Extending the Reach 2017

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PRESENTED BY San Antonio

CONSTRUCTION NEWS

™

The Industry’s Newspaper

Feature Publication Supplement August 2017

Mark Langford Photography

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GL Contracting is a licensed General Contractor performing commercial and residential new and remodel construction. We have a wide range of experience in complete design services and construction self performance. GL Contracting is capable of managing multiple projects while maintaining our focus on individual projects through completion. As a Disabled Veteran Owned Contractor, our emphasis is serving Government Contracting with our best value business.

GL Contracting was established in 2010 and is headquartered in San Antonio, Texas.

Since it’s inception, the company has experienced stable growth in sales from $250,000 to $7.5 Million. Our growth as a single owner small business, emerging from residential remodeling into commercial renovations and construction, is focused on Customer satisfaction as our priority.

SERVICES GOVERNMENT – New Construction • Design-Build • Renovation TxDOT – Airport Improvements • Renovations • New Construction COMMERCIAL CONSTRUCTION – Retail and Renovations SUBCONTRACTOR PARTNERS F & W Electric Contractors Inc. Floresville, TX

Eagle Airport Marking Inc. Kilgore, TX

Alpha Paving Industries LLC Round Rock, TX

Red Dot Buildings Athens, TX

CLIENTS City of San Antonio Capital Improvements • TxDot Aviation • Joint Base San Antonio

Corporate Office 210.290.9792 | Fax 210.714.9473 Gabriel Lomas Cell 210.825.1984 900 Isom Road, Suite 222 | San Antonio, Texas 78216 www.GLContractingLLC.com SBA: 8(a) | DOT: DBE | SCTRCA: SBE, MBE, HABE, DIBE, VBE, HUB | CVE: SDV0SB

Contents

4 Bexar County Small Business and

5 6 7 8 9

Entrepreneurship Department A Win-Win Proposition HR For Small Business

The SBA Bond Program – Help for Small and Emerging Contractors

Small Business Self-Performance Roots

Tools for the Small Business – Non-Disclosure Agreements & Teaming Agreements

10 11 12

Thanks and Acknowledgements

13 14 15

Specialty Certifications

16 17 18 19

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xtending the Reach is a supplement to the August 2017 edition of San Antonio Construction News with additional mailed distribution in the San Antonio area. San Antonio Construction News is the flagship publication of Construction News, Ltd. Additional copies of this supplement may be purchased for $10.

Photo credits: Aerial photo of Port San Antonio courtesy of Port San Antonio.

Cover and aerial photos of San Antonio skyline and completed projects

by Mark Langford Photography.

Obtaining Certifications

The Subcontractors’ Do’s and Don’ts Guide to Small Business Strategy How to Master Your Capabilities Presentation

The 3 Financial Statements You Need to Keep Your Banker Happy Small Business Certifications and Success

Lessons Learned While Overcoming Obstacles

Empowering Small Businesses One Contract at a Time

Insurance for Small Businesses and Contractors

www.ConstructionNews.net

CONSTRUCTION NEWS

™

The Industry’s Newspaper

P.O. Box 791290 San Antonio, Tx 78279 (210) 308–5800 Copyright 2017 San Antonio Construction News

Publishers....................... Buddy & Reesa Doebbler Art Director.................................. Reesa Doebbler Managing Editor...............................Carol Wiatrek Production................................ Helen Greenwood Account Manager............................Dana Calonge Administration.....................................Terri Adams Construction News Editors..... Melissa-Jones Meyer Tanya Erickson, Mary Hazlett, Carol Wiatrek

Bexar County Small Business & Entrepreneurship Department

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he Bexar County Small Business & Entrepreneurship Department has been working with small, minority, and women-owned business enterprises (SMWBEs) through the SMWBE Program for 17 years. The program focuses on the formation, growth, and acceleration of SMWBEs, Disadvantaged Business Enterprises (DBE), and Historically Underutilized Businesses (HUB) through capacity-building programs, education & training, outreach, networking, and our annual SMWVBO Conference in December, which attracts over 3,500 people each year.

Entrepreneurship

The success of the SMWBE Program is dependent upon cooperation of 48 County offices and departments. It focuses on the purchasing, scope of work and data collection processes that are, of necessity, highly variable because the scope of items and purchasing authority by the County is so varied.

All county projects have a 20% minimum for minority or women-owned business participation and a 30% minimum for small businesses.

The Contract & Diversity Management System (CDMS) is used to determine and report the County’s service and product acquisition activities. Included in the directory are certified SBE, MWBE, DBE and HUB businesses. The directory is user-friendly and is accessible to all county employees and contracted vendors. The system is also used for the solicitation of Request for Proposals (RFP), Invitation for Bids (IFB), and Request for Quotes (RFQ) that provides SMWBEs with the opportunity to participate and receive awards.

CDMS is a best practices type of tool used to manage contract compliance in order to determine whether or not the SMWBE program is meeting its Mission. CDMS provides current process information for compliance tracking for constitution, supply, and service contracts, vendor certification, contract management along with audit and report capabilities.

