Problem: Complex government-certification forms
Solution: A CD-ROM that simplifies the application process
Payoff: Fat government contracts
After Dynatek Systems, a software consultancy in Accokeek, Md., had lost three bids for government contracts since 1997, CEO Lorne Prince was beside himself. The contracts would have meant $1.2 million in extra revenues. But it wasn't just about the money: Prince was eager to bring DynaTek's first products -- shrink-wrapped software for E-commerce -- to market. But with annual sales stuck at $200,000, DynaTek was unable to bear the products' hefty development costs.
It was no mystery to Prince why his four-year-old business hadn't gotten the contracts. "I was losing to companies that were certified," he says, referring to the Small Business Administration's 8(a) Business Development certification program, which gives minority business owners with a low net worth an edge in competing for government contracts. When government evaluators review contract proposals, they often use a 100-point scale. Having 8(a) certification can be worth as many as 20 points -- often the difference between winning and losing a contract, especially since other points categories, such as technical skill and experience, generally bring much slimmer margins of victory.
For Prince, 29, who is black and has a net worth under the program's $250,000 limit, eligibility wasn't the issue. Labor was. Two years ago, the first time he considered applying for certification, he lost interest after seeing the four-inch-high stack of paperwork that he'd have to complete just to validate his eligibility. "I needed to be at my business 14 hours a day," he recalls. "I didn't have the time. So I said, 'Screw it.' "
But losing the government contracts compelled Prince to try again. Surfing the Internet, he happened upon the Web site of EZCertify.com (800-449-9048). The company, based in Edgewater, Md., offered CD-ROMs that automate the process of applying not only for 8(a) certification but also for the SBA's Small Disadvantaged Business (SDB) certification, which has a net-worth ceiling of $750,000 ($149.99 for one CD-ROM, $249.95 for both).
After receiving the 8(a) CD-ROM in the mail, Prince spent an hour answering questions that helped him calculate his net worth. Programmed with the financial formulas used by the SBA, EZCertify took Prince's raw data and spat out the right answers. Like tax-preparation software, EZ-Certify streamlined the application process by eliminating redundancies, which meant that Prince had to input personal and financial variables only once, and the software instantly plugged in those variables wherever they were needed.
The software also told Prince what documents he'd need to prove his numbers: articles of incorporation, stock agreements, company bylaws, W2 forms, and notarized financial statements. Prince's favorite feature was a checklist that showed him -- and the SBA -- which forms and documents were applicable to his particular situation.
Statistically, the SBA approves 97% of the 8(a) and SDB applications it receives, but in reality the picture is much less rosy. That's because more than a third of the applications are submitted incomplete -- and therefore don't count in calculating that 97%. "It's no snap. Most packages are usually returned because you do something stupid or leave something out," says Dick Otero, the founder of EZCertify.com. "The length of the process is a big inhibitor. It scares a lot of people off."
Which is something Lorne Prince had experienced firsthand before finding Otero's company. But just two weeks after sitting down with EZCertify's software, Prince mailed his application to the SBA. He's already certain what he'll do with the cash from his first government contract. "We'll unleash our software ideas," he says.