Johnson recognized the virtually unlimited purchasing power of the government. And so should other small business owners. Last year alone, Florida government agencies spent more than $12.6 billion procuring goods and services. And that's just the state government; the feds spend even more.
But many small business owners are cynical about dealing with the government. They say the system is too political or too bureaucratic. They're missing out.
"It's the largest market out there, and you know you're going to get paid," says Laura Subel, program manager for the Florida Procurement Technical Assistance Center in Pensacola. "But if you're easily frustrated, forget it."
Selling goods and services to the state is actually easier than one might expect. Authority for purchases lies within the executive branch, in the Department of Management Services, Division of Purchasing. The division has defined policies and procedures and can delegate purchasing authority to other state agencies.
For procurements of more than $15,000, the state is required to advertise, usually in the Florida Administrative Weekly. Bids are also solicited and advertised online in the Vendor Bid System, so it's easy for potential bidders to determine which goods or services are in demand by state agencies.
For procurements of less than $15,000, formal notice is not required, so vendors must develop relationships with agency end users to unearth opportunities. "Your success depends on your marketing strategy," says Subel.
Marketing to the state is similar to marketing to any private company. "We start with a list and call until we find the decision makers," says Shred-It's Johnson. Then he'll go in and do a presentation to show the agency how he will save it money.
The key to success is persistence. "Get to know the users of your goods and services," says Edward G. Tolliver, chief of purchasing standards for the Department of Management Services. "It's a relationship-driven process."
State Government
Resources for Government Contracts
Department of Management Services, Division of Purchasing
4050 Esplanade Way
Tallahassee, 32399-0950
850/488-7303
State Automated Purchasing System (SPURS)
850/487-4634
By registering with SPURS, potential vendors receive Invitations to Bid and Requests for Proposal from agencies seeking their goods or services.
State Negotiated Agreement
Price Schedule (SNAPS)
1-800-50-SNAPS
Using the SNAPS program, environmentally desirable commodities and services can be offered to the state in a streamlined purchasing system.
Florida Procurement Technical Assistance Centers (FPTACs)
FPTACs offer free consulting services to Florida businesses interested in selling to federal, state or local government agencies. There are six locations around the state:
University of West Florida
Pensacola, 850/595-6066
Gulf Coast Community College
Lynn Haven, 850/271-1108
Jacksonville Chamber of Comm.
904/924-1118
University of South Florida
Tampa, 813/905-5820
Florida Gulf Coast University
Bonita Springs, 941/948-0473
Florida Atlantic University
Boca Raton, 561/362-5620
Set-Aside Shakeup
A brief look at the program areas involved in Gov. Bush's 'One Florida' initiative.
On Nov. 9, as part of his One Florida initiative, Gov. Jeb Bush issued an executive order prohibiting agencies under his control from using racial or gender set-asides, preferences or quotas when awarding state contracts. The controversial move prompted a sit-in by two state legislators that induced Bush to hold public hearings on the matter around the state.
Florida's procurement policies, adopted in 1985 and slated, says Bush, to sunset in 2001, established voluntary goals for minority contracts at each agency. They also provided for race and gender-based set-asides and price preferences.
Bush's proposals involve these areas:
The goal system. Bush claims voluntary goals can be manipulated and can actually reduce the number of minority contracts. He proposes monitoring the total dollars spent with minority businesses and measuring that against the state's overall spending. To track total minority spending, Bush proposes setting up a universal registration system that identifies all minority vendors, not just those that are certified, and the amount of state business they do.
Certification. Bush says he wants to make it easier for more businesses to be certified as minority businesses. He anticipates that universal registration will someday replace certification.
Set-asides and price preferences. Bush believes these programs haven't worked and are susceptible to constitutional challenge. He proposes creating a race-neutral urban HUBZone program like that used by the Small Business Administration to stimulate economic development in areas with high percentages of disadvantaged residents.
The Minority Business Advocacy and Assistance Office. Bush wants this office to change its focus to encourage "matchmaking" between procurement agents and minority businesses.