The Opportunity Link on our website is an initiative of the Bexar County SBE Department to address business development and small, minority and women-owned business participation in public procurement opportunities. Our website is designed to link businesses to opportunities, and our Opportunities page is a one-stop shop for contracting opportunities with a variety of government agencies. We link to almost 300 government and public

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agencies that contract with SMWBEs, DBEs, and HUBs including Bexar County projects, links to the City of San Antonio, connections to surrounding counties and municipalities, information on school districts, colleges, and universities, and state and federal entities. We even link to general contractors looking for subcontractors or partners! (URL: www.bexar.org/133/ opportunities) The opportunity link is a one-stop shop for links to Bexar County and surrounding areas, but our brand-new “How Do I Do Business with Bexar County” page (url: www.bexar.org/ businesswithbexar is going to be, current one is www.bexar.org/2377/connect-with-bexar-county) brings every opportunity in Bexar County to one place. We make it easy to register as a vendor, find requirements for doing business with the county, access our CivCast bid management system, find open and upcoming bid opportunities, and information on bridge & roadway projects.

The Bexar County Small Business & Entrepreneurship Department’s mission is to link your business to opportunities for acceleration. SMWBExcel is designed to help small, minority, and women-owned businesses in the fields of Construction, Architecture & Engineering Professional services, Goods & Commodities, and other professional services grow, accelerate, and work with Bexar County and other public entities.

The SMWBExcel program is designed in three phases - the Start Up Phase, the Growth Phase, and the Accelerate Phase, each with a different focus. SMWBExcel is designed to address problems identified by small, minority, and women-owned businesses and to provide them with tools to overcome obstacles to their success. Bexar County partners with incubators, accelerators, educational partners, and government organizations to provide a wide array of training, services, recontinued on Page 13

Feature Publication Supplement to San Antonio Construction News – August 2017

A Win-Win Proposition

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.A. Nunnelly Company is one of the oldest general contracting firms in San Antonio. Celebrating 95 years in business, they not only believe in conducting their business with integrity, but also in helping others develop with the right tools so they too can achieve success.

CN: When did become involved other companies?

your company with mentoring

DN: We probably started doing this in the mid ‘90s. The schools were the first ones to step up and say, ”We need more subcontractors and minority participation to help spread the wealth.”

They started providing us with opportunities to mentor business owners.

DN: A true mentorship program kicked off with Bexar County but before that, we always did things to help subcontractors with advice and other things.

CN: How did you decide who to help or mentor?

DN: There wasn’t a formal selection process. People have always come in to us wanting to do work. Through that process, often we would find people who needed help.

We would talk and meet with them, introduce them to bonding companies and bankers, and let them know some of the things they would have to start doing to run a viable business.

That’s everyone’s problem – being a good craftsman, owning a truck and not really having a business plan.

CN: Heading them into the right direction?

DN: We want to teach them the importance of the business and running it like a business and not like a paycheck. That has always been the issue.

I don’t care what scale of program you are in, that’s where it all has to start. We have always done that and Scott and I are probably the most active due to our specific knowledge.

A simple statement I use all the time is, “I have never seen a company go out of business from not enough work. But I have seen a ton of them go out for too much work.”

They don’t have the money saved

CN: So now you’re involved with the Bexar County/AGC mentor program.

How many people do you mentor at a time?

DN: Right now we have six protégés and 12 mentors. We mentors work in a two-person, two-company team.

Typically for a company like us, I work with a larger GC and I will bring the smaller picture to the game. It gives the protégé a good comparison of how different sized companies do things.

We go through a whole process.

They first have a classroom process that all prospective companies must go through. It’s an eight-week program covering financing, accounting, and other basics. Then they graduate.

Then as a company, they can apply to the mentor protégé program.

We take their application and review them and based on the number of mentors we have, will determine the number of protégés.

CN: What is the length of the program?

DN: We work with the protégé company for two years meeting once a month, so it is a pretty extended process. Everyone really has to commit to make it through this program.

The real benefit with working with the county is that they hire additional consultants who are part of the package.

For example, my first partner was Rene Garcia with Zachry. We were teamed up with Julissa Carielo of Tejas Premier Building Contractor.

She was in the first class.

We worked with her and found her technology was lacking, so then the Country paid for a tech expert to tell them what they needed and trained them.

It’s a very thorough process.

There is not anything that we don’t touch on. It is a great program for people to get in, but is also a big commitment on their part. They have to commit their time and we will grill

Feature Publication Supplement to San Antonio Construction News – August 2017

them about getting things done for the next meeting.

CN: This industry is comprised of folks who are very independent thinking and may think they might know more than they really do.

DN: When you have so many people going through, you have many different types of people. Some people do have difficulty in meeting the expectations of the program.

We have an application and interview process to get selected into the mentorship program.

There is a point where I would say some people have been eliminated because they are not really ready to run a company or they are not really here to learn.

A lot of people think that getting into this program is going to guarantee them work. They think since I’m their mentor they are going to get all my work. That’s not what we are here for. We make that clear from the beginning - not why we are here or they are here. We are here to help them and their business.

CN: How many companies have you mentored over the years?

DN: In the Bexar Country program I am preparing to graduate my 5th protégé. Besides that, there have been 15 to 20 companies.

CN: You have to take that as a compliment. There are a lot of people who would not spend the time to do it.

DN: It does make me feel good, but in our office, we also know we need them. Everybody that we can get into the industry running a real company is a benefit.

The industry needs to grow and we need good people in it.

CN: There is a terrific value these protégé companies receive going through the mentor protégé program.

What do F.A. Nunnelly and you personally get from being on the mentor end?

Doug Nunnelly DN: Now we are partnering with another mentor and we are each learning from the other. The protégé is asking questions and we’re trying to answer them, so there is a discussion going on. We are often reminded of what we know and haven’t said for a while or haven’t used in our own office.

It’s an ongoing thing that keeps you sharper and gives you some different viewpoints. It also reminds you of some struggles you want to avoid.

