The New Frontier

The Cons

First, the bad news.

  • Politicians. All smoothly rotating wheels need a little axle grease. In the political world, that means campaign contributions. Frequently, you have to pay to play.

"I called a governor's office about a bid once, and the first thing the secretary asked was if I was on the contributor's list," says Gil Walker, president of GRW Corp., a Brentwood, Tennessee, company with $5 million in annual sales that operates prisons in Kansas, Missouri, New Mexico and Texas.

  • Paperwork. Whether you're doing business with Uncle Sam or local city officials, expect to do it in triplicate. "The biggest problem in dealing with the federal government is the paperwork," says Charles Davis, owner of Support Services Inc. in Cross Hill, South Carolina. "You have to be cautious. Everything has to be filled out exactly right, or you'll be rejected." Davis, whose company manages three rest areas in Georgia, knows whereof he speaks: He spent 19 years working for the federal government before his own job was contracted out.

In addition to the work involved in the bidding, Penney says more ink is also required on the reporting side.

  • Capital. "One issue entrepreneurs have to consider," Moore says, "is the performance bond that municipalities often require in case a company fails to do the job. If someone wants a several-million-dollar bond, that shuts out a lot of small companies, especially start-ups."

Walker cleared that hurdle but not with one easy leap. "I had to finance the company 100 percent on my own," he says. "Banks aren't always interested in lending money to companies, particularly in my business. The big companies are struggling, too."

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This article was originally published in the May 1998 print edition of Entrepreneur with the headline: The New Frontier.

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