SBA DC Metro Area Small Business Update

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March, 2013

SBA DC Metro Small Business Update

     from your US Small Business Administration Washington Metro Area District Office

Greetings from the Director (Acting)

March finds us here at the SBA in the midst of some transitions. You may have heard that after devoting the last several years to serving America’s small businesses, SBA Administrator Karen Mills and Deputy Administrator Marie Johns will be moving on to other opportunities. Both of these women have guided this agency as we helped small businesses through the worst economic crisis this country has experienced in 7 decades, and they leave behind an SBA that has successfully expanded the credit and government contracts available to small firms. Although they will be missed, I want to assure you that this agency will continue to serve America’s small businesses without interruption.

We’re experiencing some changes here at the Washington Metropolitan Area District Office as well. Our District Director, Bridget Bean, has accepted a temporary detail assignment as Deputy to the Chief Operating Officer of the SBA. During her absence, I will be serving as Acting District Director for this area. Not only can local small businesses continue to expect our support in the coming months, but we are adding new staff to our Marketing and Outreach and 8(a) teams.

We are bringing extra emphasis this month to helping small businesses who are ready to expand into overseas exporting. In this newsletter you’ll find: resources that can help you get export-ready; help financially support bringing your products or services to foreign customers; and a spotlight on a local small business that has been successfully selling its products to buyers around the world. We hope this inspires you to look for customers in places you might never have considered.

With best regards,

Theodore Holloman

District Director (Acting)

Theodore Holloman, Acting District Director

Woman and globe

SBA helps small businesses learn how to succeed in exporting

 

You may not have thought about foreign markets for your goods and services, or you may not realize that the SBA has programs to help bring export sales within your reach, but there are many good reasons to consider exporting:

  • 96% of the world’s consumers live outside the U.S.
  • Through the efforts of American government negotiators, many trade barriers have been reduced or removed.
  • International communications and financial transactions are easier, less costly, and more secure than ever.
  • The product life and sales potential of your products may be extended by selling into new markets.
  • You may be able to stabilize seasonal fluctuations in sales by selling to countries with different annual purchasing patterns.

Although many businesses think they are too small to compete in the global marketplace, fully 97% of all American exporters are small businesses. Overseas markets might just provide the growth opportunity your company is looking for.

You don’t have to manufacture a product to export. You can export services that you perform here in the U.S. If you are providing a product or service to a customer located outside of the United States, you are an exporter. Are you translating a Korean company’s packaging so they can sell food to American consumers?  Designing web pages for a tourist resort in Africa? Distributing ads for a long-distance phone company based in India? You may already be an exporter.

Now more than ever, exporters are playing a critical role in growing our local economy. There is an incredible network of resources here in the Washington Metro Area to help you extend your reach to new customers. There’s never been a better time to look to other countries in order to build your business right here and there’s never been more support available to help you succeed.SBA has assembled a wide range of counseling and training resources to help you find success in exporting:

  • SBA offers a free online course called Take Your Business Global - An Introduction to Exporting. This is a 30-minute interactive session that guides small business owners to help determine if exporting, as a business strategy, makes sense and whether the basic ingredients for export readiness are in-place. The course can be found at http://www.sba.gov/sba-learning-center/training/363881
  • SBA also provides an online Export Business Planner - a free, customizable tool for small business owners who are exploring exporting. Using the planner, you can work through the critical processes of export readiness and planning via a ready-made, easily accessible document that can be updated and referenced time and again as your export business grows. If you have a successful product or service you may be able to increase sales and profit by exporting. You can download the Export Business Planner at http://www.sba.gov/content/export-business-planner
  • In cooperation with the U.S. Department of Commerce, U.S. Export-Import Bank, and other agencies, SBA has set up a network of U.S. Export Assistance Centers (USEACs) to provide “one-stop shopping” for firms seeking help to find export opportunities or become export-ready. You can find your local USEAC as well as a wealth of information on finding and serving overseas customers at www.export.gov.
  • SBA's Resource Partners at SCORE and Small Business Development Centers (SBDCs) offer classes and one-on-one consultations with exporting experts. You can find information about these and other opportunities at our District Office web page, www.sba.gov/dc.

Sell Around the Globe? Tell the World About it!

Enter SBA and Visa’s export video contest for a chance to win up to $10,000.

Do you sell bowling balls to Bangladesh? Or dish towels to Delhi? Maybe you send laser technology to Lisbon? If you export your goods or services around the world and have used a federal government program or assistance to get there, the U.S. Small Business Administration and Visa Inc. (NYSE: V) want to see your story. Enter the “2013 SBA-Visa Export Video Contest”, where participants will have a chance to win up to $10,000 in prize money. Eligible small business exporters are encouraged to submit a video to exportvideo.challenge.gov that will highlight how the small business became a successful exporter, the benefits of exporting and government programs available to help them export.

To participate in the contest, the company must be a small business as determined by SBA’s size standards (http://www.sba.gov/content/summary-size-standards-industry) and comply with a set of requirements that include successfully completing at least one export transaction and using at least one federal program or service to support such transaction. Contest participants must register and create an account with www.challenge.gov, the contest portal that also will serve as a repository for the submissions. Registration is free.

