Learn from Stimulus Winners
Get the working capital your business needs from Entrepreneur Lending, powered by CAN Capital. Learn More »
The stimulus money is out there. There's a lot of it. Go get it.
For small-business owners, the official word is sounding a little stale, and irrelevant at that. Many say they haven't seen a cent of the money, and don't expect to, either. But some business owners have successfully tapped into stimulus funds, and Entrepreneur tracked down a couple of winners to find out their secrets.
For Chip Wilson, founder and CEO of Texas-based employee training and business consulting firm 360 Solutions, the stimulus is a blessing. In 2008, his company generated $3 million in revenue from government-related contracts alone, and this year, with the additional fiscal spending boost, Wilson expects even more.
His secret? Making connections with vendors who already work with the government.
Wilson says he's growing fast by providing products and services to local nonprofit and for-profit agencies with established government relationships. "We've gotten [several] multimillion-dollar contracts as places receiving additional dollars from the stimulus act search for partners to accomplish spending over the next year." So, he advises, don't go directly to the government; instead, aim a little lower on the food chain. "The [administration] is overwhelmed trying to get the money into the hands of people who need it, and are pushing it through existing relationships rather than taking a chance on unknowns."
Best of all, says Wilson, you can start today. Publicly accessible websites like Grants.gov and GSASchedule.com list contact information for grant recipients and contractors. "I would pick up the phone, call and tell them, 'If you need help, here's what my firm does and here's how you can subcontract some of the work to me.'"
Wilson adds that despite the recession, he's never been more optimistic about the entrepreneurial spirit. "For every company that is struggling, there is another company that is in a growth spurt," he says. "There is plenty of money right now. Anybody who is struggling is not looking in the right places."
Beware the Red Tape
Going the indirect route is good for another reason: You can avoid the red tape. However, if you do win a direct contract from the government, be aware the money comes with strings attached.
Take it from John Lomax, owner of Greensboro, N.C.-based Lomax Construction, who wasn't exactly thrilled to find out he won a stimulus-funded project to build a new fire station. "The contract went to the lowest responsible bidder, and we didn't know until the day we won it that the money would come from stimulus funds," he recalls. "Having work is good, but if I'd known, it would definitely have affected the bid price I put in."
As someone with plenty of experience bidding (and winning) government contracts, he's cynical, and perhaps with good reason. For one, the paperwork is killer. "I think everybody would have a problem with all this extra work for a lump-sum contract," Lomax says, noting that the company will have to provide copies of invoices for everything, even items like nails and screws. "My staff isn't very happy right now."
He is also skeptical of the stimulus in general, especially since developments once voted down by the public are being put back on the table because the money is there. And as for "shovel-ready" projects, he suspects they would have been done even without the stimulus money. "Surely they didn't get this far on a project without having some funding options for it, right?"
Still, there is a bright side. The money is finally trickling down to suppliers and contractors who were having a hard time keeping their doors open. "In my opinion, some of the processes are focused on the wrong thing, but it's good for the whole industry and the economy overall," Lomax says.
In Pursuit of Stimulus
No matter the eventual outcome, business owners pursuing stimulus money will run into roadblocks. Stephanie and Scott Duplex, the brother-and-sister duo who run Elite Tek Services, an IT and staffing firm based in Southern California, are proof of that. They've been trying to get a foot in the door for two years, and haven't noticed the stimulus making it any easier to get government work.
Name any strategy, and they've tried it: seminars, workshops, promoting women- and minority-owned business status, teaming with companies that have past performance records with the government, attending vendor fairs--even flying cross-country to meet with key procurement agents. But nothing yet.
Part of it might be Elite's geographical disadvantage. "You can't deny the fact you have to build relationships and meet people," Scott explains. "So you have more of an edge if you're a company in Maryland, Virginia or D.C., or have the funds to travel back and forth to meet regularly with people in person."
Now, the Duplexes are deciding whether investing thousands of dollars to get a GSA schedule (a contract that lists the prices the government will pay for a vendor's products and services if there is a purchase) and diligently chipping away at any potential leads they come across.
"It's almost like a secret club," Stephanie jokes. Fortunately, it takes more than that to depress the entrepreneurial spirit. "Time is a challenge, and budget is a challenge, but we're not discouraged enough to throw our hands up. We know the value of the opportunity, and if it hits, it will pay off, so we're definitely not quitting."