8 out of 10 Black-owned businesses fail within the first 18 months.
Lack of funding prevents most businesses from staying open long enough to be profitable. Government contracting offers opportunities for entrepreneurs to secure mid- to long-term contracts that will guarantee cash inflow.
In 2014, cybersecurity expert, Lonye Ford, co-founded Arlo Solutions, a professional services company that provides cybersecurity and management consulting services to the U.S. government, with her business partner, Arlene Wube.
In 2021, the company, led by Ford (CEO) and Wube (president and COO) generated $8.7 million in revenue. Arlo Solutions partners with companies like Booze Allen, Deloitte, and Accenture to deliver services to government agencies, and this year, it secured a $28 million government contract.
Ford, who grew up on the south side of Chicago, joined the U.S. Air Force at 19 years old. In addition to serving her country, joining the military guaranteed her shelter, food, and the opportunity to learn new skills. At the time, she needed to find a path out of the financial hardships she experienced growing up.
After 10 years in the military, Ford graduated college, moved back to Chicago, and worked in retail banking for less than a year before realizing it was not the career for her. She moved to Washington, D.C. intending to start a government contracting company. To pay her bills, Ford started working for other companies doing government contract work.
When Ford and Wube started Arlo Solutions, they knew very little about government contracts. They spent two years educating themselves and building connections before securing their first contract.
“We went into these offices and knocked on doors for two years. Back then, there was not the same level of access to information. We didn’t know how to even Google the right information because we didn’t understand the terms and the lingo,” Ford told BLACK ENTERPRISE.
Ford shared why now is a great time for Black entrepreneurs to get into government contracts, and her best lessons to succeed in this space.
Why minorities should look into government contracting
The U.S. government is the largest purchaser of goods and services in the world. In 2020, it spent $600 billion on goods and services according to the White House. Also, according to Ford, now is the perfect time to get started with government contracting because the current administration is focused on creating opportunities for small, underserved businesses. The Biden–Harris administration is asking agencies to increase contracting dollars to small, disadvantaged businesses (SDB) to 11%, a 6-point increase compared to prior years, with the objective to reach 15% by 2025.
But this administration took it a step further and more closely looked at the percentage of government contracts going to SDBs.
The data revealed that less than 10% of government contracts go to small disadvantaged businesses. “Only 1.7 percent of government funding or government awards were going to Black-owned businesses. So, this administration started putting in executive orders to force these government agencies to give more contracts to Black-owned and other minority-owned businesses,” said Ford.
“They’re setting quotas and holding agencies accountable. They’re also holding large businesses accountable for working with small businesses,” she added.
“Rules and policies change with each administration. The government is providing amazing opportunities for small businesses that we are looking over. This is the first time that they provided data. These policies are our reparations.”
Begin your journey as a government contractor as a side hustle
Ford suggests spending time to educate yourself, because it takes time to learn the lingo and how to secure your first contract. Taking the time to learn without the pressure of having to earn money to survive will help you get ahead.
“If you go to SBA.gov, there are so many different free trainings. There are women-owned, veteran-owned, and minority-owned small business organizations that provide free training. Take training on how to search for government contracts, create a capability statement, and respond to a proposal. Learn about the rules and regulations.” Ford said.
By working full-time while learning how to secure your first contract, you will give yourself the best chance to succeed.
“A lot of people try to stop what they’re doing and then transition to government contracting because they have this grandiose idea of how quickly they will make money. We believed that too. But it took a long time for us to start bringing income.”
Hire the right team members
The first hire at Arlo Solutions was an accountant who was well-versed in government contracts. She helped Ford and Wube secure funding to fulfill the contract.
“We did not qualify for traditional funding because we did not have two years of financials. When you secure a government contract, the government pays 45 days in arrears. Our accountant introduced us to factoring, privately-owned companies that fund government contracting companies based on invoices.” That allowed Arlo Solutions to fulfill the contract. Their accountant’s knowledge about how to use factoring without spending an excessive amount of money on interest payments was also valuable.
Don’t overextend yourself
When Ford first got started, she was eager to secure contracts and spent a lot of energy working with many government agencies. She recommends focusing on a few agencies at first and expanding progressively.
“Don’t try to spread yourself thin supporting 15 agencies when you first start. Focus on one or two agencies. Then when you go into those places, do your research and be specific about what you want. So, when you approach the agency, you can say, I noticed that you have a contract that comes open on X date, doing X type of work, contract number X. I can offer X services. Can you get me in contact with a person that leads this,” Ford said.
Have the right business structures in place
Ford emphasized that taking the time to incorporate your business, building your business credit, creating your operating agreement, as well as your capability statement, and building your online presence are the steps to success.
“When a government agency starts researching, they will look up your business, as well as look online. LinkedIn is probably the first place they will go, and the second place is your website.”
Change your mindset
When you are not surrounded by examples of people who have accomplished what you set out to do, one of the biggest obstacles is convincing yourself that it’s possible for you.
“A lot of times our belief system is grounded in what has happened to us in the past. Based on our past, we couldn’t have known that we would be where we are today. But we had a strong imagination and belief in ourselves and what we could accomplish. That is foundational.”