April 2022 - Paris SBDC

ATTENTION!!! Don’t miss the online Q&A about Government Contracting for Small Business!

This 2-part blog will get you ready to join this great online workshop which will help you to determine your next steps and will address general questions about Government Contracting!

It’s FREE! Click HERE to find out more!

What is government contracting?

The federal government is the largest customer in the world. Like contracts for goods and services found in the public sector, government contracts are made available by law to small businesses. Since the country runs on the backbone of small businesses, some ninety-nine percent in two-thousand twenty-one, the government wants to do business with small companies for many reasons including:

Ensuring big businesses don’t force smaller companies out of business.
Gain access to innovations and new ideas that smaller companies tend to provide.
Support the economic development and the job creation that drives our economy.
To provide an opportunity for disadvantaged socio-economic groups.

Just finding the biggest customer in the world is enough to send the likes of Joe Toolmaker to his workshop to build as many left-handed monkey wrenches as possible. For certainly there must be a need for those? Susie Muffin-Maker also believes she has an opportunity for a contract to feed troops or hungry federal workers. On the internet, she has sourced out thousands of muffin pans, ovens, and mixing equipment. However, overextending a credit-card may be tempting for Susie, and pressing the “buy now” button could put her business at risk.

The thought of landing a big, lucrative government contract for a small business may sound like a panacea for a company trying to grow. However, there are greater hurdles than just red tape to clear before actualizing any size contract available.

What do I need to know about government contracting in my small business?

If you are contemplating the pursuit of government contracts for your small business, first and foremost you must be a business registered in the United States, with few exceptions. A few other important things a small business needs to consider are:

Track record: The government is more likely to award contracts to reliable companies with strong track records for producing what they need, on time and at a competitive rate.
Register: A small business must register for a Unique Entity Identifier number (UEI). This twelve-character alpha-numeric identity is given when you register through SAM at SAM.GOV (link)
Identification: Government contracts are based on products or services they need. Research and identify what you produce and what agencies may be looking to procure. You will need to match this product with a North American Industry Classification System (NAICS) code. This can be found at the S. Census Bureau.
Company Size: Eligible companies must meet size standards as set out by the SBA. This is important as applying for a contract. It may also require a company with enough employees to produce what they need.
Compliance: The government requires strict compliance to laws and regulations. As well as adherence to the federal government’s purchasing process governed by the Federal Acquisition Regulation. Regulations for small business contracting can be found at 13 CFR 125.
Time and patience: It can take several years to be awarded a government contract. Even then, there is no guarantee that they will utilize your company.

Unfortunately, Susie Muffin-Maker did not take these things into account. She registered her business in Indonesia. Despite the low tax rates and access to the world’s largest coconut producer for her famous muffins, she is disqualified. While contracts for bakers exist, no agencies are looking for coconut muffins right now.

In NEXT WEEK’S BLOG we’ll get into the specifics of how to prepare a proposal for a government contract and which contracts are the best for your small business success.

Don’t forget our online class!!! Government Contract Q&A

For additional information on government contracting, how they work, or how to get a government contract, please contact us at the Small Business Development Center – SBDC – Serving Paris area: Lamar, Hunt, Hopkins, Delta, and Red River counties.

“I want to work forever and never retire!” – Said No One, Ever

As a small business owner, your end-goal was probably not to work forever, but have you really thought about retirement? A recent business survey of 2,000 small business owners revealed that one-third of entrepreneurs don’t have a retirement plan. It doesn’t matter if you are just starting out as a small business owner, or if you are nearing retirement, you need to think about your “exit strategy” and how you can retire comfortably. In today’s blog, we’ll talk about a few key strategies for building up retirement capital.

How small business owners save for retirement:

You are probably more familiar with reinvesting your profits back into your small business, than investing in your own future retirement. However, start thinking about your own retirement as a required business investment. Here are some ideas of how to save for retirement:

Set a solid goal

How much will you need to retire?
How long do you have until you would like to retire? (May be different than when you CAN retire.)
What will you do once you have retired?
- If your goal is to travel, will you need additional funds?
- Have you planned for a retirement home or assisted living?
What is your exit strategy?
- Will you sell your business, or will someone take over?
- Will you shut your business down in order to retire?
Build your support team
- Make sure your financial advisors are on board with your plans
  - CPA
  - Financial Advisor
  - Insurance Advisor
  - Attorney
- Decide how to invest and which programs you will use
  - Traditional IRA or ROTH IRA
  - Individual 401(k)
  - SEP IRA (Simplified Employee Pension Plan)

Pay yourself first!

The “Golden Rule” of successful entrepreneur’s states that you must pay yourself first. Before you pay any bills, employees or landlords…pay yourself first. Think of a personal savings as the first bill you must pay each month. You can even start small, say $100 each payday and put that money away in savings and a portion in a retirement plan. Overtime the amounts will add up and you’ll not only have an emergency fund, but you’ll have planned for your retirement.

Why should I pay myself first?

Dave Ramsey III is an American personal finance specialist who’s budgeting advice is world-renowned. He will tell you that paying yourself first sets up not only a monetary reward, but a psychological reward as well. When you pattern your brain for savings, you’ll achieve your goals. While we won’t get into Dave Ramsey’s steps to success, (although you should look them up!) we will tell you the advantages of paying yourself first:

It sets proper priorities

It’s easy (especially if you start out saving and it becomes automatic)

You can take advantage of the Dollar Cost Averaging (think retirement plans that grow)

It creates a health work/reward cycle

Saving first models proven financial strategies for success

How to get a tax credit on my Solo 401(k):

Did you know you can get a great tax credit for starting a 401(k) plan that benefits you and any team members that take advantage of the opportunity? Under the SECURE Act, small business employers can receive a tax credit (up to $5,000 per year).

For additional information, resources and tips on how to save for retirement; or for more information on retirement plans available to small business owners, please contact us at the Small Business Development Center – SBDC – Serving Paris area: Lamar, Hunt, Hopkins, Delta, and Red River counties.

Government Contracting for Small Business