Insight and advice from an experienced colleague
Thinking about becoming an 8a or SDB? Do you wonder what to expect from the application process? Is it really the route you should go? Which one should I choose? What is the difference?
Lets see if I can help in the decision.
There are definitely benefits to following this path. However, Contracts Will Not Automatically Fall In Your Lap. You will still have to do Marketing within the 8a and SDB environment. And it takes effort. Unless you already have strong contacts you should plan on establishing some.
Now I believe having an 8a or SDB certification provides disadvantaged businesses another strong vehicle to assist in the marketing process. You still have to be good at what you do and provide a quality product at a reasonable price.
As an 8a you would be eligible to compete with other 8a's on the contracts that are Set Aside just for 8a companies. And there are a lot of them. Your 8a competition is out there right now marketing for them. As an SDB you would hold a trump card over non SDB?s when competing for the percentages of contracts that government agencies and other larger contracts seek to award to SDB's.
In addition, with the right marketing and contacts, you can take advantage of the Sole Source Contract Award opportunities for 8a's. This means the potential government customer can award a contract directly to you, without competition, for up to $3.0 Million. Now there are restrictions and guidelines, but this vehicle is a powerful opportunity for any company that is willing to put in the effort and deal with the frustrations that may come with this.
So which one should you choose, if any? It depends. Let me provide some realistic and experienced insight as a graduate of the 8a program and current SDB certified company. At one time my company was also a Private Certifier for SDB's under contract with the SBA. Thats right, I actually reviewed the applications and recommended yes or no to the SBA on applicants. The SBA has since discontinued the nationwide Private Certifier contract.
The 8(a) Certification:
Since the 8a program 9 years of developmental and transitional support you should ensure you are ready in the areas of marketing, contacts, financial capability, staffing capability related to your business, and general mental frame of mind to put the necessary effort into making the best of the next 9 years.
Also, it is important to remember that your Personal Net Worth cannot be more than $250,000 as of the date of this writing. Now this is the Net Worth of the person listed as the disadvantage owner. And this Net Worth Excludes any value in your home or that you have in the business. It also generally reflects only your portion of personal assets and liabilities. That is, if you are married or in a community property state, only 50% of the value of assets and liabilities will be considered when determining if you meet the $250,000 ceiling for Net Worth.
Net Worth is basically --- Personal Assets less Personal Liabilities. That is the purpose of the SBA requesting you to complete the personal financial statement for yourself and your spouse if it applies.
By the way, if you become 8a certified you automatically are SDB certified. Therefore you can offer to meet 2 goals for your potential customers.
So if you meet the Net Worth requirements and also are ready as I discussed above, then it would be a smart move to go 8a as you seek to move to the next level.
The SDB Certification:
Well if you feel you are just not ready for the commitment right now to start the clock on your 9 year limit and/or you feel your Net Worth exceeds the $250,000 ceiling then you should consider the SDB certification.
The Net Worth ceiling currently is $750,000 compared to $250,000 (don?t forget to check if these numbers have changed recently). You also generally do not have to prove social or economic disadvantage. I have discovered that the SBA still is requiring you to prove economic disadvantage for both the SDB and 8a certifications. So plan on addressing this area. That is why, in response to many of our VIP Community Members request, I have made available a template of a proven write-up for this often overlooked and miswritten area. You can go to the VIP Community page of our website at http://www.paulgunn.com/ and click on products to find out how to get a copy. This can save you a lot of time, money and frustration in this small but important area. So check it out. I made it available for you.
Anyway, almost of government agencies have goals or guidelines that prefer a minimum percentage of contract dollars go to SDB's, along with their other goals. In addition, they require most Prime Contractors with significant work to also meet certain goals of utilizing SDB's and other small businesses.
So as you can see, this is an excellent marketing tool. And the SDB certification can be renewed every 3 years as long as you continue to meet the requirements. Then when you are ready and have situated yourself and company to meet some of the requirements of the 8a that you could not initially meet, you can apply for the 8a. And in the mean time, you will have had the SDB certification and gained value experience into the inner workings of the SBA processes for various certified companies. In addition, any marketing you do will expose many other potential customers (Government and Primes) to your capabilities and willingness to work within the system. It can be an easier step to then jump into the 8a using it as powerful vehicle to work with current customers for both of you to grow to the next level.
