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Monday, January 11, 2021

“Value - Based ” Marketing Techniques for Small Business

Image:  123RF.com

“Value-Based” Marketing occurs when you become uniquely aware of what motivates specific personnel internal to a customer company, a buyer or a prospective teaming partner to make favorable decisions regarding your product or services. 

COMPONENTS:

Value-based marketing does not relate to client perception of your product or service value; rather, it relates to your understanding of the client and using that knowledge to motivate that client to buy.  It includes answering the following 5 strategic questions:

1.  Who is your client? (personal traits and proclivities)

2.  Where  is your client located in the organization and what role and authority does he or she hold?

3.  What  are the driving factors that will motivate the client to make a buying decision in your favor?

4.  How to best lead the individual client to the conclusion you wish them to make in buying your product or service?

5.  Why is your product or service the best to further the client's personal value system and motives?

METHOD:

Combine the details of your product or service with some transition suggestions regarding how a client can make the leap from where they are now to where you can take them without totally disrupting how they operate at time now.  

Understand that to sell the services and the product you are offering you must provide a bridge for those who do not have your vision of the end game. 

It is a simple fact of life that your sales techniques must provide practical suggestions in getting your client off a blank sheet of paper as to how your concept could be brought internally to their organization.  That can only occur if you are sharp enough and aware enough of their existing processes and systems, status, plans, budgets and funding to offer them a path to follow.  This type of market research is a tough order but you will not sell effectively without it.  

Sometimes clients will not disclose personal values and organization value systems until you are engaged with them and at that time you must be sympathetic to transition issues, think on your feet and evolve a way to get to your sales objective; not just insist that they change dramatically to accommodate your concept. 

Ask the client questions about what you know or have found their needs to be. Then take them to where your presentation has solutions for them; engage them on a solutions frequency and make your concept of the future theirs. A key will be your ability to make the client want to own your product or service in their environment and your assistance to make them as individuals look good for acquiring what you sell to increase their visibility and productivity in the organization. 

Consider the values of the client your are engaging and threaten or further his or her value system.  To do so, find out what they value first.  It may not be what you value - or what you believe they should value;  but you are stuck with those values and the value system backing them up. In many cases they are political, self-serving and disappointing but you cannot ignore them.  You must manage them.  You must threaten or further those value systems to get your customer to act.  Furthering client values is a positive view of the future, enhancing what the client already has.   Threatening client values is making the client feel he or she cannot undertake the future effectively without buying from you.

SUMMARY:

I once had the privilege of experiencing a professor who conducted a course on managing people for 3 days to our management group.

For those 3 days the instructor did not allow us to use the word, "Problem". His message was that there are no such things as problems - just situations that threaten or further peoples' (or the corporate culture values).

Through a series of exercises, mock situations late into the night, critical negotiation teams and value determination exercises he demonstrated that his theory was absolutely correct and that if one determines the values involved in a challenging situation, then develops solutions that threaten or further them, one will motivate people to take action.

Value-based marketing effectively threatens or furthers your client's value system as a strategic element in your marketing program, motivating them to act  in your favor. 






Monday, January 4, 2021

Small Business Government Grants Versus Direct Government Contracts




INTRODUCTION

Start-ups, entrepreneurs and new small businesses regularly seek information regarding small business grants. There are many misconceptions about the nature of such instruments, who qualifies for them and what constitutes a small business grant. The misunderstanding stems from advertising on the Internet and other media creating the impression that grants are readily available and that they are "Free Money".

There is no such thing as “Free” small business government grant money. In many instances individuals seeking grants should be looking to direct government contracting; this article will explain why.

DEFINITIONS

Small Business Government Grants

Small Business government grants are a type of contract and involve performance of a statement of work for agencies that are in some socio-economic endeavor serving the public, such as health care, public information, communications, high technology, or similar undertakings. A small business entity receiving a grant from a government agency becomes an extension of the agency mission and obtains funding to enhance that mission while growing as an enterprise.

