After studying trends among over 1,500 8(a) Business Development Program participants in Metro Washington, D.C., we discovered some common characteristics and best practices of those who leverage this federal contracting program. Here’s what the most successful companies do to grow their companies through the first four years of the developmental phase, and then the final five years of the transition phase that leads to program graduation.
8(a) Program Entry
8(a) program participants all usually have at least two years’ track record, although SBA may waive that requirement, and the business usually employs at least one person other than its owner.
What do the most successful do differently? Before they apply for the program, they are already marketing to government and are targeting efforts on their highest potential agencies. They focus their efforts on 3-4 agencies, maximum. And they have teaming experience. They have the groundwork underway for joint venture (JV) and/or mentor-protégé (MP) relationships.
8(a) Stage 1: Initial Development
Once in the program the top 8(a)’s quickly demonstrate outstanding contract performance, and have actively seek training to build their skills in critical topics like costing, proposal writing, federal sales, marketing, business development.
The most successful 8(a) businesses have lined up their first contract ready for award immediately upon achieving 8(a) status, or win their first award sometime during Year 1.
They have at least one JV and/or MP agreement in hand along with their 8(a) application, or have one or more JV or MP relationships by the end of Year 1.
8(a) Stage 2: Growth Development
At this stage, 8(a)’s are now winning more work based on strong past performance. They’re focused on winning as many 8(a) opportunities as possible, ideally without exceeding size standard.
But the most successful are also expanding their footprint in their initial agencies, and winning referrals within and beyond their first federal agencies by extending their networks to develop more relationships in both industry and government.
Year Five marks the transition from the Developmental Phase to the Transition Phase. Every 8(a) must meet business activity targets (BATs) designed to shift their business mix away from reliance on 8(a) contracts.
The most successful 8(a)’s are fine tuning the transaction management plan they’ve had in place from the beginning to meet those goals, focus their business development team on more non-8(a) sales, and search for the right post-graduation 8(a) partners.
8(a) Stage 3: Initial Transition
Once in the initial stage of the transitional phase (Stage 3), most 8(a)’s must meet their BATs of 15-25%, in order to stay eligible for sole source awards.
But the leaders seriously ramp up their relationship development and networking focused on non-8(a) business development. They also start figuring out their post-graduation strategy, including how they will subcontract to other 8(a)’s, or whether they might want to grow by acquiring one or more companies.
8(a) Stage 4: Final Transition
At this point, the most successful businesses continued meeting their BATs (35-45%) while seeking younger 8(a)’s as post-graduation prime partners. Many also position themselves as prospective mentors to such younger 8(a)s to support post-graduation subcontracting to them under the 8(a) program; or preparing to be acquired by a larger firm.
These 8 key success factors emerge for the 8(a) Business Development Program:
- Be persistent in going after business, but also understand that when agencies tell you to "come back when you have your 8(a)," that doesn't automatically mean there's an opportunity waiting.
- Line up 8(a) opportunities, especially sole-source ones, before and while you're applying.
- Stay in regular contact with your SBA Business Opportunity Specialist.
- Network at events sponsored and recommended by SBA.
- Attend your target agencies’ outreach events.
- Participate in SBA and agency and industry matchmaker events.
- Ensure that your top executives consistently attend targeted agency / networking events.
- Seek out potential joint venture or mentor-protégé relationships early on in the process
While we’re fascinated by what our research revealed, we know there is more to the story. We'd like to talk to other 8(a) business owners to round out our viewpoint. What is your experience? How are you preparing for graduation from the program?
Please contact Judy Bradt to schedule an interview today.
This article highlights some of our top findings. Want to know more? Get the compact, information-rich insights in the full report now: