Angels looking for a place to land.

As a new business in the late 1980’s, it didn’t take me long to learn about the 5 “C”’s.  I soon had maxed out my credit cards and ran through my cash and resources.  All the while I was obligating myself with debt. So it seemed like a good time to start looking for credit.  More experienced business owners would have done that first.

After a few visits to banks and being lectured about the 5 “C”s of credit, it was pretty clear I only had one of the possible “C’s. According to the people with their hands on the money the five elements a borrower should have to obtain credit: Character (integrity), Capacity (sufficient cash flow to service the obligation), Capital (net worth), Collateral (assets to secure the debt), and Conditions (of the borrower and the overall economy).

I learned about the real business of credit in a story told to me by a local lawyer and great friend, Mr. John Shaw. Mr. Shaw told me about a meeting he had participated in years before.  He was invited to lunch to meet a young man  who wanted a loan from an Alaskan bank to purchase a small motel/hotel in Anchorage.

Mr. Shaw was asked to join the bankers to give a judgment on what he thought about this young man, Bill Sheffield. Bill Sheffield had been an appliance salesman at Sears and a veteran.  He had little going for him expect his character. Mr. Shaw was very proud of the fact that he gave his full and unequivocal approval for the loan.  Bill Sheffield built a great business and later became Governor Sheffield.

Well, Alaska and the Mat Su Valley in the 1990, where I lived were about as far down as you could go.  There were whole subdivisions in foreclosure.  The best job in town was the HUD contract managing the foreclosures. Thinking back, one of my best customers was Fawn.  She had been a local realtor and had probably sold many of the homes that were being abandoned.   Being smart, with a whole bunch of young children to feed, she hustled and got the federal contract to close out and repair the homes.  Many families walked out and left the homes with water on and more.  Very much like our current situation in 2010.

It seems like I was not the only one looking for cash.  As we would later learn, Alaska had two major economic disasters coming on fast.  Mark Air was struggling to take on Alaska Airlines (you know who won) and Martech USA Inc was playing fast and furious in the environmental remediation areas for the feds.  Both were federal contractors and the two “M”’s would be a huge disadvantage for me later when I went to the bank with a “government contract” in hand.  They shrieked and showed me the door. Many of our Alaska banks were not interested in any more “government” paper.

As for the other three C’s, capacity, capital, and collateral, I was a real dud.  That left only one of the five for me: character. As it turns out that was my  savings grace.

As I struggled, I had an employee who told me, ”I have some cash I don’t need for a few years. Maybe you could use it.” On a handshake, I had a $20,000 loan. Who needs banks, when these  Angels are watching out for fools like me. That stayed me over for the first year.  It was paid back and we kept he doors open.

As cash was always an issue, my second Angels appeared in the form of a cadre of girl friends who would hand me their credit cards.  I would use it and pay it back in 30 days.  Usually it was an Alaska Airlines card that gave mileage.  Since we were in Alaska, travel points were a great bonus and they traveled a lot on my hustle. Mark Air never could overtake the Alaska Air travel points.  We now know we contributed to their demise but we were hooked on mileage points.

But my most glorious Angel appeared in the form of another federal contractor.  As I said in an earlier blog, in 1994 Wal-Mart was thrashing me and every other small business in Wasilla and the entire Mat Su Valley. By this time I had already taken out an SBA loan but needed more operating cash, just as my government business was taking off.

I made the rounds of the banks, which by this time had seen the two big “M’s” go under. I hated talking to bankers who could not talk to you without one hand on the calculator.  I thought, if I took that calculator off their desk they would be mute. As soon as they start talking to you, they would reach for a calculator. Then they look at your financials and show you the door.

I was seriously looking at closing and digging out of debt. I had told my husband that we may lose our house as I had missed three payments. To his credit, he told me “this is a house not our home.  We will always have a home.  Maybe not this one.” That’s when you know you married the right guy.

That’s when Eleanor Andrews and I had a long talk.  Eleanor had built a great federal contracting business, had been a political appointee, and was a respected business woman in Alaska.  She was, and still is, the go-to model for contracting.

Eleanor Andrews, president and CEO of The Andrews Group, Inc. of Anchorage, was later named the 1998 Small Business Person of the Year by the U.S. Small Business Administration. How lucky to be counseled by Eleanor at such a critical time!

She told me I needed to talk to her accountant. A hard lesson I had to learn was that my local CPA and attorneys really did not understand federal contracting.  What they considered okay was never good enough for government purposes.  Like a lot of small businesses I had  small town thinking and it hurt me. I learned to look for competency rather than a local address. And I never again picked a friend or family over expertise.

I told her I didn’t have enough cash to pay anyone.  She went to the phone and called Kevin.  He had been her accountant and understood how to “explain” things.  Then she said, ”Kevin  will see you tonight at 6 PM and I will pay for it. Get your chin up and go see him, now.”

I drove to Anchorage, 60 miles in the dark winter time, and we met for a few hours.  He took the information from my financials and restated them.  He told me to use as many footnotes to explain each item as necessary.

I took the new financials to the Anchorage bank and with the SBA guarantee got my second bank loan.  Whew! So I cut back, slimmed down, and keep going. I hired a new lawyer and CPA. They both understood federal contracting and were not using my company for their on-the-job training.

I learned you have to ask for help and find those angels who are ready to help.  In the first case, my employee kept a business open and his job, the second got their vacations out of Alaska, and my angel Eleanor understood that we are all in this together and a failed 8a business was another black mark against the perception that federal contractors are not capable of performing.

I have been having conversations with small companies now in 2010. The banks have frozen credit now because it seems the biggest C of all, the character of our economy is perceived to be questionable. Frankly, I think the banks are lacking that element today as they set on cash needed by the businesses.

The point of all of this?  Having survived the crash of Alaska and the multiple bumps of my business, I think we all have to understand that we all have to give all we’ve got and then some more.  We can only predict the future by creating it ourselves.

Everyone looks good at the starting gate!

Regional corporations established by the Alask...

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When I started in contracting it was almost a lark. I had a friend tell me about the 8(a) program. I was pretty fat and sassy at the time as my business was booming along. I had 12 employees and the industry I was in, computers, was starting to take off. Computers in 1991 were still pretty new.

I was the first computer store in the Wasilla area and had left a teaching career to start my own business. The schools were slow to embrace technology, and still are today, and I was really intrigued with technology. I had always wanted to have my own business but thought I wanted a restaurant or something.

With the support of my husband, I left teaching, used all my savings, mortgaged my home, and got an SBA business loan. The doors opened in 1990. And almost closed in 1996!

In 1994 in the very small town of Wasilla, Wal-Mart moved in. Overnight, my financials dropped like a rock. I could never understand how Wal-Mart could devastate small business in areas that they were not ever selling. What happened? All the cash flows out of a community into Wal-Mart leaving nothing for the small businesses. Think about how much you walk out of the store with when you go in for one or two items. It was no different in Wasilla.

Just like the downturn companies are in now, my customers disappeared. All except for one, Uncle Sam.

My oil spill was the Exxon Valdez. The federal government in Alaska, just like in Oklahoma, was very active. Spilling and cleaning up. Spilling and cleaning up. Some of the worst spillers were the military. They spilled weapons, bombed the ranges, and basically were pretty dirty. But it makes for good business opportunities.

I needed a new game plan, a new coach, a new team. Happily, I found one in my first partner, Chugach Alaska Corporation.
I partnered with them in late 1996 and sold part of my company to them in 1997.

It was the early days of the ANC’s (Alaska Native Corporations). Chugach was bankrupt. I was soon going to be. We were both co-dependent. What happened to turn that around is an amazing story which I can share later.

The point of all this is to say that we all start out looking good.

Government contracting is the one game that gives everyone a fair start. The rules are posted. The referees are lined up. There are coaches ready to help your company. The end zone is clear. But getting on the field seems to always be the first step. Getting started in federal contracting, as opposed to getting into commercial business, can be the right step for your business if you have a strategic plan. In fact, you need an entire strategic strike team to get started.

I had great coaches. I joined a great team. But I still had to get on the field.

This blog is about how we all get started and I invite others to share their story on their first steps. Maybe it will help someone else. Maybe it will save another business. We are all in this together.

Thanks, Tom Knight.

What do you do if no one is watching? I think I am ethical. But who knows where the line is? How sure are you what you would do under all circumstances?

Today I attended a short seminar at Oklahoma City University and the subject was Crossing the Line: “Economic Incentives and Ethical Behavior”. It was presented by the Oklahoma Business Ethics Consortium. In attendance were a lot attorneys and CPA’s. One friendly face was Oscar. Oscar is an ex-fed with years of experience in the game of federal contracting. Oscar and I can talk “con” anywhere and anytime. I enjoy his friendship.

Did I mention that both Oscar and I are classified by the government as “minority” and (surprise) women owned? I can say with a great deal of certainty that no one in that room has faced more “ethical” decisions on a daily basis than us. We both worked under a huge burden of regulations and rules that required, indeed demanded, the highest ethical behavior. The consequences of which were Leavenworth Federal Prison.

That might sound overstated but in the spending of public dollars: either by performing on a contract or supervising the negotiations of a contract from the government’s side; ethics and ethical behavior is a measure that all federal employees understand. However, many political folks and federal folks do slip and end up on the front page of the Washington Post.

My first weeks in the federal government coincided with the beginnings of the end for Jack Abramoff and his pals. The shoe dropped for Abramoff at the first hearing I attended when Senator Nighthorse Campbell publicly talked about a potential indictment that was coming. By the time I left Washington, DC, we had pretty much turned the Department of Interior upside down. So we thought. But that didn’t keep another Interior agency, Mineral Management, from slipping over the edge. Today Interior is still moving and removing staff. Quietly.