The Application Process:
For either certification the best advice I can give you is this, Prepare For Frustration! Thats right. I'll tell it like it is. If you prepare yourself in advance to know that you will probably be extremely frustrated, then you are well on your way. To me its like an unwritten barrier to entry.
I can honestly say that most applicants that were truthful, had the right attitude, were patient and respectful, submitted an organized and easy to follow application, and were persistent, have successfully been certified.
Think of it this way, The process doesnt really start until you receive your first negative response from the SBA after submitting your application. Sounds strange? Well, once you get your first response, which is usually a letter saying your application is incomplete, or a rejection letter, then you are able to better work toward your certification.
Why? Well with every response letter, the SBA typically sends a detailed list of items that need addressing or an explanation of why you are rejected. But they also provide a timeline for you to respond. This is the time that is most important! Now you know more than you did before. Now you know what to address and you can respond in detail on every issue. But you must be serious and respond within the timeframe.
Most companies make it through this effort and go on to be certified. And it can take many letters and responses until the SBA is satisfied. So dont give up as long as there are questions to respond to. This is the weeding out process. Will you be a weed or a strong rooted seedling?
Remember, you are dealing with SBA staff that is underpaid, overworked, and feel underappreciated. And they are being swamped with applications and complaints. So put yourself in their place, okay. Who would you be more apt to work with on their behalf? The bad and inpatient attitude, or the cooperative and patient attitude? You get the picture.
This is Paul Gunn talking. And those who know me, understand that I mean it when I say Relationships Building Counts and Attitude Determines Results. Now lets be real. At times this may not work, but there is nothing that works all the time. However, more often than not it does. End of story. Here are a few tips
- Download the application and print it out.
- Get the SBA checklist.
- Then sit down and check off all items that you know you can handle. This is an important first step. Assign someone to begin working on those now. Psychologically, it will help as you begin the process with those things you can do. You have started the process!
- Next assign those things you may have difficulty with or dont know to someone who does. For instance, your accountant and/or CPA can begin the process of preparing both your Company and Personal Financial Statements. You can provide them the SBA guidelines and regulations on qualifications so they can know what they have to address and how (13 CFR 124). I told you I would give you what you needed to know.
- Determine how you will prepare your package. It should be in an organized format where the SBA can remove and replace any individual item without going through unstapling and restapling. Make it simple for them. A good idea would be in a loose-leaf binder or similar. Put tabs for each section that is identified in the checklist or requirements. Even if your response is Not Applicable please put a tab for that and put in Not Applicable. It seems small but you have just eliminated another question on their part. That is, why did they not address this section? Well you answered it by saying it is not applicable and if you choose you can state why it is N/A. Are you getting my drift on the approach?
- Then when you get as much done as you can, you can have a third party review it again for reasonableness and completeness. It will now cost you less for an outside party to review if that is even necessary.
- And as I said earlier, if you have an issue with the Economic Disadvantage Write-up (believe me you will know if you have an issue), then go to the list of products section on our website. Dont worry, it is very inexpensive. Priced to help defray the cost of providing this information and advice to our community.
So can you do it? Yes you can. Should you do it? It depends on your current versus future goals and objectives as well as your readiness to commit. Will it benefit you? Yes it can, if you are willing to put the effort into what is required After you get certified. Which one should I choose? It depends on your Net Worth, Your Readiness and Commitment.
And by the way, remember that if you choose a third party to prepare the package for you at sometimes a high cost, You or Someone In Your Company Will Still Have To Commit Time. Why? Who else will be able to provide the answers to all the questions related to your company and your personal life? I think You. So at a minimum you can say money and time by doing what you can first as indicated above. Okay?
What do I say? If you are ready then Just Do It. Stop talking about it and Just Do It. Next week you will be farther ahead in the process than today if you Just Do It. And have some fun along the way.
I have just shared with you hundreds of dollars ($100's), if not several thousands, of consulting advice. You now have some direction from one that has been there many times and has helped 100's successfully through the certification process. Do I guarantee anything? No, and no one else can. However I have given you a framework and starting point that gets you on the way.
I am happy to be able to share this with you and I hope you find it helpful. Please, enjoy the ride. It can be as much fun as getting there with the right attitude. May God bless and direct you in your decision.
Additional Resource for more details into the certifications - 13 CFR 124 Subpart A 8a 100-700 and Subpart B SDB 1000. Please use our forum to add any comment or additional direction on this issue to your colleagues.
Paul Sr