Small Business Direct Contracts

Small business direct government contracting differs from grants in sheer numbers and regulatory control. Direct contracts are used by all agencies of the federal government to acquire supplies and services. Both for-profit and non-profit organizations compete in direct government contracting. A direct government contract has a very specific work scope, schedule, deliverable items, pricing and in many instances incremental funding. A grant has a more generic functional orientation to funding and may or may not include deliverable items.

There are some programs, such as Mentor/Protege and Small Business Innovative Research (SBIR) that appear to be hybrids of grants and direct government contracting and are often mistaken for grant instruments. They are not grants and are governed under the Federal Acquisition Regulation (FAR) as direct government contracts.

REGISTRATION
Guidance on registering to become eligible for both small business grants and direct contracts is at the following link:

Registering For Government Contracting

STRUCTURE AND STRATEGIC PLANNING

Non-Profit Organizations

Most small business government grants go to non-profit organizations because of the nature of the work such entities do.

A non-profit organization operates in much the same way that a for-profit company does except that the founder (s) work for a board of directors that pays them a salary and, upon registration with state and federal governments under IRS provision 501 3 (c) or a similar designation, the business pays no taxes.

What would normally be considered profit in a for-profit company is re-invested back into a non-profit to further its work. Annual reports are required by the IRS to demonstrate the re-investment and maintain a tax-free status.

Non-profit organizations are usually initiated to pursue a religious or socio-economic endeavor serving the public, such as churches, health care, public information, communications, high technology, or similar undertakings.

No one owns a non-profit organization. A board of directors, a charter, articles of organization filed with the state and the IRS designation with the federal government establish it as a public entity. In the event it is discontinued, all proceeds and assets are distributed by the government for public use and no one individual benefits. A non-profit charter must include that provision.

The following link at NOLO provides the chronological process between a state registration and the IRS in applying for non-profit registration and tax-exempt status:



For-Profit Organizations

A for-profit organization is founded by individuals specifically defined by name as owners in the articles of incorporation with the state and registered with the federal government for tax purposes. There are many different types of for-profit entities (S Corp, Sole Proprietorship, LLC, Partnership, etc.); each type has its own unique tax and operating characteristics.

A for-profit organization exists for the specific purpose of providing a return on investment for the owners. All assets on the books of the company are the property of the company, and although certain types of corporations, such as a Limited Liability Company (LLC) reduce the risk and insulate the owners' private assets to some degree, in general what is invested by an owner in the firm is the property of the firm and subject to business risks and the laws governing such matters. In return the owner or stockholder is entitled to the return on his or her investment as an individual in the form of dividends, direct proceeds after costs or other forms of entitlement (conveying what is commonly known as profit).

GRANTS VS. DIRECT CONTRACTING

Small Business Grant Funding

Small Business Government Grants have the effect of supplying lump sum funding to a non-profit organization for a specific period once the grant is awarded. In general the funding is used to further the stated mission of the business. However, the grant provider may reserve the right to receive reports on how the money was spent and may require deliverable items associated with performance of the work under the grant.

Certain grants take the form of cooperative agreements, whereby the non-profit and the agency commit to supplying mutual funding amounts to a project. Under limited or special circumstances involving 0 profit, a for-profit entity may be eligible for such a cooperative agreement with the federal government.

Federal Government grant regulations are at the following link:

Grant Regulations



A Web site for researching federal grants as well as additional information on grants in general is at the following site:

Government Grants

Small Business Direct Contract Funding

Federal Government direct contracting regulations are at:

Federal Acquisition Regulation


“Small to Feds”, the web site you are reading, was initiated to assist small businesses in understanding the above regulation and direct federal government contracting. Please see the table of contents in the left margin of this site for topics.