We are extremely proud of what we have done because we feel like it is putting back into the industry. We are all making our living this way. It’s up one day and down the next. It’s a struggle. It’s not a dream world. When we succeed we are pleased and proud, whether it’s the building we built or the people we helped or worked with hand-in-hand. You want to accomplish and see your accomplishments.

CN: What advice would you give to other companies who are considering becoming a mentor in the Bexar County program?

DN: Call Renee. The pride, the self examination. and the benefits to the industry all pay off to you. And if you have the opportunity to be a mentor, you should definitely get involved.

You will enjoy it and it’s not a real task; it’s kind of a labor of love.

CN: Your final thoughts Doug?

DN: I think anybody who reads this article should stop and think about where they are and which side of the fence they could be on – maybe a potential protégé or a potential mentor.

As a protégé, take advantage of what is being offered to improve your company.

As a mentor, there are a lot of corporate benefits that you would get from being a mentor. And there are a lot of personal benefits like pride and all those kind of things that you will reap or receive from doing it. -bd

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Mentor - Protégé

CN: Did you mentor before Bexar County and Associated General Contractors started their program?

up to carry them and they don’t understand what their expenses are going to be to start a job. That has been a major issue with all small companies.

Human Resources

Mr. Hobbs has more than 30 years of Human Resource and training experience. His extensive background includes positions as a Personnel Management Specialist with the Federal government and a Human Resource Manager for the General Dynamics Corporation.

Throughout his career he has performed a significant amount of consulting, training, writing, and university-level teaching; with more than 40 published articles. Larry assists companies with policy development, problem-solving, writing employee handbooks, investigating discrimination/harassment complaints, supervisory training, and many other HR topics.

Larry has a B.S. from Abilene Christian University and an M.B.A. in Organizational Behavior & Management from the University of Alaska. He is a certified Senior Professional in Human Resources (SPHR) and a Senior Certified Professional (SCP); as well as an active member of the Society for Human Resource Management.

Hobbs served on the Board of Directors of the San Antonio Human Resource Management Association (SAHRMA) during 2014-15. larry.a.hobbs@gmail.com www.managementresolve.com

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HR for Small Business Is there a website or resource that allows small employers to obtain immediate responses and guidance on Human Resource issues as they surface? It is becoming more challenging for small employers that do not have full- time HR Managers to understand all of the requirements, and to know how to deal with frequent employee challenges.

Most small and medium-sized businesses suffer from the same dilemma described in the question above. More and more subjects and issues are being put under the “umbrella” of HR Management.

Here are a few ways to address the problem: • Send someone on the staff to as many local seminars and HRrelated meetings as you have the time and funds for. This is usually an office manager, an administrative assistant, or a supervisor from operations.

• Join the local Human Resource Management Association; the annual dues are minimal. They conduct monthly meetings that concentrate on a program, lesson,

workshop, or speaker related to an resources: form samples, policy samples, white papers on about HR topic.

50 subjects, and the Resource • Get on the “Alert List” of the Center in Alexandria, VA to answer U.S. Department of Labor. They questions. e-mail frequent updates about employee relations, Federal • HRM also provides HR regulatory changes, and mandatory certification on the “HR Body of Knowledge.” Certification is posters. obtained through studying and • Conduct an “HR Audit” that testing. reviews your current personnel management policies and • Make certain that your current practices. There are about 15 Employee Handbook and the critical subjects that need to be related personnel management examined --- and it does not really forms are current, thorough, take an HR practitioner very long accurate, clearly written, and in to do the review and write the compliance. report.

• Train each salaried staff • Have someone on your member, particularly managers staff join the Society for Human and supervisors, in subjects such Resource Management, a national as principles of management, improvement, association.

SHRM members communication receive legislative, legal, diversity, performance evaluation, record bench-marking, compensation, keeping, discipline, and leadership. benefits, and other useful information every two weeks --- These are some of the things some of it is hard-copy, but most that need to be done in order to of it is electronically distributed to stay up with “HR best practices.” the members.

Larry A. Hobbs, B.S., M.B.A., SPHR & SCP, is an HR Specialist who assists • Additionally, SHRM members employers in policy development and have unlimited access to many training. Telephone consultation is always free --- (210) 316-4206.

Feature Publication Supplement to San Antonio Construction News – August 2017

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The SBA Bond Program Help for Small & Emerging Contractors

he Soft Bond Market — Contractors who work for public owners are required to provide surety bonds. These bonds guarantee the work is performed as per the contract (Performance Bond) and all the subcontractors and suppliers are paid (Payment Bond). The current construction boom has resulted in an abundance of surety capacity. There are a lot of bond companies in the surety arena these days. As these companies compete more aggressively for business, underwriting requirements have become looser. The current surety market has become the “softest” we’ve seen in at least 15 years.

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Who Qualifies?

To be eligible for the SBA Bond Guarantee Program, contractors must meet the SBA’s standards for qualification as a small business. A general contractor cannot have annual revenues larger than $36.5 million.

Trade contractors cannot have more than $15 million in annual revenues.

The SBA can guarantee single bonds up to $6.5 million, and up to $10 million on certain federal government projects.

How Does It Work?

To apply for bonding in the SBA Program, a contractor must go through an SBA-authorized surety agent who can place the bond with an SBA-authorized surety company.