“This contest is a fantastic opportunity for small businesses to be recognized for their efforts in exporting and how they contribute to the global market,” said U.S. Small Business Administration Mid-Atlantic Regional Administrator Natalia Olson-Urtecho. “Between 2009 and 2011, U.S. exports saw a 40 percent growth, and the SBA continues to provide programs and resources that can assist businesses to compete globally.”

A panel of judges chosen by SBA will select five videos to be awarded cash prizes directly by Visa, Inc. – $10,000 for first place; $8,000 for second place; $6,000 for third place; $4,000 for fourth place and $2,000 for fifth place.

The videos must meet specific criteria that include duration no longer than three minutes and high-resolution format. Content should be educational, not promotional. The contest is open from Feb. 25 through April 5, 2013. Winners will be announced no later than May 31, 2013.

For more information and submission procedures and requirements, please visit exportvideo.challenge.gov.

man with video camera

CONTRACTING UPDATE:

Are you *really* ready for 8(a) Certification?

The 8(a) Business Development Program is a business assistance program that offers a broad scope of assistance to firms that are owned and controlled at least 51% by socially and economically disadvantaged individuals. Among other advantages of the program, participants can receive sole-source contracts up to a ceiling of $4 million for goods and services and $6.5 million for manufacturing. In addition, 8(a) firms are able to form joint ventures and teams to bid on such contracts. Participation in the program is divided into two phases over nine years: a four-year developmental stage and a five-year transition stage.

In addition to ensuring that your firm is eligible to participate in the program (more about that in a moment) it is important to make sure that you are ready to make the best use of your nine years as a participant. A business owner may only participate once (even if you start a new business). If you are approved for participation, but are not prepared to pursue and complete Federal government contracts from the beginning, you may not be getting everything you can from the 8(a) program. In order to make the best use of your only opportunity to go through the program, it may be better to wait until you have developed your firm’s capabilities before applying.

How do you know if you are ready? The first step is to make sure that you meet the objective rules of eligibility spelled out in the pertinent regulations [13CFR124.101-106]:

  • You are socially disadvantaged person as a member of one of the designated groups
  • You are economically disadvantaged
  • Your firm is a small business per SBA NAICS code small business standard
  • Your Personal Net Worth: Less than $250,000
  • Your Total Compensation: Less than $250,000 over 3 years’ average
  • Your Total assets test does not exceed $4 million
  • You own at least 51% of company and are in unconditional control of the decisions and operations.

In addition, there are some lesser-known but equally important eligibility requirements that help determine whether your firm will succeed in the program.

Factors for Success [13CFR124.107]:

  • You must be of good character
  • You must possess reasonable prospects for success in competing in the private sector if admitted to the 8(a) BD Program.
  • Your firm must be in business full-time for 2 years
  • Past 2 years of tax returns must show that your firm has earned revenues in primary NAICS code industry
  • You must have substantial business management experience
  • You must demonstrate technical expertise to carry out your business plan with substantial likelihood for success
  • You must have adequate capital to sustain operation and carry out business plan
  • You must show the ability to obtain personnel, facilities and other requirements in a timely enough manner to perform on contracts
  • You must line up access to capital and credit, including long-term and working capital financing, equipment trade credit, raw materials, supplier credit and bonding capability
  • You must have a record of past performance on federal and private sector contracts 
  • You must must hold all required business licenses
  • Federal Government has previously procured and is likely to procure your products or services and in sufficient quantity to support the developmental needs of your company.

Extensive experience in managing the 8(a) program has proven that if your firm does not have these factors for success in abundance, it may be best to delay applying for 8(a) status until your firm has a credible past performance track record and the financial, personnel and operations infrastructure to support and assure your performance on 8(a) federal contracts.
More information about the 8(a) program can be found at www.sba.gov/8a


Small Business Spotlight:

CraftyStitches Sews up Success with Overseas Customers

Jennifer Michael on Martha Stewart

Jenn Michael was born in Kowloon, Hong Kong SAR to a family of seamstresses and tailors. Jenn began her studies in Fashion Design at the Fashion Institute of Design and Merchandising (FIDM) in San Francisco. She completed her Bachelor of Liberal Arts at Georgetown University and earned a Master of Science from George Mason University.

Jenn Michael had a successful career in business analytics, HR Management and HR Information Systems before returning to her passion for fashion accessories design. She began to sell fashion accessories that she made on her home sewing machine, and in 2010 she incorporated her home business as CraftyStitches, LLC.  CraftyStitches specializes in customized quilted accessories with embroidered monograms and has developed a successful line of products for the growing wedding party gift market.

To build CraftyStitches, Jenn took advantage of SBA-sponsored management training and counseling from the very start. “As a new startup business in design and cottage manufacturing it's not easy to find supporters who understand,” she explained. “SBA was my first place to go!  I won the 2011 Business Plan Competition sponsored by the Loudoun Small Business Development Center (SBDC) and just took their advice and ran with it!”