As stated in the introduction above, both for-profit and non-profit entities compete for direct federal contracting. A non-profit entity will bid grants and direct contracts at 0 profit. The following links are suggested as an introduction to direct federal government contracting:

Introducing Federal Government Contracting Into Your Commercial Small Business

Small Business Government Contact Set-Aside Designations

Should You Consider Small Business Federal Government Contracting?

 
SUMMARY

This article has provided a brief (and admittedly general) overview of the difference between non-profit and for-profit business entities and the small business government grants and direct contracting available to each. 

Both small business government grants and direct government contracts are highly competitive. Selecting potential agency sources and submitting winning proposals are acquired skills. For assistance in writing grant and direct contract proposals please see the following links:

Proposal Preparation


Non-Profit Guide

When considering forming an enterprise, please assess in your business plan the potential of both types of entities in direct contracting or grant competitions. Go to the SBA web site that guides you through the business planning process. I suggest you follow the site presentation and note the factors to consider:

Write Your Business Plan


The following site contains samples of business plans:

Sample Business Plans

Look for examples in the above of both for-profit and non-profit organizations at the above link.

Ask yourself some strategic questions, such as what competition you envision and what your marketing plan will be. Addressing these questions may take some research and that is all part of the process of putting in place your plan. It is your road map for the future.













Saturday, December 26, 2020

Acquiring An Incumbent Work Force As An Element Of Winning A Government Contract

Opportunities and Challenges for the Small Business

INTRODUCTION

During the course of marketing to the federal government the small business will encounter opportunities involving potential for acquiring an incumbent work force as an element of winning a contract.  The acquisition of existing personnel already performing on a service contract is a way to exponentially grow a small enterprise. 

The purpose of this article is to discuss the acquisition of an incumbent work force and effectively managing the associated potential and challenges.

BACKGROUND

We have previously discussed planning and business systems for service contracting at the following postings:

The above articles discuss basic business organization and systems necessary to support the service contracting environment and bring an incumbent workforce into a company.

HOW INCUMBENT WORK FORCES ARE PROPOSED

Your market research into future acquisitions in the service contracting industry to the federal government will lead you to existing work forces subject to assumption by a winning contractor.
Base operations contracts, long term service contracts of an IDIQ nature and similar programs have competitive phases or are re-designated for a small business prime contractor if the government deems a pool of qualified companies is available to compete. Researching potential programs of this nature and marketing them is discussed in the following article:

 http://www.smalltofeds.com/2011/10/marketing-to-achieve-small-business-set.html

In some instances a larger contractor holding the existing work force is displaced from a program to meet agency statutory requirements for contracting to small business or because the existing contractor has grown to exceed the size standard for a small business on the program.  

Under these conditions a teaming arrangement may be possible with the departing contractor,resulting his assuming a lesser role in the effort (we suggest no more than 40%) as a subcontractor to you.  Do so only if the company is highly regarded by the customer from a past performance perspective and when you can negotiate an exclusive arrangement with him during the proposal phase of the program. Teaming arrangements are discussed at the following posting:

 http://www.smalltofeds.com/2009/05/small-business-teamiing-in-government.html

If a teaming arrangement cannot be achieved with the existing incumbent you must gain access to the incumbent personnel salary history and benefits to effectively bid the program for the out years in response to a solicitation.  Speculating on what the personnel make or relying on the government or the incumbent to provide the data is risky. Although some solicitations will provide a government “Wage/Rate Determination”, that document is the minimum and seldom represents the actual salaries of the employees. The only other meaningful document commonly provided is a union bargaining agreement still in force. 

Some companies will publish a help wanted advertisement in the local paper and invite the incumbent personnel to attend an off site open house, asking for sign offs on contingent hire agreements for use in the proposal, together with resumes:

It is important to remember that although the RFP may go so far as to say incumbent personnel have first rights of refusal for future positions, you are not legally obligated to hire what you feel are poor performers. You will, however, have to specify your criteria for personnel selection in your proposal and, especially for personnel the government has listed as “Key” in the RFP, explain how you intend to utilize existing people or bring in new ones. 