Even within the SBA Bond Program, a contractor must meet certain credit, experience, and financial capacity standards to qualify for bonding. The surety underwriter will require the same basic underwriting information. If the underwriter decides the contractor qualifies for bonds, but does not quite meet their standard underwriting guidelines, the surety may offer surety support in the SBA Bond Program. The SBA Bond Program can be a godsend to a bondable contractor because

their underwriting requirements are considerably easier to satisfy than those found within the standard surety marketplace.

Response Time It is true that in the past, the SBA’s response time was not always very fast – at least in comparison to the turnaround times outside the program.

This was largely due to the paperintense process that had developed over the years. The same information was required on multiple forms that all required original signatures.

Understandably, the SBA was often slow to respond under the weight of a cumbersome and outdated system.

Today’s SBA has caught up with the times and has firmly embraced the digital age. The SBA-required forms have been consolidated down to a total of just two – the 994 (Application for Surety Guarantee) and the 912 (Personal History Sheet) - for the initial setup, and only one form (the 994) for each new bond request. The SBA Quick-Bond Program provides bonds for contractors with decent credit up to $250,000 – with no financial statements required. All the SBA forms are now available electronically through the SBA’s website and can be submitted to the SBA-authorized surety agent via email.

The SBA also created the “e-App System,” which is an internet-based bond submission and approval program. Agents and sureties in the SBA Bond Program use the system to upload underwriting information and the SBA forms instantly. The e-App System has increased efficiency, resulting in a very nimble and responsive process. The typical SBA response time for approval on a new account is 3 to 5 business days. For bid bond requests, the SBA usually responds within 24 hours and is even able to respond the same day if necessary. This is as good as, if not better than, the turnaround times available in the open bond market.

Many small and emerging contractors struggle with the issue of quality financial statement preparation.

Obtaining a CPA Review for the first time from a construction-oriented CPA takes considerable time and can be somewhat expensive. It may even be cost-prohibitive unless the contractor will need several bonds per year to spread out the expense over the course of several jobs. With the SBA Program, the contractor can do significant bonded work while they seek out and form a relationship with a qualified CPA at the same time.

But perhaps the most important benefit of the SBA Bond Program is that it allows available limits on bank lines of credit as additional working capital. If a contractor has established a line of credit from an FDIC-insured bank, the amount available for use is added directly to the existing working capital shown on the contractor’s balance sheet. In addition, the SBA’s minimum working capital-to-backlog requirement is significantly lower than it is outside of the SBA Bond Program.

By taking advantage of the SBA Bond Program, a small contractor who may have once had only a modest ability to bond, can exponentially increase their surety capacity. This enables the small and emerging

Jim Swindle is the owner and principal agent of Alamo Surety Bonds, a professional surety agency in San Antonio. Mr Swindle has been in the surety bond business for 29 years, both as a surety underwriter and agent. He gives presentations on contract surety bonds for construction trade associations, large general contractors, and governmental entities. contractor to take their business to the next level of growth – and in a relatively short period of time. The resulting increase in local contractor participation on public works projects creates a boon to the local economy as more of those construction dollars stay within the community.

Most small and emerging contractors have tremendous growth potential, but can be held back by the inability to maintain adequate bond capacity. The SBA Bond Program encourages surety companies to provide significant bond capacity for these small contractors who otherwise would not qualify. The ultimate goal of the SBA Program is to give worthy and capable small contractors the chance to develop into large, successful prime contractors.

Benefits of the SBA Bond Program In the SBA Program, a contractor without CPA-prepared financial statements can be approved for single bonds up to as high as $1 million.

Feature Publication Supplement to San Antonio Construction News – August 2017

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Bonding

his new soft market has not yet, however, reached its way down to the small and emerging contractor segment of the industry. Bonding can still be a significant barrier for small contractors who often find bonding difficult or impossible. Fortunately, there are sureties and programs that cater to small and emerging contractors seeking their first bond or increasing their existing bond capacity. The Small Business Administration (SBA) has a program that guarantees up to 90% of a bond issued in the program. The SBA provides this backstop in exchange for a relatively small fee to the contractor - 0.729% of the contract amount. The SBA Fee is in addition to the bond company’s premium charge, however, most sureties offer special SBA rates to adjust for the extra cost of the SBA Fee. The surety underwriter, in turn, is able to offer a more aggressive bonding line than would be possible without this SBA support.

S H O W C A S E

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Self-Performance Tools

nly seven years ago and with just a handful of employees, Roland Davila founded RCO, a civil work subcontracting company – but it didn’t stay small for long. With the help of R.J. Delagarza, who joined in 2013, RCO evolved into a general contractor while staying true to its self-performing roots.

Today, the 35- employee-strong company boasts an SBA 8(A) designation, a HUBZone certification, and participates in two mentor/protégé and JV programs.

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Small Business Self-Performance Roots

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CO’s success in such a short span is no accident.

“Our main strengths in the selfperformmance area are earthwork, utilities, and concrete,” Delagarza says. “All three have given us a small competitive advantage in civil GC contracts that we pursue as well as opened up doors for ground-up subcontracting projects.”

Depending on the project, RCO reaches out to the general contractor’s estimator with interest on bidding out items they can selfperform. Relationships are built during the bid process and sustained over the project’s duration.

“We pay close attention to details and make it a point to know what the owners and inspectors are looking for on projects,” Delagarza continues. “We work very hard to stay ahead of the curve and on the critical path.”

RCO believes its ability to successfully self-perform work in this market is attributed to its employee retention and training; continuing education and employee safety are top priorities. Safety orientation, including an OSHA 10

class paid for by RCO, is mandatory for new employees. Supervisory and management personnel are required to obtain OSHA 30 certification. A full-time safety manager handles daily toolbox talks and the corporate office’s safety meetings.

