Federal Contracting Q&A: Location, Location
I read your post on military.com about government contracting.
I have a simple question. Is being located in the Northern Virginia/DC a significant advantage to getting federal contracts?
Thanks for contacting me. I am very grateful to Mililtary.com for publishing my BizDev comments.
You gave me a simple question. Unfortunately the answer is not so simple because it depends upon what Scope of Work (SOW) you intend to perform and what sector you intend to chase (e.g. logistics, accounting, aviation consulting, software and IT services development, etc.). You didn't provide me with information about your personal situation and business aspirations, so, I must speak to your question generally.
There are a myriad of decision-points to consider when deciding where to create your start-up company:
- Type of Business
- Scope of Work
- Your personal situation with regard to resources, capabilities, intended or potential customers
- Will you work at your new business part-time or full-time
- Will you perform your business alone or with other people
- Can you perform your contracts captured alone or will you need to hire/outsource more personnel to accomplish Contract Performance
It is vital to remember that start-up companies must conserve their capital outlays to ensure survival until they have enough revenue coming in to sustain growth.
However, it also comes down to what is called 'Spans of Control'. You must be located where you can "control your operations": Marketing & Business Development; Advertising and Sales; Proposal Drafting; Contract Personnel; Contract Supervision/Oversight; your total end-to-end Contract Performance. Thus, your location must support all of these Spans of Control.
A small business start-up should be located in the best place where:
1. You are incorporated in a state that protects small business. I have run my company successfully from out-of-state, despite being incorporated in Delaware. Please see my discussion below on why I think Delaware is the best place to incorporate, regardless of where you will actually conduct your regular business.
2. Your main office or place of business is located in a building or facilities that keep initial costs down (e.g. your home or garage, or an inexpensive shared office).
3. You are located in a town that allows broad range of business pursuits with minimal amount of registrations, licenses, and taxes. For example, my main office was moved from Yokohama, Japan to Herndon, VA to serve our growing customer base in federal agencies). If you intend to pursue federal contracts, then you should try to locate your main office somewhere that does not tax or burden with paperwork any business pursuits performed outside of your city or outside your state.
4. If your intended customers demand on-site performance, then you must locate your company where your oversight will satisfy customer needs (until you can afford to hire and supervise out-of-state personnel).
5. You should locate your initial company/office where you can begin your contract pursuits with very little re-location expense. In other words, you should stay where you are initially, and try to begin operations from there. Then you can relocate as the customer contracts come in, or you see that another location is better suited to your needs. However, you should also remember that your choice of initial location must meet the needs of your family, your hobbies, etc. This is because you can only work 60-80 hours per week (hahaha) on your new business, and will eventually need easy access to off-duty enjoyment.
You asked specifically about Virginia. Relocating yourself into Virginia hoping to find work should not be your only consideration. However, if your career is in transition (e.g. you will exit military service in near future), and you have to make a choice of new state of residency anyway...then Virginia is a very good location to consider as your new home and new business location.
Having your company located in Northern Virginia has many benefits...particularly since most Federal Government Agencies have their headquarters in Washington, DC or the surrounding suburbs of Northern Virginia. If your customers require on-site performance in Virginia, or if you will need to coordinate closely with customers on a regular basis (and the customers are located in Virginia), the it is a very good choice...if you can afford the higher cost of living in this area. For example, in my personal case, my company does a large amount of overseas aviation consulting business with foreign airport authorities, civil aviation administrations (CAAs), and foreign Air Traffic Control-ATC facilities for infrastructure upgrades and master planning efforts. However, my company does not have a lot of travel budget. Therefore, I needed to meet those foreign aviation customers at cheap cost (through some method of gathering them up here and meeting them en-masse). Being here in Northern Virginia allows me to attend/participate in Federal Agency conferences and business development match-making events (for example, USTDA-sponsors Reverse Trade Missions (RTMs) in downtown Arlington, bringing foreign delegations of high-ranking aviation (and other sectors) to their USTDA headquarters for conferences and Trade Missions).
Thus, being here in Virginia allows me to travel into Washington, DC for these conferences and then get back to office/home afterwards. Additionally, most of the Small Business Development Units (SBDUs) of Federal Agencies are here in Washington, DC also. Thus, I am able to meet with the SBDUs and brainstorm with them on how to best position myself for their upcoming programs, how to apply for small business loans/grants, etc. In my case, the Federal Aviation Administration (FAA) is located in downtown Washington, DC. Thus, I can meet with them frequently and easily.
Depending upon your sector of business, or your personal situation, you may be able to just as effectively accomplish your Spans of Control from another city, another state, or another country. For example, I successfully ran my small business from Japan initially, because I focused my BizDev upon potential customers at U.S. military Bases in my region of the world, and towards customers in Asia-Pacific countries. Thus, you can fine-tune your BizDev to suit your personal situation and circumstances.
In getting ready to pursue government contracting, I would suggest my recently published e-book So You Want To Be A Government Contractor (SYWTBAGC, for short), where I talk about all these issues that you have raised. You will find that my e-book is a step-by-step, how-to book that will take you from creating your own company, building a website, getting all government registrations, contacting all the federal agencies & their Small Business Development Units (SBDU), searching out Contract Opportunities and getting yourself on the automatic distribution lists (e.g. www.FBO.gov), understanding the various types of contracts, understanding the Specifications Documents, building a multi-company team to collaboratively pursue the target opportunity, drafting a winning proposal, etc.
In summation, I recommend that you should perform some research on Virginia (or any other location under consideration) with an eye towards answering: "How would this location help or hinder me in my business start-up?" Would you be able to overcome any roadblocks to BizDev from the location chosen? Can you afford to live and survive in the chosen location until your business expands into long-term growth?
I hope this brief discussion helps you. If you tell me more about your personal situation and aspirations, I can provide more directly-focused advice.
Please keep in contact.
Michael J. Erickson
President, Aviation Management Inc., LLC (AMI)