panelists for q&a
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Panelists for Q&A. LESSONS LEARNED FROM SUCCESSFUL SMALL BUSINESSES. Surveys and Slides by Pat McMullen, President of MGS Construction and Karen Stubbs, VP, Business Development, J2 Engineering. Before we get started…. About that Survey 25 firms, good cross section of all variables - PowerPoint PPT PresentationTRANSCRIPT
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Panelists for Q&A
Name Firm Status Primary Services
Kathryn Steele
Wells Group 8a Construction
Victor Palma
ECOMM SB Environmental Consulting
Kevin Phillips
FPM HBZ Environmental Remediation
Gary Cram Cram Roofing SB ConstructionJose Morales
J2 Engineering SDVO / 8a
Construction , Environmental
Ed Von Dran Alpha Terra SDVO Environmental, StaffingKathy McGookey
Medina Consulting WOSB Environmental Consulting
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LESSONS LEARNED FROM SUCCESSFUL SMALL
BUSINESSES Surveys and Slides by
Pat McMullen, President of MGS Construction and
Karen Stubbs, VP, Business Development, J2 Engineering
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Before we get started….. About that Survey
25 firms, good cross section of all variables Data is confidential except panelist’s
comments Format
Recap results of survey Q&A with panel One-on-One as time allows
Slides with Much More Detail on Website http://same-satx.org/
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“They Said It Best”
“Running a business is hard work ….be prepared mentally prior to taking the leap of faith”
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Before you leave today…
Goal: Walk out with a general understanding
of how 25 diverse small businesses established and sustained success
Identify a few things you want to ensure you continue….. a few things you want to stop …a few things you want to start
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About our respondents….
Age Range at Startup: 26-57 Years in Business: 3-23 years Experience Background: extremely
broad Geography: SW/SE/NE/Upper
Midwest. Lacked CA and NW
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More about our respondents… 20 firms were once “Start Ups”; 5
were acquisitions of existing companies
No Super 8a’s ---we’ll explain later Size at start up and now
New Startups were 1-3 employees Buy outs were 6-50 employees Ranged from 7 to 450 employees
today
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“They Said It Best”
“find an outlet besides drinking that can keep you sane and focused”
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If there’s one flaw in this survey Startup success rate in our industry
is actually high (yes…it really is) but we only spoke to folks who were successful
Those who failed would have most likely added different perspective
We decided it was too awkward to interview those firms …de nile is not just a river in Egypt
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Why Did They Start a Business
Positive: “Just wanted to do it” Negative: “Couldn’t stand working for
others anymore” Limited “Opportunity Driven” answers
but more personal for our sample population rather than coming together of market conditions.
Hidden Message…when you’re ready, there will be opportunity
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How Did Startups..Begin
Most started out as Federal subcontractors; several began as commercial Prime contractors. No startups started as Federal Prime
New regulations drive New Opportunity: e.g. creation and expansion of SDVO brought new owners. And there are always new regulations e.g. 8(m)
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“They Said It Best”
“Yes, you can hire family….you can also step in front of a South bound train…with my family, I’d rather step in front of the train”
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Good Buy.…Buy Out
Most recovered investment in <3 years
Tended to grow much more rapidly when compared to ‘start ups’
Minimal ownership changes 5-20 years later
Beware: small sample population for above statements .
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Was There One Outstanding Problem at Start Up
Of course….Money!!! All other issues vied for 2nd place And this is why we chose to not
include Super 8(a)s as they’re typically cash rich
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Differences in Type of Services / Type of Business It appeared to us that all types of
businesses had similar experiences No major differences noted by type
of service However….
8(a) participants clearly benefited Construction firms had additional
challenge of bonding
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“They Said It Best”
“it was hard at start up and I did some dumb things but, five years into it, this is the most fun I can ever imagine. This is my company, understand? I built this thing myself. I love being an entrepreneur.”