“We have 10 employees who have been with us since 2010,” Delagarza says. “We have a great working relationship with our field staff. We rely on them heavily and are blessed to have them as part of the RCO family.”

Delagarza believes positive strides have been made in the SMWVO arena since he started RCO. In 2014, RCO received its Small Business Administration (SBA) 8(a) designation under which it was awarded sole source projects from Joint Base San Antonio (JBSA), Directorate of Public Works, and Air National Guard. Over the past three years, RCO has built a working relationship with local agencies including San Antonio Water Systems (SAWS), San Antonio River Authority (SARA), and Brooks.

“Many agencies are requiring to meet small business goals which sort of force general contractors to go out and actively seek small business contractors,” he says. “This helps businesses get a piece of the pie while actively building relationships with larger companies.”

Relationships are what bring RCO opportunities in the form of word-ofmouth referrals and repeat customers.

“RCO has been an exceptional

contractor to work with over the several projects that have have completed,” San Antonio River Authority’s Dustin Moore P.E. says.

“If any issue ever arose, they came up with solutions that were cost and schedule efficient. Their primary focus was always job completion with the highest level of quality and safety.”

“We are honored that others find our work good enough to have other general contractors go out of their way to recommend us and contact us,” Delagarza says. “I think that not only says something about our management relationships, but the quality of work from our field staff.”

Delagarza encourages anyone wishing to start a construction business to utilize available tools.

“Reach out to the SBA and the programs they offer to small businesses,” he says. “The SBA is a great program and will help guide new business owners and provide the tools to becoming a successful business. Develop good working relationships with larger GCs and clients as this will allow for future opportunities.”

“The Construction News Special Feature Section will be a tremendous tool,” he continues. “It will help small companies that don’t necessarily have the resources to market their companies. This will be a great opportunity for them to share their capabilities and gain exposure in the industry.”

Feature Publication Supplement to San Antonio Construction News – August 2017

Tools for the Small Business Non-Disclosure Agreements and Teaming Agreements

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ontractors often seek strategic alliances with other contractors to complement their capabilities and increase their chances of winning a contract. In forming such alliances, it is important to use the type of agreement that best fits your needs to ensure it is enforceable and not just an agreement to agree.

Elizabeth H. Connally, Connally Law, PLLC

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rior to sharing details about your business with a potential business partner, it is wise for the parties to sign a Non-Disclosure Agreement, also referred to as a Confidentiality Agreement or NDA. By executing a NDA, you are protecting your confidential information given to the other party as the other party will only be permitted

Joint Venture or Teaming Agreement

Contractors generally use either a joint venture agreement or a teaming agreement to accomplish their business arrangement. When two or more companies jointly form a separate entity to act as the potential prime contractor, this is a joint venture. This article focuses on the second type of arrangement – the teaming agreement.

A teaming agreement is a tool for contractors when a prime contractor desires to work with one or more subcontractors to pursue a contract and requests the subcontractors to perform specific work on that contract if it is awarded to the prime contractor.

Unlike a joint venture, a teaming agreement allows the companies to remain as independent entities while working together to prepare the proposal and be successful in obtaining the contract award. Many times the parties are very anxious to pull together the proposal and proceed, thinking they only need to put the basic terms on paper and work out the details of

Feature Publication Supplement to San Antonio Construction News – August 2017

the subcontract agreement later if they win the contract. It is unlikely this will be an enforceable teaming agreement, for without details regarding the terms of the subcontract agreement, it is merely an agreement to agree.

Unenforceable Teaming Agreement The Cyberlock Consulting, Inc. v Information Experts, Inc., 2013 WL1395742 (E.D. Va. 2013) case exemplifies why it’s important to state in the teaming agreement the terms which will ultimately be incorporated in the subcontract agreement. In that case, Cyberlock Consulting, Inc. (“Cyberlock”) entered into a teaming agreement with Information Experts, Inc. (“IE”), wherein IE would be the prime contractor if awarded the contract for security services. The teaming agreement said if the parties were successful in getting the prime contract awarded to IE, then IE would enter into a subcontract with Cyberlock. The teaming agreement included general terms which described each company’s anticipated scope of work, but it did not include, as an exhibit or attachment, the actual subcontract agreement the parties intended to enter into. In addition, the teaming agreement stated that either party could terminate it if the parties were unable to negotiate a subcontract agreement in good faith.

After IE received the contract, the parties attempted to negotiate a subcontract agreement without success.

IE then terminated the teaming agree-

ment, and Cyberlock sued to enforce it.

The court determined the teaming agreement stated only a framework for negotiating a subcontract agreement sometime in the future and was, therefore, unenforceable because it was merely an agreement to agree. Thus, it is very important that the teaming agreement include not only the parties’ intentions regarding the teaming agreement but also the subcontract agreement which they intend to sign on award of the contract to the prime contractor.

Checklist for an Enforceable Teaming Agreement:

The teaming agreement should: 1. state its purpose and specify the proposal that the parties are responding to; 2. describe each party’s role, not only with regard to proposal preparation but also the resulting subcontract agreement when the prime contract is awarded; 3. provide protection for the proprietary information and intellectual property of both parties; 4. set forth indemnification provisions; 5. state the term of the teaming agreement; and 6. incorporate, as exhibits, the request for proposal, each party’s proposal responsibilities, the subcontractor’s scope of services and the form of the subcontract agreement.

