or workloads. (Other experts estimate that anywhere from 8,000 to 30,000 mobilized reservists held crucial jobs at their small businesses.)
"The current trend toward longer and more frequent reserve deployments raises questions about the ability of civilian employers, particularly small businesses, to absorb the costs they experience when their reservist employees are called up," said Douglas J. Holtz-Eakin, the office's director.
The usual notice of two weeks (and sometimes less) before deployment, and the uncertainty over the length of service, can worsen the problems small businesses face, according to the 31-page report. Temporary workers can be expensive to recruit, hire and train. And sometimes, as in the case of the manager Mr. Maddix employed, they do not work out.
Among the ideas being considered to help small businesses are tax credits, subsidized loans and insurance and the exemption of certain workers from being called up for military service.
Senator Snowe also wants to increase the financing for a program run by the Small Business Administration that provides low-interest loans of up to $1.5 million for small businesses when owners or employees are deployed. The S.B.A. Office of Veterans Business Development approved $6.6 million in such loans in 2003, almost double what it approved in 2002. Reflecting increased call-ups, the loans rose again last year, to $7 million.
The ranking Democrat on the committee, Senator John Kerry, favors giving businesses with 50 employees or fewer up to $21,000 in tax credits to cover salary shortfalls for mobilized reservists and the hiring costs for temporary replacements.
He also proposed up to $25,000 in economic-injury disaster grants for small businesses when a crucial employee is called for active duty. In addition, his legislation, called the Military Family Bill of Rights, would set up a task force to examine how to aid small-business owners with management, financial planning, contracting and marketing issues during employee deployments.
"It simply shouldn't be the case that people who have spent their lives building up a business and volunteer to serve our country have to wonder if their businesses will be there when they return home," Senator Kerry said.
Meantime, entrepreneurs who are pulled away from their businesses by military duty continue to struggle against the odds. Sandra Buckles had just started Lockhart Technology, a firm in Oak Hill, Va., that provides security analysis for companies, when she was called up from the Navy Reserve's ranks on Sept. 11, 2001, in the middle of the night.
It was just a three-week stint to help with air defense, but it "certainly put a hold on the momentum" of getting her business going, Captain Buckles said in an e-mail message from Iraq, where she has been serving, as she put it, a "permanent recall to active duty" since December 2002.
This time, she has not been so lucky. In 2003, she said, "my company stayed afloat with my constant intervention." But military work pressures made it impossible to continue that, so Lockhart "now is more or less on the shelf," she said, because "I am not allowed to work on security contracts or marketing due to conflict of interest."
All but one of her seven employees has been able to find other work, Captain Buckles, 50, said.
The tale is not always so grim. Some people, like Mark Auer, who runs Entec Services, a heating and air-conditioning contractor in Peoria, Ill., got lucky. When his Illinois Air National Guard unit was called up in February 2003, and Mr. Auer was sent to fly fighter jets at a secret Middle East location, his boss, who was the owner, stepped in to take over his management duties.
Entec's workers -- minus one reservist who was also called up -- also pitched in, doing double duty, in Mr. Auer's words. Before his departure, Entec had also cross-trained some workers for a greater variety of jobs.
While he was gone, the company "didn't lose any big clients," Mr. Auer, 41, said. On the other hand, he said, "patriotism lasted just a few days" for some fellow companies, which bumped Entec off construction projects when it fell temporarily behind on deadlines because of a worker shortage. "It's a lot different than a Fortune 500 company," Mr. Auer said. "When 2 out of 32 are called up, it is a lot more difficult for those left behind."
At a small company, the most careful planning can come to naught. Larry Audet, a 30-year Army National Guard veteran, hired a professional to take over as funeral director at his Greenlawn Memorial Funeral Home in Bangor, Me., while he ferried the military brass around Afghanistan.
But four months later, the man he hired died of a heart attack. So, Mr. Audet's son Joel took up the slack and kept the business running smoothly, handling as best he could problems like billing errors made by a new employee. "Actually, I didn't find out about the problems until I came back," Mr. Audet said. "And that was a good thing. I had to keep focused on the job I was doing there because we were being shot at and landing on unimproved airfields."
Even so, he calculates that his absence cost his business $65,000, mostly in payments to other people to do building and vehicle maintenance that he would have done himself.
Entrepreneurs are used to adversity, of course, and have a habit of bouncing back from it. When Captain Buckles finishes a coming tour in Japan and retires from the Navy in 2009, she says, she and her remaining part-time employee plan to rebuild Lockhart Technology.
"I did it once," she declared. "I can do it again."