At deadline, Bush said he was committed to the changes, but it was unclear what effect input from the public hearings would have.
"There is a tug of war going on, and there will be some legal battles," says Vicky Bledsoe, manager of the Procurement Technical Assistance Center in Tampa. "But the certification process itself is still very firmly in place and is moving forward, until such time as things have been really and truly changed."
Federal Procurement: Selling to Uncle Sam
Barbara Bradshaw, president of Estero-based Mesa Machinery Services Inc., loves dealing with the federal government. "They pay on time," she says. "They are a very significant buyer of the commodity that I handle."
That commodity is metalworking machinery, which Bradshaw sells to the Army, Navy and Air Force, among other federal agencies. About 60% of Mesa's business is with Uncle Sam.
For small businesses, the federal government offers a huge marketplace -- thousands of agencies purchase goods and services every day. And it's all there for the taking if a business is willing to put up with some red tape.
"The federal procurement process involves a lot more paperwork," says Laura Subel, program manager for the Pensacola-based Florida Procurement Technical Assistance Center. "Where with the state government, you may have 100 agencies to deal with, with the federal government, you may have 100,000. It becomes mind-boggling to a lot of people."
Doing business with the feds requires some additional steps. The Department of Defense, for example, requires vendors to register with the Central Contractor Registry, a database for all contractors. Once registered, vendors can search for opportunities in Commerce Business Daily, the federal government's primary procurement publication, also available on the Internet (http://cbdnet.gpo.gov).
Bradshaw uses the Internet "extensively" to check for new leads. She also uses several commercial services that notify her of upcoming federal opportunities. Indeed, the Internet has leveled the playing field for many small businesses, which can now easily find out about and compete for government contracts.
"If you're not Internet capable, become so immediately," recommends Subel. Many agencies now -- particularly the federal government -- won't mail copies of the solicitation. -- Robyn A. Friedman
The Image of Success
Miramar-based AnciCare finds a niche in medical imaging.
Sometime after his 30th birthday in 1994, Michael Cabrera found a niche that would put him in the driver's seat of a $13-million managed care organization, AnciCare PPO.
In his old life, Cabrera worked for a private company that served the group healthcare market, negotiating contracts for HMOs and PPOs. There he spotted a neglected medical market in workers' compensation claims. "I couldn't sleep all night just thinking about the idea," he says. "I knew it couldn't fail."
Cabrera and his wife, Donna, formed Managed Care Network Inc., now called AnciCare PPO. Miramar-based AnciCare serves insurance companies and large employers like CNA and Winn-Dixie Stores, helping them handle medical imaging required by workers' comp claimants.
When AnciCare's clients have claims for injured workers requiring magnetic resonance imaging (MRI) or CAT scans, adjustors contact an AnciCare representative, who makes patients' appointments, transfers the medical records, contacts doctors' offices and works with radiologists to interpret the findings.
AnciCare (www.ancicare.com) has developed a network of 800 medical imaging facilities (145 in Florida) primarily in the Southeast U.S., but now in 40 states across the nation, that contract with AnciCare to provide diagnostic testing at a reduced rate. A typical MRI and interpretation by a radiologist can cost around $1,000, but AnciCare's MRIs cost the insurance company between $450 to $500. Volume is supposed to make up the cost difference for the provider. From that fee, AnciCare takes about $100.
The Cabreras worked out of their home for six months, and then, along with five employees, moved into a 1,300-sq.-ft. office, where they stayed for three years. After the second year, they had to add a night shift to accommodate their growing staff in the limited space. In 1998, AnciCare transferred to its current 6,000-sq.-ft. facility, with 40 employees. They still have a late shift to serve their West Coast clients.
Startup capital for the venture, around $75,000, came from the Cabreras' family and friends, along with the couple's savings. That money didn't last long, though. Four months after launching the business, the Cabreras felt they were close to success, but the money was almost gone. "We had most of the state (of Florida) covered in the metropolitan areas," says Michael Cabrera, referring to the imaging facilities in his network. "I knew it was going to work."