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Agreements

Ms. Connally is the Managing Shareholder of Connally Law, PLLC, San Antonio, Texas. She is licensed to practice law in OH, DC, HI and TX and is a former warranted Contracting Officer for the U.S. Dept. of State (“DOS”), where she handled contracts for the DOS’ largest procurement office in Frankfurt, Germany. Ms. Connally counsels clients in the areas of SBA and VA certifications and compliance as well as construction contracts, government contracts and DOL-related compliance issues. Ms. Connally’s email address is ehconnally@eclegal.biz.

to share or use the information as directed by the NDA. Key elements of a NDA are: identifying the parties, defining what is deemed confidential, describing the confidentiality obligation of the party who receives the information, identifying things that are excluded from confidential treatment, such as public information, and stating the term of the NDA. Once the parties agree upon the NDA, then they can get to work on the teaming agreement.

Our Thanks to Everyone

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hen we first envisioned this special feature, “Extending the Reach,” our goals were pretty simple. We wanted to help Small, Minority, Woman and Veteran-owned (SMWVO) companies with valuable information they could use to help them achieve success in starting or growing their business.

Starting a business today is a daunting task and it takes a special type of person to risk everything to be their own boss and run their own company. Decisions they make can lead to great success or great failure.

The construction industry can be non-forgiving in many aspects and having good information or knowing where to find it can make the difference.

Finding qualified employees, bidding within your qualifications and limitations, sticking to a budget, insurance and bonds and so many other items are what an entrepreneur needs to know to effectively run a business.

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The articles in this publication were written by people with vast experience in their fields. They too wanted to help those on their way up with sharing some of that knowledge.

The construction industry needs new qualified entrants in all fields. The industry is experiencing a serious skilled labor shortage and everything each of us can do to promote quality workmanship strengthens the entire industry.

Hopefully one day someone will tell us or one of our feature writers that the “Extending the Reach” feature or a particular article made a difference.

We are very grateful to all the people who spent so much time writing these very informative articles. Also we want to thank the sponsors and advertisers who made this project a reality.

We hope to publish this feature yearly to help the next generation of SMWVOs by “Extending The Reach” again.

Buddy Doebbler, Publisher Feature Publication Supplement to San Antonio Construction News – August 2017

Mark Langford Photography

Obtaining Certifications

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he South Central Texas Regional Certification Agency (SCTRCA) is a 501c(3) non-profit corporation that represents public entities in the South Texas area. The entities we represent are committed to enhancing the participation of Disadvantaged, Small, Minority, Woman and Veteran Owned Businesses in public/ government contracting and purchasing activities.

At the SCTRCA, we seek to connect the small business owner to economic opportunities through the power of certification. The SCTRCA is responsible for the certification process for our member entities, which include:

The City of San Antonio • Bexar County • Alamo Colleges Brooks • Edwards Aquifer Authority • Port San Antonio San Antonio Housing Authority • San Antonio ISD San Antonio River Authority • San Antonio Water Systems University Health Systems • VIA Metropolitan

The SCTRCA offers a SMWVBE (local) program under which vendors who meet eligibility requirements are certified as Small Business Enterprise (SBE), Minority Business Enterprise (MBE), Woman Business Enterprise (WBE) and/or Veteran Business Enterprise (VBE). A vendor can be certified with multiple certifications as long as the eligibility requirements for each certification are met.

The SCTRCA also offers a federal program that consists of the Disadvantaged Business Enterprise (DBE) and Airport Concessionaire Disadvantaged Business Enterprise (ACDBE) certifications. The ACDBE and DBE are reviewed and processed according to the Texas Unified Certification Program (TUCP). The TUCP follows Federal regulations, 49 CFR, Part 26 and Part 23. The certification applications for both programs as well as additional information can be found on our website – www.sctrca.org.

Feature Publication Supplement to San Antonio Construction News – August 2017

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Do’s and Don’ts

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enerally speaking, one of the most important things small, minority, woman, and veteran-owned businesses can do to increase their chances of getting work and growing their companies is to form a relationship with general contractors before bid day.

To help small subcontractors navigate their way to strong relationships with general contractors, Jason Smith, president of San Antonio Division of SpawGlass, along with fellow team members, proposed a list of do’s and don’ts aimed toward establishing and maintaining positive relationships with general contractors.

“It’s really beneficial for small businesses to establish relationships with general contractors or companies that award work in advance of specific project bids, and to their benefit, they’ll learn things about the project,” says Smith.

“They’ll learn things about the expectations of them, and the benefit to them is they won’t waste their time submitting a bid that is either going to be excluded or disregarded because they didn’t understand what they were bidding.”

It’s important to know what general contractors look for and expect from you as a subcontractor and how you can conduct business with them in a professional manner that leaves a favorable impression for enduring business relations. Smith provides a list tips on how to accomplish this.

SpawGlass is a general contractor based in San Antonio. Louis Spaw and Frank Glass established the company in 1953. –mh

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The Subcontractors’ Do’s and Don’ts Guide to Small Business Strategy The Do’s

DO develop mentors and/or business contacts.

DO get certified with the SCTRCA (as applicable) and other governing agencies as appropriate.

DO have a clear, simple business plan that can be communicated easily.

DO join and attend industry-related association events. People need to know who you are, and getting out there to network and shake hands is a good way to introduce yourself.

DO develop relationships and or systems that lead to project leads.

DO establish relationships with general contractors (prior to project announcements).

Start with preconstruction or estimating personnel. If you’re making a cold call, talking to the estimators is a great place to start, because they are full of information. Bring them tacos or donuts, and get a conversation going.

