The Small Business Starter Kit
#005 Understanding the path for a successful GOVCON Small Business whether a lifestyle company or growing to $100mil+ in annual revenue.
Here is the scenario: You just registered in SAM, began any set-aside certification processes, developed your company’s pitch, and are ready to begin conducting business development activities. You determined based on your professional qualifications that you have technical knowledge for IT work, with a primary NAICS code “541519 Other Computer Related Services”. You have a personal security clearance at the Secret Level, so your company is eligible for a Secret Facility Clearance Level (FCL), should the government or prime contractor sponsor you.
We determined in last week’s newsletter that 80% of our effort should be devoted to initially developing new business revenue in the $0-$1mil range. How then do we develop and incorporate the initial drive for revenue, identifying strategic partners, and building relevant past performance into a longer-term strategy?
Small business owners need to develop a strategy that outlines their growth goals and objectives to assist them in achieving success.
A strategic business plan should include the company’s mission statement, market analysis, financial management policies, marketing strategies, customer service tactics, information technology (IT) infrastructure development plans, and human resource management procedures. For example, a business plan like this will be required for the SBA Mentor Protégé program or 8(a) program applications. The business plan described above also aligns to ISO 9001:2015 processes for a future certification. The ISO standards cover documentation procedures, management, resources, and processes.
When developing a small business growth strategy, you should consider both short-term and long-term objectives. Short-term objectives are typically focused on boosting sales in the immediate future while long-term objectives focus on helping the company reach its ultimate goals.
Is the goal to have a lifestyle company under the 50FTE, 100FTE, or small business size standard for your primary NAICS? Is our goal to break out of the small business size standard and create a $100mil/yr revenue producing company to begin conducting mergers or acquisitions? Answering these questions will assist you in determining growth goals, and how to create a roadmap for a lifestyle company or future acquisition.
We begin with what many in the GOVCON industry call the “Small Business Starter Kit”, which builds a sustainable foundation for growth.
It’s important to note these objectives are not inclusive and represent investments in the future of the company, similar to a 4-year degree or personal certification. To meet the objectives ensure your rates are structured correctly to sustain investmet in your future growth (we will cover pricing in future editions). You do NOT need to have bottom barrel, fully burdened labor rates (FBLR) with no room for HQ growth or investments, to be sustainable in this industry. The government wants to see you succeed, sustain, and grow your organization. I’ll break these into 3 growth objective categories: Initial, Short Term, & Long term:
Initial Objective - $1mil/year revenue hustle
Fund business bank account
IT System - Purchase a web domain & O365 Business Email / SharePoint for your domain
LOGIN & SAM Entity Registration (Use Business Email to meet government requirements)
Set-Aside Certification – WOSB, EDWOSB, VOSB, SDVOSB, HUBZone, or SBA 8(a)
NIST SP 800-171 Self-Assessment on your new O365 IT System (Future CMMC 2.0 certification)
Marketing – Create logo, one page capability slick, LinkedIn page & website. Clients, partners, and potential employees want to see a professional appearance
Execute 1-3 subcontracts for past performances(PP) in similar NAICs, with a target of 2+ FTE per subcontract, to develop solid PP for the next phase. The goal is approximately ~8-12 FTE or $1mil/yr revenue depending on how your FBLR is structured.
Note - If you have a SECRET or TS Personnel Security Clearance (PCL), you should be attempting to find a partner/subcontract, who is willing to sponsor your FCL at the same level as your PCL. Set your expectations – YOU WILL NOT be performing on this cleared subcontract until your FCL is complete. FCLs take time, and are dependent on your PCL status, sponsorship documentation, and other requirements.
Determine your HR & recruiting strategy - If you can’t quickly find and onboard candidates to fill positions, you can’t generate revenue!
Short Term SB Objectives - 2+ Years or up to ~$5mil/yr revenue
Final Secret or Top Secret FCL
ISO 9001:2015 certified
Develop prime bid & proposal strategy & capabilities (W2 or consultant)
2-3 prime or subcontracts to develop past performances in similar NAICs, with annual values exceeding $200k per prime or subcontract.
Conduct GSA Multiple Award Schedule Onramp, after completing project performance for 1 year or more, on 2-3 projects.
Consider whether the SBA Mentor Protégé Program Joint Venture or 8(a) program could assist your growth goals.
Long Term SB Objectives ($5mil/yr revenue +)
CMMI/SVS Maturity Level 3 or higher (IT Professional Services)
3 to 5 prime or subcontract past performances in similar NAICs, with annual values exceeding $500k to $750k per prime or subcontract. The annual revenue targets are to onramp a GSA GWAC which can vary by vehicle.
FPRA, FPRR, and/or Approved Billing Rates
Develop GWAC task order bid & proposal strategy & capabilities (W2 or consultant)
Preparation to onramp a prime a GSA GWAC such as OASIS, ALLIANT, VETS, or 8(a) STARS.
Market analysis can help identify partners and opportunities for expansion that could help drive growth aligned to your plan.
A great place to begin identifying potential partners, is to start in the GSA eLibrary. If your primary NAICS code is 541519 and focused on Information Technology, one should review the MAS Category List in the various Information Technology categories. When you pull up each category/SIN, it will provide you with the MAS Category Description and a way to display companies by category. I recommend you begin your research aligned to your specific set asides (i.e. EDWOSB, SDVOSB, etc) searching for companies that may be about to size out of the size standard.
You are going to look at each company website to see if they have been successful and are executing a similar strategic plan for growth. Next you are going to go to FPDS or USA Spending and search the company name or CAGE code to determine the annual revenue by GSA MAS, GWAC, or other award contracts. By downloading an excel of every award or mod, it will give you a good idea of the type of work and customers. Larger dollar value contracts may have vacancies which you could potentially fill on an existing effort or you may develop a strategy to pursue similar work on future bids with the partner.
Next, you are going to follow the steps outlined in our Networking newsletter and reach out to as many partners as possible. Set up a 30min introductory call to introduce your company, learn about their company’s focus areas/vehicles, and discuss potential future work to pursue together.
During your introduction, let them know you are starting out and some of your goals such as ISO 9001:2015, finding a partner with a cleared contract who might be willing to sponsor you for an FCL, and specific opportunities you are seeking to pursue as a subcontractor. Additionally, you need to outline your current recruiting capability and how you can quickly fill positions. DO NOT overpromise, be up front about your capabilities.
Laying out some of your goals and targets without an ask, may compel partners to support your start up! Additionally, if you do ask directly for support and they cannot support you, it may stall the ability to pursue new work with that specific partner. In the end, the relationship needs to be mutually beneficial with both parties feeling as though they can advance their strategic business goals. As always, this is not a “hat in hand” conversation, but relaying your expertise and how you can support a partner in growing together!