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Lessons Learned at Startup… No one knew everything about
running a business, everyone had to learn a lot
Some knew very little at all Almost no one had it easy (2 out of
25) Almost all spoke about putting in more hours but no one expressed regret: but we chose successful firms
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Lessons Learned at Startup… A lot of focus on understanding all
that was involved in building the business
For most, this was a more stressful time because of the uncertainty about surviving
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Lessons Learned: at Start Up All of our firms survived start up They did through a various means Common threads
Hard work Passion Basic business sense
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“They Said It Best”
“We are successful now because we established a good management and business plan and had the courage to follow through.”
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Formative Years Overview
Years 3-5 were less about learning what to do and more about hiring staff, establishing relations, establishing business processes
Hiring the right people dominated most discussion at this period…..Comments consistently reinforced major point from Good to Great: you simply can’t outgrow your ability to hire and maintain the right people
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Formative Years: Two Issues for Everyone
Need to focus…lots of opportunities but not enough time to chase every opportunity
Need to diversify ..New clients..New services
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Formative Years: Major Transitions
“culture vs. growth” “letting go” Moving from doing work to being a
business person who is now responsible for leading the company and managing people and processes
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“They Said It Best”
“People talk about the long hours and make it sound miserable. But then you try to buy their company and they scream….I’LL NEVER SELL MY BUSINESS..”
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Predicting Success
1. Able to find and retain good people who “fit”
2. Owner learned to delegate 3. Developed relationships that formed
future of company…stopped bidding beyond those clients
4. Began to show financial discipline e.g. budgets
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Predicting Success (cont’d)5. Most bought into strategic planning 6. Found “Sweet Spot”7. Found a “Good” Mentor
8a program was huge success for most (not all)
Mentors came in all shapes and sizes (e.g. individuals, agencies (SBA), companies, SDBO)
Mentors filled in the gaps and everyone has deficits in skill set
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Start Up Period vs. Formative Years Seemed startup was more stressful
due to fear of failure. Future years often had much greater
problems but owners knew they could survive
It didn’t get easier….owners were smarter and had evolving support system
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“They Said It Best”
“20 years later the most important lesson at startup is still the most important lesson….we need to always maintain our focus”
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Just when you thought it was safe to go out…. Older well established firms had
many of the same challenges Still vulnerable to loss of key people More difficult to be flexible with ever
changing markets More pressure to maintain revenues to
support existing staff But they were clearly less vulnerable
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There are plenty of resources …Resource Value MentionedSAME Networking, Training, ConferencesSBDC SBA Loan support, Business operations
training, HR consulting, NetworkingSBA Absolute for HBZ/8(a), Start up and
Expansion LoansPTAC GSA Schedule, Training, Bank Real help for someFederal/University/City SDBO
Some great source of help…size/relationship driven
Other Lots of other entities but no patterns
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Darwin right again… The majority of our respondents
evolved significantly from initial services
Where services remained constant, other aspects of the business evolved (client base, culture, locale)
For some, no correlation of current services and clients to when they started the company
Lesson Learned: Need to stay flexible and continually evolve…or become extinct
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“They Said It Best”
“Persistent is the key to success”
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Glad I didn’t know then..
For this group….ignorance was bliss Most said they’d do it again but it
would have been more stressful if they knew the risks
Seemed they had a sense of the basics (bring work in, do the work, manage the business) and learned from there
Lesson Learned: no one path
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Differentiating yourself
Surprise Finding : Nothing new under the sun. We anticipated more complex answers. We kept hearing the basics: Quality,
Responsiveness, Best Value, Integrity Lesson Learned: though getting to
success can be difficult, understanding what you have to provide as a product/service is fairly straightforward….do good work
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Lessons Learned: Accounting Software
Purchase Proven software that readily and seamlessly interfaces with government software and make sure you can handle job-cost accounting.
DO YOUR RESEARCH, you don’t have time or money for shortcuts
Start simple (QuickBooks) and move on Buy software that is government auditable Buying the software is easy, training staff is
major task
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“They Said It Best”
“the most painful thing I did was save money on a bookkeeper when we started the company. It costs us about $15,000 in about 6 months to fix her mistakes.
