EZCertify Finds SBA Niche
EZCertify Finds SBA Niche
By Marianne Dunn, Staff Writer
EZCertify.com, Edgewater, Md., plans to build on its rapid success in selling software to small, disadvantaged businesses by launching a new product keyed to the Small Business Administration's 8(a) program.
The company's first product, EZCertify, which hit the market in August, quickens the process by months for small business owners applying for small, disadvantaged business certification from the SBA, company officials said.
Richard Otero, founder and president, said the next product, which will automate the 8(a) application process, will be launched by November. The 8(a) program, named for a section of the Small Business Act, is an initiative to help socially and economically disadvantaged citizens, including African, Asian, Hispanic and Native Americans, gain access to the economic mainstream.
A third product that would enable business owners to apply for state and local small business certifications should hit the market within a year, said Otero.
"We do all the leg work," said Otero. "Our objective is to make it easy for people to get certified. We don't want applicants to face up to filling out any forms."
More than 1,000 small business owners have purchased the EZCertify SDB Certification software, which is available for $149.95, said Otero. The program leads applicants through a series of questions, then plugs the answers into SBA forms that can be printed out and mailed to the agency.
According to Otero, all of his customers have received SDB certification. He attributed the high success rate to the company's free EZCertify Knockout Interview, a section on the Web site (www.ezcertify.com) that poses questions to potential applicants, then uses the responses to determine if they will qualify for the SDB program.
"We don't want people to buy the software if they are not eligible," said Otero.
Jorge Vargas, founder of WinNet Computer Technologies, Gaithersburg, Md., who used the EZCertify program to apply for SDB certification, said it simplified the process for him.
Typically, companies must "hire someone to do it for you, and that costs thousands of dollars. You don't want to do it yourself, because you don't know the process or how to fill out all of the forms," he said. "This software package makes it easier to go through the program."
"Anything that makes it easier for applicants is really beneficial," said Terri Dickerson, acting administrator the SDB program. "This is menu-driven and very easy."
According to Otero, there is no competition for EZCertify. But other companies are looking to the nation's 20 million small businesses for new business. For example, Chicago-based Andersen Consulting is developing a service to simplify transactions for small businesses by automating some of the tasks the companies need to complete in dealing with the government.
"They are trying to simplify the processes by which small businesses get information from or about the government," said Otero. "It is very valuable because they will produce a centralized facility by which you can get this information. They are not a competitor of ours at all. In fact, I want to talk with them and see if they want to market our product."
Otero learned the system as a partner in RJO Enterprise Inc. of Fairfax, Va., an advanced information technology company that was certified for the 8(a) program in 1983. While working there, he was instrumental in the founding of the National Federation of 8(a) Companies and the National Coalition of Minority Businesses.
In March 1998, Otero said he cashed in his interest in RJO, found a publisher and started writing a book about SBA programs.
"I thought I would be retired," said Otero. The book included a chapter on the 8(a) program and certification. "The publisher loved all of the chapters, except that one. He thought it was too complicated and suggested that I make a CD-ROM."
Initially, Otero said, there was no market for the CD-ROM, because there were not enough companies eligible for the SBA programs to warrant production of such a product.
That all changed in the summer of 1998 when Otero said the SBA reacted to concerns about affirmative action, set-aside contracts and other minority preference programs by changing its eligibility requirements. Effective Oct. 1, non-minority women and people with disabilities who were previously ineligible for 8(a) certification will be able to apply to SBA programs.
At that time, SBA also discontinued the practice of self-certification for the small, disadvantaged business program. Under the new regulations, potential SDBs must apply for certification.
"I looked into it and found about 1.5 million [potential] SDBs out there," said Otero. "That is a market worth following."
Although the company had no revenue last year, Otero said he expects to generate $2 million this year and $47 million in 2000. He projects revenue of $91 million for 2001 and $95 million the following year.
Otero also anticipates expanding his operation from 12 to 30 employees in the coming year. "Our vision is to grow the company so it has a market value in excess of $100 million by 2002, and to either seek a merger or perhaps be acquired," he said.
"We are not trying to create a Lockheed Martin situation where we are trying to gobble up everyone. I want to keep this near $100 million and run it profitably," he said.
One way to do this, he said, is to make smart hiring decisions.
"At RJO, we were hiring 60 people a month. When you do that you are bound to make hiring mistakes," he said. But if you try to keep the brakes on and have a company of 30 or fewer employees, "everyone is going to be someone I know or I have worked with."
During the early product development stage, Otero called on people he had met from the National Federation of 8(a) Companies and the National Coalition of Minority Businesses. Isaiah Washington, a retired SBA official now living in Atlanta, served as a consultant to the development team. "I needed someone who had inside-the-SBA street smarts," said Otero.
Washington said he knew Otero as a successful businessman and one of the graduates of the 8(a) program.
"I participated with a team that reviewed the software to ensure that it complied with government regulations and that it was user friendly," Washington said.
Once an employee joins his company, Otero said he makes them "part of the adventure."
Companies tend to pay the same amount of money, and even the most innovative fringe benefits person can run out of ideas, he said.
"Everyone has to love what they do. The environment has to be very supportive of their efforts, and they have to be paid extremely well," he said. "And if there is any potential for equity in the business, they have to see themselves sharing in that."