A major part of the CraftyStitches growth strategy has been to expand into overseas markets. Jenn and her key staff enrolled in the intensive Passport to Global Markets program offered by the Virginia SBDC  Network (http://www.virginiasbdc.org/programs/passport-to-global-markets/). Participants in this program work with legal experts, bankers, freight forwarders, and trade specialists to devise an international growth strategy customized to their company’s strengths.

Recent developments in online retailing have helped CraftyStitches extend their reach into other countries.  Online retailing sites such as Etsy (which specializes in handicrafts) actively market to foreign users, and make it easier for small businesses to offer their products globally. Online payment systems such as Paypal and Google Checkout simplify transactions by accepting payments in a wide range of currencies. This eliminates exchange-rate concerns and offers increased security to both parties.

Recently, Jenn and her staff have focused on Search Engine Optimization (SEO) to increase overseas online sales. SEO techniques make a firm’s website more prominent to users who search for relevant product categories. By making sure that the CraftyStitches website is recommended to shoppers in Australia, Canada, South America, and Europe when they use online search engines, the company can continue to present their product line to new customers in those markets. Today, sales to these countries make up more than 30% of company revenues.

To Jenn Michael, selling handmade goods is more than just a business plan, it’s a crusade. “I believe that working with our hands and creating something organically can change our worldview. Our children today need more than just technology. I want our next generation to be able to create with their hands. Creating does something to your brain.”

crafty stitches at work

SBA In the Community

On Wednesday, February 13, Washington Metro Area Assistant District Director Nicole Porter participated in a conference titled "Preparing for a Disaster: What Your Business Needs to Know!" at National Geographic's Grosvenor Auditorium. Also on the panel with Nicole were representatives from FEMA, Homeland Security, and the Greater Washington Board of Trade.

For more information on SBA programs to help you prepare your business before disaster strikes, visit http://www.sba.gov/prepare.

Keep an eye out for Washington Metro Area District Office staff throughout our community, and be sure to say “Hi!”

Nicole Porter at Disaster Prep Event 2/13/2013

SBA Assistant District Director Nicole Porter discusses SBA resources to help businesses recover from natural disasters.


Capital Closeup

The Small Business Administration has programs specially-designed to help small businesses finance their exporting initiatives.

In addition to the SBA lending programs you might already know, trade financing is available to help you specifically address many exporting cash-flow challenges.

Most banks in the U.S. do not lend against export orders, overseas receivables, or letters of credit. If you need to cover expenses until overseas customers pay for goods, funds to participate in an overseas trade show, or a funds to help pay for your investment in new capital assets to improve your competitiveness, you may be eligible for an SBA guaranty that enables your lender to offer loans on terms and conditions not otherwise available.

SBA’s Export Working Capital Program provides transaction financing to cover your long-term receivables on export orders, easing the burden on your cash-flow.

Export Express Loans provide up to $250,000 that may be used to fund many export development activities including developing or translating marketing materials and financing letters of credit used for bid or performance bonds.

The International Trade Loan Program offers funds for acquiring, building or upgrading long-term fixed assets for businesses that plan to use them to start or continue exporting.

You can find more information on SBA export financing programs at http://www.sba.gov/content/financing-your-small-business-exports-foreign-investments-or-projects.


Top Ten Lenders (by number of loans) in the DC Metro Area

FY13 Year-to-Date (10/1-1/31/2013)

1. M&T Bank (PLP) | 39 loans | $5,776,600 total

2. Wells Fargo Bank (PLP) | 19 loans | $6,916,500 total

3. Business Finance Group (CDC) | 17 loans | $14,173,000 total

4. BB&T Bank (PLP) | 11 loans | $1,825,000 total

5. TD Bank (PLP) | 10 loans | $1,469,500 total

6. Eaglebank (PLP) | 8 loans | $7,230,000 total

7. Suntrust Bank (PLP) | 8 loans | $4,502,000 total

8. Wilshire Bank (PLP) | 8 loans | $3,586,000 total

9. Access National Bank (PLP) | 6 loans | $7,341,000 total

10. Sonabank (PLP) | 6 loans | $1,247,900 total

Definitions:

Preferred Lender (PLP): SBA provides 24 hour expedited loan processing

Regular Lender (7A): Non-PLP lenders, Regular Loan Processing

Certified Development Company (CDC): Non-Profit Lenders for fixed asset loans (504 Loan Program)


Upcoming Seminars from your SBA District Office:

SBA Washington Metro Area District Office hosts monthly seminars on federal contracting and other small business issues. These talks are all be held at the District Office at 740 15th St. NW, on the 4th Tuesday of each month from 9:00-10:00 am (unless otherwise noted). These sessions will be free of charge but registration is required . For more information or to register, email wmadoee@sba.gov.

The next two sessions will be:

March 26, 2013

A partnership for Small Business Exporting: Come learn from the DC/VA US Export Assistance Center about how to sell your goods and services to buyers around the world.

April 23, 2013

Entrepreneurship after 50: Come learn about resources available to "encore entrepreneurs" who are interested in starting and building businesses as a second (or third) career. Presented in cooperation with
AARP Washington DC

For more local learning and networking opportunities:

See the DC Metro Area small business events calendar at www.sba.gov/dc

Government Contracting Classroom Sidebar Graphic