Oh but we saved about $600 in salary. Dumb, dumb, dumb move”
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Lessons Learned: Hiring a Bookeeper
MOST IMPORTANT person we hired Relevant experience to your industry
is critical. Most know one or a few industries….but must know yours
Make sure they understand federal work
Experience with your business and software
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Lessons Learned: Hiring a CPA
Best move was when I hired my CPA as our CFO
Get references, make sure they are familiar with government accounting
Use someone sensible, not a hot shot An absolute must but ….must
understand your industry and federal work
Invaluable, taxes can impair the entire business picture
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Lessons Learned: Hiring Staff At times we needed to step out and hire
people before the work is actually booked Don’t rush, check references, background Once you hire, difficult to fire so we used
temp agencies to try them out One of the more stressful actions is
terminating someone, especially if it’s a good person who is simply wrong fit for job
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Lessons Learned: Involving Family Never – you cannot fire them Don’t..that’s it don’t do it Don’t unless you must Can be beneficial Very personal decision Not a problem for us, but not
recommended for all Large % of respondents used family!
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Lessons Learned: Working with Banks Imperative, can not grow with out a
line of credit and working capital Find one that doesn’t charge
excessive fees for online bill pay and payroll options
Always work with two until you find the one who is most helpful and trustworthy
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Lessons Learned: Working with SBA They are your friend and an
invaluable resource Can be the key to your success but
don’t believe everything they tell you Difficult getting certified, very
successful relationship afterwards SBA can be like a university when it
comes to training and education resources
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Lessons Learned: Securing Bonding
Life blood, must keep them happy Talk to people in the industry, find out out
how they like their Surety company Do it before you need it They were the key to our success. Bonding
company should be confident in your abilities to bid correctly and then finish the projects on time /on budget
We secured a relationship with insurance broker before bonding was required which made it easier
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Lessons Learned: Contract Admin Hire the best qualified personnel to do
the job At time challenging; some slow
responses can lead to lack of work Start knowing this early, ….it gets hard
as you grow Have a qualified person, who
understands contracting, this will save you from getting in trouble and it will save money
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Lessons Learned: Procurement Mistakenly thought this was an easy
hire…dumb move. Must have procurement staff that are
well versed in understanding and conveying to other departments and managers what we must do to maintain contract compliance with government contracts.
Life blood of company …must have a handle to survive
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Lessons Learned: Business Development No one sells the company better than the owner The client wants to see the owner Attend SAME events Placing this above short term profit was key to our
success We did it first class and it paid off Beware of BD types – some look better on paper than in
reality No one will care for or sell for your business better than
you Right person will make the difference between success
and failure You cant sell and do at the same time
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Lessons Learned: IT Systems We are successful by contracting only what we
need Fast changing sector needs to be kept up to date Cannot afford to reinvent the wheel Consult trusted and proven source for IT
solutions as you grow Hire a dedicated person when you get the
chance. If it is down, you are down Get a system/server that can support people
working remotely We did it first class and it saved us money
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Lessons Learned: Quality Control Do not cut quality control out of a
project- ever Without this you might as well close
shop and do something else Cant have enough of it. Ever You cannot take it too seriously, ever. As owner, QC is your responsibility Essential, a company is known by its
product and experience
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Lessons Learned: Safety
Always number one. Give employees empowerment to stop work in unsafe conditions
If you are not safe, you will not work for the federal government
Essential /Priority One/ No short cuts Develop procedures Do it the right way which is the safe
way
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Lessons Learned: HR
Write or buy a very detailed plan and have all employees sign off on it upon hiring
Recruiting, hiring, retention and termination are learned skills; much information is available for them
Comply with all hiring rules and keep current labor law posters properly posted
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Lessons Learned: Taxes
Pay them on time! Move the money out of your operating account each payday.
Thinking you can delay paying your taxes akin to saying you’re only going to eat one piece of chocolate…nobody eats one piece of chocolate.
Somewhat surprisingly we found the IRS was willing to work with us when we met face to face and were proactive.