The competitive environment on a given procurement will drive how much you disclose in the way of openness in terms of publicly announcing your intentions to bid and acquire the personnel data you need to do so effectively.  You must conduct effective research and propose a winning wage and fringe package that appeals, not only to the personnel you wish to retain, but also to your customer.
Do not count on gaining access to incumbents through the government or being able to go on government property to interview them.  In most instances you will not be allowed to do
so or it would compromise your proposal from a conflict of interest perspective if you did. 

 A TRANSITION PLAN IS KEY

A winning proposal will have solid plans for recruiting and retaining the existing work force, executing a transition plan and insuring that the government does not encounter an interruption in services.

 Carefully analyze the solicitation requirements for elements for which the government expects to see a response pertinent to incumbent personnel. Prepare a graphic schedule and specific set of activities to transition the incumbent personnel to your company after contract award. Make sure the activities are overlaid upon the technical and management schedules elsewhere in your proposal and supports them. 

Your transition plan topics should address administrative, human resources, training and similar factors to insure a seamless process.  

SUMMARY

Acquiring an incumbent work force poses both opportunities and risks for a small enterprise.  Understanding the above factors and assessing your ability to manage the challenge will best prepare you for the decision whether or not to bid such a program. 


Thursday, December 17, 2020

3 Entrepreneurs Navigating COVID

 

                                                                       Image: MicroMentor

MICROMENTOR” – Written by Katy Mitchell

COVID-19 has struck a devastating blow to small businesses, and we have heard many stories of the incredible hardships faced in every corner of the world. At the same time, we have found hope and inspiration in stories of courage, resiliency, and strength from our community. Mentoring has proven again and again to be a vital resource in the face of economic hardship.

Here are 3 entrepreneurs from around the world who have been using the pandemic to launch, pivot, and grow their businesses.”


Neucco-1.jpg

Shannon (The Bahamas)

Bahamian entrepreneur Shannon was struggling in the wake of Hurricane Dorian, only to be hit again by the economic downturn of COVID-19. After hearing about Mercy Corps’ RISE Initiative and MicroMentor on a local radio station, Shannon joined and connected with mentor JP Michielsen. JP had an idea to help Shannon’s business: launch a COVID-specific deep cleaning and disinfection service.

With JP’s support, Shannon has successfully grown Neucco Solutions into one of the most modern and technologically advanced cleaning businesses on Grand Bahama, securing contracts with resorts, yachts, the shipyard, and small offices. “I cannot begin to totally summarize how the assistance of my mentor has aided me in building this new business, from advice on marketing and insurance to help with my logo and pricing tips. I am certain that without the help of my mentor my idea would have still been just that.”


KatherineTirkel.JPG

Katherine (USA/UK)

After finishing her degree in May 2020, American entrepreneur Katherine knew that she wanted to take advantage of the time provided by quarantine to launch a holistic health coaching business to support women and young people navigating Lyme disease. Armed with a rough plan for her business, Katherine joined MicroMentor and connected with Singapore-based mentor Eric Jude.

The pair bonded over a shared prioritization of creating meaning in business. Eric provided Katherine structure and accountability, and guided her through the process of identifying her target market, brand, client funnel, and service packaging. With Eric’s guidance in her toolkit, Katherine has started working with her first client and hopes to continue building more mentoring relationships to help her business flourish: “The biggest value is having a relationship where there are no unrealistic or unfair expectations…[my mentors] genuinely want to give back.”


sakher alqawasmeh 1.JPG

Sakher (Jordan)

Sakher, a young Jordan-based entrepreneur, decided to turn his passion for game development into a successful business. While developing his game, Earth Rage, Sakher recognized his lack of experience in business planning, development, and marketing and joined MicroMentor in 2019 to find a mentor who could provide advice.