DO handle your financial matters promptly.

DO know your financial and performance limitations. It’s not good to bid on work you can’t handle, but don’t think too small either. If you’re able to handle the work, step out there and do it.

DO remember that safety and quality are part of every conversation. It’s not all about the dollar or the handshake.

Doing the work well and safely has a lot of importance and value.

DO make positive contact with general contractors’ estimating or project teams about specific project bidding well in advance of bid/ proposal day.

DO understand the submission requirements (timing, deliverables, qualifications).

DO ask if a project-specific scope is already written. If so, bid that scope and include other items/services as alternate pricing. If one is not written, suggest writing one. If you bid the scope you want to do rather than the scope being bought, the general contractor cannot get an apples-toapples comparison and ends up disregarding your proposal. If a scope isn’t written, that’s your opportunity to write one and bid that.

DO understand the selection criteria before bid day. It’s important to know if it’s a hard bid price only, if it’s price driven or qualifications driven, if it’s a public or private project. The estimating and preconstruction team members will know and should share that information. That way, you can focus on getting a low price or getting the best team.

DO ask about the project schedule and be sure you can accommodate the allotted time for your trade.

DO send your scope, inclusions and exclusions well in advance of when a bid is due, preferably the day before.

If a bid is due on Thursday at 2 o’clock, know your scope and what you’re

going to bid, and send it the day before.

Then, send your number on Thursday.

This is always very helpful. At the very least, you should make contact and inform general contractors whether or not you are going to submit a bid or proposal so that they know what to expect.

DO follow up on bid results. While bid tabs may not be available for some time, feedback is important. It’s okay to call and ask how you did, where you missed, if you were too high, or if you were late. Asking these questions can provide insight that will be helpful to you in the bidding process going forward.

DO present a clear execution plan when given an opportunity to discuss a project further after bid day.

DO conduct a thorough preconstruction meeting before starting any activity onsite. Proper planning time will help all parties succeed.

DO ask for feedback during project execution and after project completion.

DO familiarize yourself with the billing and payment criteria associated with publicly funded projects. If the job is a public project, the payment terms are not always very convenient.

They can be 30 to 45 days with 30 being the most common, and those terms can really stretch a small business.

DO provide a list of similar project experience.

DO look for ways to engage 2nd and 3rd tier small/minority business participation.

DO work with associations that provide assistance, training, and guidance to assist with opportunities to be awarded contracts.

The Don’ts

DON’T commit to more than you can do.

DON’T let the first time the general contractor’s estimating or project team sees your name be on bid day.

They need to know who you are before that point. If the first time someone sees your company name is on bid day, it’s too late.

DON’T have significant inclusions or exclusions that vary from the requested scope of work. If so, discuss before bid day or include those only as additive/deductive alternates. For instance, in San Antonio, the local industry standard is that painting picks up the tape and float. However, in Houston, the painter only does the paint, and tape and float is done by the drywall contractor. So, be aware of the industry norm where you are bidding so that you do not include tape and float in your bid if you are bidding the framing and drywall. If you are a framing and drywall contractor bidding a job in San Antonio and you want to do tape and float, price that as an

Jason Smith alternate. Bid the scope that a general contractor asks for and bid other items or services, such as the tape and float, as an alternate.

DON’T wait until five minutes until the bid is due to send your scope, inclusions, exclusions, and price.

DON’T present opposition to contract terms & conditions, insurance criteria or financial/payment requirements after bid submission. Present your concerns as soon as possible. If you are concerned about what the terms and conditions are, not having the right insurance, or being able to handle the job financially, present your concerns right away. If you don’t know what those requirements or things are, ask.

As soon as you know you have an issue with something, just speak up. A lot of people do.

DON’T start work onsite without a well-discussed plan that includes safety, quality, schedule, manpower, equipment, and material deliveries.

DON’T be unwilling to seek assistance finding local sources to meet bonding and insurance requirements. A lot of subcontractors or small businesses are not bondable because of their size. But if you want to do larger work, general contractors are most likely going to want to bond you. Understand that before you submit the bid.

DON’T be deficient in paying bills timely.

DON’T be reactive to planning and managing your projects.

While Smith emphasizes that this is purely the perspective of SpawGlass, he hopes that this will provide some insight and guidance to small business subcontractors who are bidding work and trying to get their businesses off the ground and keep them on a good path to growth.

“We want to see lots of contractors – small business and otherwise – do well,” says Smith. “And these are the things that, historically, when you do these things and you don’t do these things, we typically see people very successful.”

Feature Publication Supplement to San Antonio Construction News – August 2017

S H O W C A S E

C

R

aymond Martinez leads the Low Voltage Systems Department with more than 26 years of experience.

This department encompasses data communications, security systems, CCTV and fire alarm systems. He runs the projects with two extremely seasoned project managers and six veteran technicians and a variety of specialty products. Of course, everyone also obtained certifications in Panduit, CommScope and Ortronics, but once that was complete, it only enhanced their field of knowledge as they went out to perform their work. All four techs, in addition to Martinez, are ITS Technician certified, which is equivalent to a state license for electricians.

A benefit the new division brings to Capital is that it serves as a one-stop concept.

