5 tricks for small businesses looking to prosper

Lee Iacocca knows them. So do Larry Ellison, Rupert Murdoch and Jack Welch. Anyone who stays with a profession long enough discovers some tricks of the trade. Sometimes, they come like an epiphany, and sometimes at the end of a long learning curve. But one word — experience — sums up the secrets of their success.

In the government contracting arena, small businesses have amassed a wealth of such secrets. This article offers advice from Guy Timberlake, co-founder and chief visionary officer of the American Small Business Coalition, a for-profit membership organization supporting small firms. Timberlake asked coalition members to suggest secrets of successful federal contracting by small businesses. An informal and unscientific poll yields additional information from some executives of small tech companies.

Sweat every detail

The old guard of systems integrators, the "Beltway Bandits" of the 1980s, often won government contracts by bidding on customers' broad needs. Small contractors succeed in the government sector now by focusing on one set of skills. That means working on a specific need, whether it's a classified installation for the Navy's Atlantic fleet or updating software for a Coast Guard base in Maine. You're not selling 1,000 desktop PCs to the Pentagon, you're solving a specific problem for a particular agency.

"We sweat a lot of small stuff," said Jeff White, president of Blue Canopy Group. "We live and die by our reputation and our brand, and we sweat every detail."

He said the old business mantra of "sell the benefits, don't sell the features" is as outdated as the mainframe. "So we ask our clients, 'How do you do what you do today? How do you accomplish X today?'"

Don't take anything for granted, he said, because the federal marketplace is too diverse. By asking precise questions, "the idea is to know the symptom before prescribing a cure," White said.

Dig a deep networking well

You can't walk up to a government information technology buyer and expect to differentiate your company from the hundreds of competitors because few unique characteristics distinguish one vendor from another. Instead, develop close relationships. Don't go to networking events to just collect business cards.

Vish Varma, vice president of corporate development at software developer AlphaInsight, said networking is important, but too many small businesses practice it incorrectly. "One of the problems is people networking are looking for people from whom they can benefit," he said. "When I bring a hidden agenda, trying to figure out how I can exploit this relationship to my advantage, that's not true networking."

Be kind, considerate and personable — and don't have other motives — to set a first impression that will carry over into a potentially successful relationship, he said.

Varma attributes his personal networking philosophy to Harvey Mackay, the author of "Dig Your Well Before You're Thirsty." "We should be looking for people to whom we can bring some benefit and then later, down the road, the benefits will be returned," Varma said. "We should connect with people before we know whether they can help us or how they can help us."

Anything else is insincere and manipulative, and that won't produce an effective, long-lasting network connection.

Know the market

Many new companies waste time trying to gain a foothold in the government sector without understanding its needs. Small-business sales employees need to study not only who their potential customers are but also why those customers would buy the company's products or services. Are they speaking to the right person to deal with their specific product or service? Sales employees must know precisely what their products or services would do for a potential customer and why the Internal Revenue Service, for example, but not the Department of Health and Human Services would buy from the company.

Government buyers are much more savvy today about how and why they acquire products and services. If you don't take the time to educate yourself, you're wasting time, and you'll eventually make yourself and your company look bad.

Gary Newstaad, president of Paragon Systems, a 40-employee provider of Sun Microsystems, Unix and storage products to government and military customers, said resellers should have three sets of knowledge, which he calls "bubbles." The three bubbles: what his provider has, what his client needs and what his products and company can do to satisfy that need. "What is important to Sun is important to us, and what's important to the client is important to us," he said.

"There are a lot of masters, but ultimately the master is the customer," Newstaad said. A vendor's education needs to ultimately focus on the customer, "just as Nordstrom's does when you or I go in to shop."

Make out your lineup card before the game begins

Although many IT companies talk a lot about the team concept, they don't often practice it until it's nearly too late. To achieve creative teaming and successful bidding, your team of subcontractors must be on board and in sync before you respond to a request for proposals.

Timberlake said he compared this approach to personal relationships. We don't wait until we need someone's help to form an acquaintance in the neighborhood or office, he said. Likewise in business, you develop the team before you try to sell to customers.

Federal agencies are writing requirements more specifically designed for a lead contractor, regardless of whether it's a large or small business. That contractor will be responsible for the overall delivery, including the work of several subcontractors. "Put a plan in place to go after a very specific piece of business that's relevant to the core skills of the entire team," Timberlake said. "Not only is it teaming, it's creative and focused teaming."

Nice guys don't always finish last

Small IT companies are all too often led by chief executive officers with strong personalities who seek executives in their own image, some critics say. That technique virtually guarantees failure because the chief inevitably micromanages the team.

To build the best possible team, CEOs need to step away from the mirror and hire those whose posture, carriage and speech suggest a winner who can impress customers and work in a productive, congenial atmosphere. The executive team should also be flexible.

Mike Morehouse, chief business officer of FGM, an employee-owned defense and intelligence contractor, said the company's philosophy is grounded in several business concepts, including "getting the right people on the bus, and getting the right people in the right seats.

"An extremely important part of our strategy is getting the right folks not only from the business development perspective but also on the execution side," Morehouse said. "You can win all the business in the world with the right people presenting your story right. But you cannot be successful without having the right people on the execution side."

Morehouse, who participates in most of FGM's hiring initiatives, said FGM takes its time and tends to be a little more critical than other companies when it comes to hiring. "Some people even criticize us for how long we take in making a [hiring] decision."

Morehouse said he often begins with a target list of potential hires, "people I have interacted with prior to me ever thinking about hiring them." He said he looks for someone with a relatively humble side, who also has what he calls the care factor — genuine concern for what he'll be expected to do and the customer for whom he is doing the work.

To avoid the possibility of hiring executive clones or a Caligula, he uses a team approach, with each member conducting an interview from a different facet. "We obviously compare notes when we're done, and some of [the questioning] obviously overlaps a little bit by design, he said. "But you can get a gauge on consistency and continuity of responses."

Morehouse said it's gauging personality. "How well will that person work in a team environment?" he asked. "How well are they going to communicate and collaborate? What we've found — we've made some mistakes in the past — is you can hire the best 'brainiac' in the world, but if he can't work with anybody else, it doesn't do you any good at all." n

Hubler is a freelance writer who lives in Annandale, Va.