When the pandemic shut down Amman and cities around the world, Sakher made use of his quarantine time to work on building his business and launching his game. He connected with more than 20 expert mentors on MicroMentor who have helped him gain the professional skills he needs to continue growing his business.

https://www.micromentor.org/blog/navigating-covid/

ABOUT THE AUTHOR:

[KM]
Katy Mitchell is the Digital Marketing Specialist at MicroMentor 

Monday, December 14, 2020

COST CENTER STRATEGIC PLANNING FOR SMALL BUSINESS SERVICE CONTRACTORS

INTRODUCTION


The purpose of this article is to discuss how a growing small enterprise can enhance competitive rate development and cost management by effective cost center utilization in federal government contracting.


A cost center is a single, pricing, accounting, and billing entity within a company, organized for a group of business lines and clients with close similarities for technical and management purposes. It has its own unique overhead rate and houses the projected direct cost labor dollar base and associated expenses for that base.


A cost center is also a financial consistency template that runs from long range planning through proposal pricing, accounting, billing and closeout for the contracts it houses.  It is the way DCAA and contracting officers view major aspects of your business and your rates for that business.


INITIAL COST CENTER EXPERIENCE


Enterprises that have not experienced federal government contracting typically base their initial proposals and bid submissions to the government on their commercial quotation approach and related market rates.  This usually involves a single company cost center approach with both government and commercial work together at the general ledger level. 


When the company gains experience in government contracting through audit exposure during proposal fact finding/negotiations, as well as accounting and billing, it becomes apparent that government cost accounting standards (CAS), job cost accounting and cost management at lower levels than the commercial general ledger are necessary to succeed.  At that point a business system to support the new requirements begins to take shape. 


The below graphic contains a typical graphic overview of the processes necessary.



PLEASE CLICK ON IMAGE TO ENLARGE

Note the long range planning and cost center blocks in the graphic.  The remainder of this article will focus on those two elements of the company business process. 
 
GROWING INTO MULTIPLE COST CENTERS

The time to consider separating government from commercial work and/or establishing new cost centers for bidding, accounting and billing purposes is when the enterprise is generating a long range marketing plan to determine rates for bidding new long terms contracts.
The location of the work (both geographic location and whether performance is in or out of a government facility, its duration, skill set requirements, government-mandated fringe benefits for workers and the competition are all factors to consider).
The government will not question your setting up a new cost center and projecting a direct cost business base within it together with associated expenses and the resultant forward pricing rates.  The reality you must remember is that the business in the cost center must materialize as a contributor to the company G&A base for the firm’s rates to remain consistent.   DCAA will check the math during a proposal audit.  You must make the projections happen to succeed if you win the work.  Please see the following article for the details on these relationships:


Setting up a new cost center retroactively for contracts that are already in process with pricing, job cost and billing records supported elsewhere in the plan, and the business system is extremely difficult.  Looking ahead during the bid process pays big dividends.

PROBABLILITY FACTORS IN COST CENTER FORECASTS

Probability factors reflect the likelihood of contract awards.
Place into the projected base for a cost center only that amount of forecasted direct cost base deemed likely to occur and then market and manage to make your forecast happen.  If major projects in the forecasted business do not materialize your actual, realized base will be too low and your overhead rates will go up during cost center operation unless expenses are cut. That means higher bidding and billing rates to your customers.
Probability factors are usually applied by forecasting the direct dollar labor content for the job in dollars and factoring it based on marketing intelligence relative to competition, the company capability statement, past performance with the agency and how well the firm is known to the customer.  Proper modeling of probability factors avoids unrealistic cost proposals and cost overruns under contracts while permitting flexibility in risk taking to beat the competition. Please see the below article for further details on this practice:


SUMMARY

Projects performed in government facilities may require a separate cost center, since many of the associated expenses for such operations are born by the government, who in turn expects a lower overhead rate as a result.
For accounting purposes cost centers usually have individual subsidiary ledgers, balance sheets and profit and loss statements. They are summarized monthly to a company total. Each cost center must have job cost accounting for the contracts residing there and a cost-center-unique overhead rate. 
The sum of the direct and indirect costs in the company cost centers forms the G&A base to which corporate level expenses are applied when calculating the G&A rate that is further applied to all projects residing in all centers after labor, labor overhead, material and other direct costs (travel or like expenses) have been summed.
Assuming your competition pays a generally similar labor rate to employees as you do and that fringe costs about the same for everyone, then cost center overhead, coupled with the company G&A rate, are often what wins and loses price evaluations during source selection. 
For more on cost centers and attendant business system considerations, please see the PRICING, BUSINESS SYSTEMS, FINANCE & ACCOUNTING section of the free book offered at this site as well as the long range plan and estimating and pricing examples in Appendices A and B to the book. 






Tuesday, December 8, 2020

Import/Export Management And Small Business Federal Government Contracting

Image:  EDUCBA.com Import -Export Managment

Because the world has become tightly wired technologically and the current economic situation ties us inexorably to foreign economies, it is likely small business will encounter the import/export process either on the selling or the buying end of federal government contracts involving foreign countries. This is particularly true with Foreign Military Sales (FMS) contracts through DOD and services contracts with civilian agencies such as USAID.

Key to your success will be the development of links to buyers or sources in other nations. You may have gotten the idea that it is a simple and perhaps easy enterprise to get into and successfully perform. It is not in my experience any such thing. Companies who are successful evolve contacts and product relationships in foreign countries and in the US that take careful and businesslike approaches. You will find yourself importing to this country by exporting from other countries and vice versa. There are laws and processes that apply in both domains governing taxes, duties and the import/export process.

It is recommend that you research thoroughly the answers to the following questions:

(a) What are the specifics of the equipment and supplies you are becoming involved in? (Manufacturer's part number, performance specification, unique qualities and market potential) What are the distribution channels that currently exist; is there a product warranty and are their spare and repair parts involved?

(b) Who buys the equipment and supplies in the United States and in countries you intend to sell to. (commercial consumer, government agency, large business, hospitals, military etc.) Do you plan to do market research on the potential demand for a product before you buy it? My advice is that you should - before you buy. I further advise that you research practical marketing, sales and distribution channels for a product before you buy it or import it. What are the possibilities of locally retailing it yourself?

(c) What are the laws and regulations regarding the movement of equipment and supplies? How are they taxed in the US and how are they taxed in foreign countries? Are they regulated by US or foreign countries? Are licenses required to either import or export the items? The answers to all these questions vary with the product and the US State Department and US Customs and Border Protection will have those answers once you identify the equipment and supplies. The links to the associated web sites are in the section below entitled 'THE REGULATORS'

(d) What service can you perform in (a)-(c) above? What value can you add to the process? Do you have special channels to either a customer or a source for the supplies and equipment? Do you have special knowledge or do you know others with special knowledge of these equipment and supplies, customers and sources which you could involve in creating or designing a niche no one else is filling or offer these items at a price attractive enough to generate volume and profit for your business and beat the competition.

(e) Who is your competition and how are they performing (a)-(d) above? Your business involves offering the service of importing equipment and supplies to fill the need in the US from sources out of the country and the other way around. You must develop an available niche that other companies do not fill, either by having lower prices, more and better sources, or a low overhead cost for handling the business; faster delivery, better product warranty, parts service and replacement, all play in the equation. Your market plan must address the reliability of your sources in other countries and the US, the quality of their product and how well they support their product in countries other than their own.

SHIPPING AND FREIGHT FORWARDERS

Along the way be particularly careful in your planning to research Freight Forwarders (FF). Use the Better Business Bureau (BBB) or other such government agencies to research the experience the buying public has had with stateside companies you deal with. BBB company research capabilities on the web are free to the public. Carefully review FF terms and conditions and assess the liability arrangements in the event of product theft or loss for goods coming in from overseas.

