Advising Veteran-Owned Small Businesses to be First in Line for Federal Government Contracts. A Market Opportunity for Financial Advisors.
By Steven Wightman, CFP®
In any given year, even without stimulus money, the United States government will write at least $433 billion in checks to businesses. It has a goal of spending 23 percent of those dollars on small businesses, and it has set aside 3 percent, or about $12.8 billion, for Service Disabled Veteran Owned Small Businesses (“SDVOB”). This is an enormous opportunity.
Advisors can take a quantum leap in their value added by performing business matchmaking services to clients for business-to-government and business-to-business markets. In particular, specializing in serving SDVOBs can be a great business for financial advisors.
Small Business Realities
Small businesses view the U.S. government as an ideal customer; it manufactures nothing, purchases everything, and by law, must pay all bills within 30 days.
For many years, however, SDVOBs struggled to get their fair share of small-business government spending. But in 2004, President Bush signed Executive Order 13360 to create the Office of Small and Disadvantaged Utilization Interagency Council (“OSBDU”). The order established clear goals and set the reporting and management infrastructure and accountability for all federal agencies. For the first time, not meeting these goals reflected on manager’s performance evaluations. Each agency must appoint a representative to report progress to agency directors who meet monthly with OSBDU to report on the 3% procurement goal progress. Now agencies, led by the Small Business Administration and the Department of Veteran’s Affairs, are paying real attention to directing government business to SDVOBs.
Combined with the strengths that veterans demonstrate, the business opportunities look stronger today than ever. Veterans know how to serve. They are disciplined and steeled to meet the mission, regardless of the odds. They tend to be highly trained, physically fit, and mentally acute. Generally, they care deeply about the health and welfare of our country. They are driven to succeed.
Business classification
Contracts awarded in billions ending 9/30/2008
Share of total contracts
Goal
Small businesses
$93.2
21.5%
23%
Minority owned
$29.3
6.8%
5%
Women owned
$14.7
3.4%
5%
Hub zone
$10.1
2.3%
3%
SDVOB
$6.4
1.5%
3%
Source: Small Business Administration
The biggest problem SDVOBs face is, well, not being big. They often lack the resources to meet the often large service and supply demands of government agencies. Furthermore, contracting officers look for a performance record with government agencies, something a new (or even an existing) SDVOB may lack. The result is that SDVOBs often only qualify to be subcontractors for larger firms often called primes—and then they sometimes get the short end of the contract stick.How an Advisor Can Help
Financial advisors can help small-business owners become successful government contractors in many ways. I learned about these opportunities while attending the July 20-23, 2009 Fifth Annual National Veteran Small Business Conference in Las Vegas aimed specifically at the SDVOB market, and many of the lessons can be expanded to reflect the needs, resources and opportunities of small businesses in general. Interestingly, I learned that any small U.S. business can enlist a team of federal experts dedicated to assisting small businesses to start or expand business with the U.S.A. without adding a dollar to the payroll. At the federal level alone there are many employees working hard for this cause. How can you help?
First and foremost, the advisor should get veterans to sit down with the local area’s SBA Veteran Business Development Officer and the Small Business Development Center. Staff members in these offices know how to work with small businesses to develop or refine a business plan, and then to qualify them for contracts and list them in contracting data bases. They even offer small business free online training programs. Also, inquire about http://www.acquisition.gov/, Acquisition Central, the integrated acquisition portal that streamlines the federal acquisition process and is used by every member of the federal acquisition community.
Second, direct the veteran to register at http://www.vetbiz.gov/. It is the easiest way for potential government buyers to find any Veteran Owned Business, VOB. It’s a free linkage service for veterans from the Veterans Administration. Here at a section called VIP (Vendor Information Page) veterans can post their own web page and even cast a three minute video about their products or services free of charge. VIP is the first place federal contracting officers visit to improve their performance scores for VOB and SDVOB contracting. Also, VIP Registered businesses automatically receive contract solicitation notices from fedbizops, a linked website, http://www.fbo.gov/ matching their industry or product codes AND they also receive advance purchase planning information from VA’s forecast of business opportunities.Third, get hands-on assistance in the Federal Market place. Procurement Technical Assistance Centers (http://www.dla.mil/db/procurem.htm) are located in most States. Procurement Technical Assistance Centers (PTAC) while funded by the Department of Defense provide counseling and training on financial, technical, contracting and marketing issues at minimal or no cost.