Even now with the oil spill, fingers are beginning to point to a lot of federal folks that did not or would not “uphold the public trust.” Let me make my second statement of certainly. In defense of a number of feds, the lack of resources to perform their duties is real. The public believes that there are too many feds and they are too lazy to do their jobs. Having been working across a number of agencies, I know the resources have slowly been starved that would allow for adequate oversight. For example, the Small Business Administration has had a 50% reduction in their staff over the last 10 years.

In the area of government contracting, minority businesses who obtain the special status for federal contracting are often, often, often the target of larger companies who want to recruit their businesses for teaming and partnering opportunities. That is usually a good thing and is the mission of the government to build a strong base of suppliers. However, too often the opportunity is not a win-win. Someone is a loser. Too many times it is the minority business. Ethics requires the ability to be fair with the partner even when the smaller partner is just learning the ropes.

In the ethics class the professor stated that research shows that the large majority of people are honest. Today we talked about decisions designed by governments which can generate positive and negative consequences. In the case of minority contracting, the public “believes” that we, minority contractors, are less than capable or we would not be in this “program.” It is pervasive and unspoken but true. If a minority contractor messes up it seems to be a heavier burden to carry. Yet non-minority businesses crash and burn every day.

So daily, ethics are imposed on the minority businesses and the companies with which they partner. I have one significant guideline that I was given by the first employee I hired, Tom Knight, now of Palmer, Alaska. Tom had spend years in the Army as a helicopter mechanic. He was well trained and we both had to learn the business of computers in the early 1990. (Before the internet!) We struggled with customers that wanted us to load illegal software on those early computers.

Tom said, “Kay, if you never do it, you don’t have to worry about it.”

Thanks, Tom. Those words have served me well.

Hello Oklahoma–It’s me!

Greetings from OKC!

This is a blog to discuss, argue, train, encourage, or in any way possible engage your interest and ideas in the subject of federal contracting issues and opportunities that abound in Oklahoma. Oklahoma Government Contractor’s blog is intended to inspire, motivate, and maybe, console. I hope companies in Oklahoma (or anywhere) that have an interest in talking about my favorite subject-growing business with the world’s biggest customer, Uncle Sam, will take part in this blog.

My early contracting experience was in Alaska with my own 8(a) company. I found a great partner with Chugach Alaska Corporation. I sold my company in 2000. I then had a great time working with a lot of Alaskan companies and Alaska Native Corporations as the executive director of the Alaska 8(a) Association. Then I went to Washington, DC and stayed for 6 years as a federal bureaucrat. I wasn’t a very good bureaucrat as my performance reviews steadily declined the longer I was there. My transition from entrepreneur to bureaucrat was as difficult for my bosses as it was for me. To their credit, I know they really tried to coach me. I appreciate them more and more.

Nevertheless, Washington, DC is a great place! I was in an environment that understood how the government buys and spends. The energy of this beautiful city is wonderful and infectious. I decided to give my bosses a break and left DC for Oklahoma City in October 2009. I thought, “Wow. I bet there are lots of great contractors in Oklahoma.” I found a few and then a few more. However, the list was rather short.

In Oklahoma, it is all about football. We all know the rules of the game for football. Every grocery clerk, every pizza delivery man, every doctor, dentist and lawyer knows the “rules” of football. But no one can talk contracting to any degree. Federal contracting appears like a secret society in my new world.

Yet there are many opportunities available. You have to be willing to put in the time and resources to “peek under the kimono“, as my favorite old boss (MEB) used to say. What you will find are billions of federal dollars are spent in Oklahoma. In 2009 the total was close to $3 billion. Count the number of military bases and throw in an Army base and depot. Oklahoma is the heartbeat of FAA here in OKC. These agencies and many other federal entities are in a growth mode and can be predicted to continue on this trend. Think about who has the money today. Fortunately for us, Uncle Sam is not Uncle Scrooge!

So where do you start? I would start at looking at a very good website that tells you what agencies are buying in Oklahoma, who they are buying from, and how much the contracts are worth. Look for your “sweet spot” in the list. Check out and drill way down and look at what is bought and who is buying. You have to work at it but the information is there.

The second thing I would do is to start getting acquainted with companies who are currently performing on federal contracts in Oklahoma. You can meet some of them at the Oklahoma Government Contractors Group Meetup in OKC and Tulsa. This is a group of persons who are interested in the subject of “contracting” and get together to network for one hour a month, You can join at and meet others to partner or team with for future contracting opportunities.

So, I set as a goal to start teaching about contracting to those companies who should be looking at the federal market here in the Midwest. The government needs to refresh its buying base with new small businesses, woman owned businesses, and minority owned businesses. Prime contractors need to do the same. But they have to be able to find your company and you need to be selling something that the government buys. But you have to invest in your own time and money in learning the “rules” of the contracting game. There are no shortcuts.

I have a number of websites to share but what about you? Send me some sites and let’s share how we use them. If you have questions or experiences to share send them to me. Maybe we can connect some dots?