He borrowed another few thousand dollars from his family, and the business took off. AnciCare generated $13 million in revenues in 1999, and Cabrera projects revenues of $18 million in 2000. By 2002, he expects a whopping $60 million. Cabrera says that AnciCare was profitable from the first year, and his current profit margins are in the 5% to 6% range.
What's next? Cabrera is waiting for the Florida Legislature to pass a bill allowing managed care in the auto insurance environment. He believes consumers will benefit from managed care in this industry, and insurance companies will realize enormous savings. Cabrera says that if this happens in Florida, as it has in five other states, AnciCare will be ready.
Small Talk
Tampa Bay Licensing
The University of South Florida Small Business Development Center has developed an Internet database of city and county licensing, zoning and other business requirements in the seven-county region made up of Hernando, Hillsborough, Manatee, Pinellas, Pasco, Polk and Sarasota counties. Information on Florida and federal requirements also is posted on the USF website.
Ask the SBA
The U.S. Small Business Administration's Answer Desk is now available both by telephone (800/U-ASK-SBA or 800/827-5722) and e-mail. Popular question topics include getting a loan, starting a business, and licensing and certification as a woman-owned or minority-owned business. The telephone service is available from 9:00 a.m. to 5:00 p.m. on the East Coast. You can e-mail a question 24 hours a day, seven days a week.
Venture Capital: CAPCOs Start Investing
In 1998, the state Legislature authorized $150 million in tax breaks over 10 years to encourage the formation of Certified Capital Companies (CAPCOs), venture capital firms designed to help early-stage technology companies. Now, two years after the legislation was enacted, the money is beginning to flow to Florida entrepreneurs.
All three CAPCOs began dealmaking last fall: Advantage Capital Florida Partners LLC, based in Tampa, has invested $5.5 million in four companies. Stonehenge Capital (formerly BancOne Capital Markets), also based in Tampa, has funded three deals totaling $2 million with a fourth deal in the works. And Miami's Wilshire Partners has put $7.5 million in three ventures. "There are tremendous opportunities in Florida," says Barry Sloane, Wilshire's managing director.
CAPCOs raise their investment funds from insurance companies, which in return receive tax credits on their premium tax liability. Florida requires that CAPCOs invest 20% of their capital by the end of 2000, 30% by 2001 and 50% by 2003. The law requires that 50% of the funding go to early-stage technology businesses.
Picking companies in which to invest isn't easy, particularly in the rapidly changing technology sector. Steven F. Lux, director of Stonehenge Capital, says that in 1999 he reviewed more than 230 business plans requesting more than $800 million in financing. From those plans, Lux and his partner selected about 50 to 60 companies to visit and later followed up with eight to 10 businesses. "The quality of the deals has been excellent," says Lux, who spent 17 years in Texas before his move to Tampa. "We've been very surprised."
Yupi Goes to Wall Street
Yupi Internet, a Miami Beach company that targets the Latin American market, has filed for an initial public offering. Yupi [FT, Oct. 1999] plans to raise $172.5 million and has requested Nasdaq listing under the symbol YUPI. The filing did not include the expected share price or the number of shares to be sold. Yupi's websites include Yupi.com, CiudadFutura.com, Bogota.com and Metabusca.com. The company reported an operating loss of close to $14 million on revenues of $166,914 for the nine months ended September 30, 1999. The offering, which is expected to be priced this month, is underwritten by Credit Suisse First Boston, Donaldson Lufkin Jenrette, Banc of American Securities and SG Cowen.
Deal Flow
USBid, a Melbourne business-to-business auction site for electronic components [FT, Oct. 1999], received $10 million in venture money from California-based Spectrum Equity Investors and Chicago's Brinson Partners.
Jacksonville Beach-based E-Dr. Network, a business-to-business Internet site for professionals in the optical industry, raised $8 million in venture capital from Atlanta's Noro-Moseley Partners and California's Benchmark Capital. E-Dr. Network was founded in 1998 and has 4,000 registered users.