Fourth, consider a mentor-protégé program with a non-SDVOB business, preferably one that has the resources and experience to fill the kind of contract work that the SDVOB is seeking to obtain (but is too small to service a large set-side contract alone). These types of partnerships are welcomed by government agencies. In fact, some agencies prefer mentor-partnerships to stand-alone SDVOBs. See www.sba.gov.GC/indexcontracts-sbsd.html for a list of prime contractors and their Small Business Liaison Officer contact in your region.
Mentoring is a triple-win: SDVOBs get access to great talent and resources; the government reduces contract default risk; and the prime contractor gets access to a formerly inaccessible pie. As a subcontractor, the SDVOB works closely with the prime contractor to meet the requirements of the contract (this is vital), but also to develop its own skills in marketing, negotiating contract terms, and providing services to the government.
Fifth, advisors should encourage SDVOBs to look for opportunities to become prime contractors, after they have developed experience. Remember that complex legal issues arise for prime contractors, so it’s best to bring in an attorney who understands federal contracting law.
If you’re not moving fast, you’re food.Sixth, Financing: Advisors can help SDVOBs establish a merchant account to accept government credit cards. Many government agencies use credit cards for small purchases. Check out http://sss.gsa-smartpay.com/. Also advisors can help SDVOBs obtain the financing needed to fulfill a contract. Financing might be needed to hire workers, set up a benefits program, rent office or warehouse space, buy equipment or a variety of other business growth needs. Fortunately, veterans have excellent options for getting funding through the Patriot Loan program; this offers business loans for as little as 2.25 percent above prime and an 85-percent federal backing guarantee. Seventh and finally, this often overlooked axiom; businesses have got to market to make it and advisors can add value by connecting businesses to those that have that know how. Registering on government databases is a lot like having your own website; it’s great for showcasing your services but it’s not very good at attracting new business. Imagine for a moment that you are a VOB. Yes, you’ve identified your customers, researched their requirements, registered on all the right websites, and learned government procurement laws and procedures, but now you must sell your capabilities directly to government contracting officers that purchase your product or services. Remember, their time is valuable too and you must show them that you have exactly what they are looking for on their, not your terms. Advisors can help businesses define their products and services in language more appealing to federal purchasers. SBA can help here too. Visit www.sba.gov/businessop/marketing/register.html where you’ll find valuable resources on contracting with the federal government. Supporting small businesses, especially those owned by veterans, can be a great business opportunity for an advisor. Helping a client prosper can generate extraordinary loyalty, as well as build assets that the advisor can manage. But more importantly than the immediate business opportunities, the advisor can have an impact that goes beyond his firm—an impact that includes strengthening our economic security, sparking morale in his or her practice, and supporting the local community.
Advisors who lead the way for veterans to develop relationships with the Small Business Administration, VA and the SBDC will become heroes. It’s a great feeling to give something back to someone who has given so much. Let’s help our disabled veterans and help America too. Attention!

About Small and Disadvantaged Business (SADBU) Public Law 95-07 amended the Small Business Act and the Small Business Investment Act of 1958, making federal procurement contracting more readily accessible to all small businesses.
OSBDU http://www.va.gov/osdbu/veteran/index.asp
Ben R. Manzano Email of 10/8/09
Procurement Center Representative
US Small Business Administration
Office of Government Contracting, Area I. SBA.GOV/veteran loans. Patriot loans
Ben R. Manzano Email of 10/8/09
Procurement Center Representative
US Small Business Administration
Office of Government Contracting, Area I.