A freight forwarder is your paid agent to safeguard your property. He is also registered to handle clearing US customs. Certain other FF specialize in dealing with foreign countries. He is normally the individual to which your overseas manufacturer ships you product or through whom you ship product to foreign countries. Relying on the manufacturer himself to ship, insure, handle export and import requirements is not a safe bet and shipping directly to a foreign country has no assurances of delivery.

The foreign factory producer has too much conflict of interest in simply getting you to pay his bill and move on and your expertise in clearing customs in a foreign country may be limited. Freight forwarder expenses must be added to those of the product you buy from the factory source. These expenses should be included in your business plan and in your product pricing prior to going to market.

BE CAREFUL

Be wary of networks and exchange sites on the web that offer to make you rich and handle all the arrangements. This is seldom the case. Check them out with the Better Business Bureau:

Better Business Bureau

INSURANCE

On the subject of insurance, I assume you have looked into business insurance. A Limited Liability Company (LLC) is a form of Subchapter 'S' corporation that usually experiences the lowest rates for insurance. Have you looked into becoming an LLC? Insurance is a must in the line of business you are pursuing.

THE REGULATORS

For research regarding exporting and importing goods to and from foreign countries please see the web site for the Bureau of Industry and Security out of the Department Commerce. It is the keeper of export administrative regulations and classification numbers. It also has a commerce country chart that shows taxes and duties and license information by country. 

Bureau of Industry and Security

The Office of Foreign Asset Controls out of the Treasury Department is also a site you will have to visit to see if there are any specially designated nationals or targeted countries that the US has regulations against selling to:

Sanctions Programs and Country Information

The US State Department and the US Customs and Border Protection regulate and assist in import and export matters. I strongly suggest you visit their web sites. The State Department controls high technology items and weapons through the International Traffic in Arms Regulation (ITAR). Export licensing under the ITAR can be a lengthy process. Services and technical data as well as products of a weapons or high technology nature requiring licenses appear on a controlled items list in the ITAR. A company can unwittingly make an illegal export of technical data simply by conveying the wrong specifics regarding a controlled item to a foreigner over the phone. The serious nature of ITAR violations can be seen in case histories at the following web site:

Federal Contractor Misconduct Data Base

For an excellent article on ITAR compliance please see:

ITAR Compliance: What It Is, Who Needs It, and the Penalties for Ignoring It


The web site for the US State Department and US Customs and Border Protection respectively are as follows:

U.S. Department Of State

U.S. Customs and Border Protection

You will need to research the above regulatory sites as appropriate once you identify the specific products in which you intend to deal. It will be necessary to determine licensing, declaration, tariffs, taxes and trade implications. All these factors should be fully documented in your business plan before you undertake operations in a product area.

FINANCE AND CREDIT:

Finally your business plan will be your best long -term asset in establishing your credibility with the banking community and with prospective investors. My advice is to start small and slow, with minimal personal investment and begin dealing in products only after you have a well developed business plan and market research indicates they will be profitable. As the business establishes itself, a demonstrated cash flow and projected earnings statement can be used as leverage with a good business plan to achieve a small business loan, perhaps working with the SBA for a guarantee. Small business credit cards are a possibility if you can work the interest rates into your planned expenses and recover them in your product pricing.

Your planned banking arrangements should involve setting up accounts that involve automatic currency conversion features in the countries you plan to do business in.

I recommend being careful not to make your inventory a burden. Carrying excessive financed inventory without associated sales to pay the bills is one of the biggest traps you can fall into. Also remember many products have a shelf life which must be considered in the storage environment.

Sunday, November 29, 2020

Vital Tips for Project Management in Small Business Federal Government Contracting




Good small business project management focuses the resources on a plan for contract execution, the schedule, budget and customer requirements baseline and the status of a given effort among other concurrent projects to give visibility into problem solving and management trade offs.

If you are a small enterprise selling off-the-shelf commercial items under FAR Part 12 or marketing commercial products on a GSA schedule, you may be initially challenged by the government contracting venue. With persistence you will establish selling relationships through agencies and prime contractors. Your project management challenge is minimal.

A service contractor faces a far greater challenge in understanding the nature of government contact project management and succeeding at it
.
PLANNING IS KEY

Strategic thinking must be applied to structuring a government service contract project management capability in your company. It must involve long term planning and designing a business system as well as establishing rates and factors to bid new work and control it while interfacing with the customer.

A Framework For Small Business Federal Government Contracting Business Systrems

When one plans in detail to define the product or the service one reduces performance risk

The project management challenge is not to launch significant and costly resources before the specification for the product is sufficiently defined, obviating the need for costly revisions or abandonment, yet knowing when the product definition and plan are suitable for release.
Good project management starts early.

Without a well written Statement of Work (SOW) and associated supplies  and services specifications there is unacceptable risk in the future  contract and is it exceptionally high risk to bid or contract the job. 
Both the contractor and the customer must come to an understanding regarding the scope of effort to be performed. That understanding is conveyed in the Statement of Work (SOW) and confirmed in the specifications referenced therein.  A good SOW should have the following principal attributes:

* Clear identification of the products, services, skills, materials and performance factors required to complete the contract

* A description of the conditions under which the contractor will be required to perform and any related environmental or location factors

* Specific references to product specifications that govern an acceptable product or services performance outcome and delivery  acceptance

* A schedule for the contract that identifies discrete delivery dates for products and specific start and end dates for supporting labor.

* A precise description of customer furnished material or facilities required and when it will be made available to the contractor.

If your customer does not provide the above, offer the document during the comments period, during your proposal or during negotiations that represents a version to which your company will commit. 

Do not let the fact the program is competitive sway you from the facts. Signing off on a poorly written SOW results in a difficult contract to manage, a high probability for disputes during the  contracting period and a poor past performance record you will have to  deal with in the future on other jobs.

PROJECT MANAGEMENT RULES OF THUMB

A secondary and related challenge is managing the baseline for the product or service to avoid scope creep, superfluous bells and whistles and other diversions that risk the basic completion objectives. 

Set a baseline for what can and cannot be achieved for the resources and time that have been committed to the job and present to the client.  Use it as a bench mark for discussion to establish a plan going forward. Then control it using sound baseline management. 

Stay away from "Scope Creep" that can kill a contract, a customer relationship and a past performance record, all of which are important to your business. Stay in front of "Scope Creep" by communicating positively with the customer to control the baseline, keeping cost, schedule and technical performance integrated and synchronous.

Use the below rules of Thumb to control "Scope Creep":

KNOW - The contract value and its ceiling amount

KNOW - The incurred cost to date and commitments

KNOW - The scope of work and whether or not your current efforts are supporting it or some other objectives

KNOW - The estimated cost at completion based on where you are at today

KNOW - Your customer and who among the customer population is prone to direct out of scope effort.

 KNOW - WHEN TO SAY "NO" to "Scope Creep" and say it officially in   writing to the contracting officer specified in your contract.

For baseline management and earned value techniques in achieving the above, please see the articles linked below:

Baseline Management In Small Business Contracting

Earned Value Management Systems

CAREFULLY SELECT YOUR PROJECT MANAGER(S) OR PERFORM THE ROLE YOURSELF

The following are the more esoteric project manager attributes necessary in the government contracting industry:

DEVELOPING the ability to cross organizational lines and make disparate groups or functional organizations work together with only a power of persuasion and a contract.

EVOLVING the art of directing resources without having them as direct reports while keeping home departments and functional bosses happy at the same time.

MANAGING to convince the executives in the company that specific project (s) are the most important in the firm.

LIVING with the prospect that if the project is late, fails or otherwise disappoints the powers that be, replacing the project manager will be the designated corrective action.


GROWING to crave the satisfaction that comes from succeeding at the above challenges and you would not have any other job because no other pursuit makes your day go as fast, grows you skills as sharp and totally occupies your intellect.