The new division has impacted Capital as a small and diverse business, and its work complements the other divisions. As most companies working in data communications and security know, specialty product certifications are difficult to achieve, not only to find the right staff, but to identify the future projects and what that profitability might be. Capital’s leadership has allowed Martinez a unique opportunity to identify projects that called for both

electrical and data or construction, fire alarms and electrical. This type of target has aided Capital in providing more broad based opportunities to self-perform on a greater number of projects. This is in addition to being more attractive to other companies who are looking for joint venture or teaming partners. It’s similar to learning that your friend of 20 years has a great new skill to offer. It opens doors that were never available to you in the past.

For the customer, it allows a more streamlined approach to deal with one or two contractors versus 10 different ones.

The new division promises to add to the company’s rich history. Davila established HJD Capital Electric Inc. in January 1994 to focus on the electrical industry and its need for minority contractors. In 2013, he furthered the mission by adding a Construction

Division to its repertoire. In 2015, the Low Voltage Systems Department was added and later that year, a small Worldwide Construction Department was also added.

Each staff member is encouraged to take the years of blood, sweat and tears Davila has put into Capital and make it an even greater place to work and prosper through new diverse projects, untraditional partnerships, mentoring other small companies and giving back to the community through volunteerism.

Today, Capital is still locally owned and operated by Davila with support from David Wineman as the vice president. Together, their mission is to demonstrate and support a strong work ethic and an enhanced selfperformance, all with a family-style atmosphere.

continued from 4 – Page Bexar County Small Business & Entrepreneurship Department

sources, information, and an expansive network of professionals.

In partnership with the San Antonio Chapter of AGC, the program has had over 160 graduates since it started in 2007. The AGC/Bexar County “Basics” of Construction Training Program is designed to assist small business contractors in understanding the basic elements of running a commercial construction business. The sessions include elements of running a successful construction business, project scheduling, financial management and understanding contracts. Liens, estimating, project management, safety, business development, insurance and bonds were other important topics that were covered. The course material focuses on both technical and administrative skills, with a special emphasis on how to do business with Bexar County.

The U.S. Department of Transportation’s Bonding Education Program (BEP) is a free program tailored to small businesses competing for construction-related contracts in the transportation industry. The program consists of a comprehensive set of sessions designed to provide small and disadvantaged businesses the tools and resources required to compete for transportation projects. The Bonding Education Program’s goals are to educate small contractors about industry challenges and to assist participants in their efforts to obtain surety bonds or increase their bonding capacity. Participants will interact

with service providers and bond producers, and learn how to conduct business with local, state, and federal transportation agencies.

The Mentor-Protégé Program is a two year commitment where the protégé, their mentors, AGC, and the County Mentor-Protégé Program Manager work together to help develop the protégé firm’s marketing, operations, and financial performance strategy. There are five current and nine graduates of the Mentor-Protégé Program. The program exists to build effective working relationships between leaders of mature established companies and locally-owned small companies so that newer companies can benefit from the knowledge and experience of established firms. The Bexar County Small Business & Entrepreneurship Department is dedicated to the growth of small, minority, and women-owned businesses in Bexar County. With the launch of our newly redesigned website and the SMWBExcel program, we are set to help even more small businesses and entrepreneurs succeed To learn more about the Small Business & Entrepreneurship Department, the SMWBE Program, SMWBExcel, or any other information and services we offer, visit us online at www. bexar.org/smwbe, in person at the Paul Elizondo Tower located at 101 W. Nueva St or call us at (210) 335-2478.

Feature Publication Supplement to San Antonio Construction News – August 2017

13

Specialty Certifications

apital started the Data Communications Department to diversify their book of business. Capital found that while there was a tremendous amount of competition within this industry, there were few minority contractors in San Antonio. In addition, those who did have the background did not have the years of experience in construction and electrical as their staff did. Henry Davila, owner of Capital, felt his team was diversified and highly skilled enough to present a nice advantage within the Low Voltage industry. Within the last two years, the Low Voltage Systems Department has grown by leaps and bounds to everyone’s astonishment due to their team support and community relationships.

Specialty Certifications

Contracting Tips

Contracting Tip: How to Master Your Capabilities Presentation

A

re you positioning your company to develop relationships with your target customers?

If you had 15-30 minutes with your target customer, what would you tell them about your company to make your firm stand apart?

As a small business pursuing local, state, and federal contracting opportunities, it is extremely important that you aggressively seek to establish relationships with your target customers (especially if you are 8(a) certified). By establishing relationships with your potential customers, it could lead to your firm being solicited for opportunities not posted for the general public to view, it could lead to you being notified ahead of time regarding future projects or contracts in the works, and it could help you tremendously during the proposal evaluation process (customers generally like to go with companies whom they are familiar with).

Each local, state, and federal agency has a designated supplier diversity coordinator or small business specialist who serves as the initial starting point for vendors seeking to do business

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with their organization. This is the person you should reach out to via email (attaching your capabilities statement) and via phone to schedule a face to face meeting (typically 30 minutes). I want to encourage you to be persistent in your follow up until you are able to get an appointment.

During this 30 minute meeting, you will have the opportunity to present your company’s capabilities, to learn about their agency’s needs, and to listen to any tips or pieces of advice that they can offer to help you do business with their organization. Since these capability briefings could lead to potential revenue for your business down the road, they can be a vital component to your company’s success. As such, I wanted to provide you with a few tips to help you maximize this opportunity:

Tip #1 - Listen More Than You Talk I highly recommend that you do not spend the entire meeting with your customer doing all the talking without allowing them to get involved in the conversation. You should be able to summarize your company’s capabilities and your past performance within 5-10 minutes (beyond that you’ll lose their attention). After explaining what your firm can do, start asking your customer questions to learn about their needs related to the products/services you provide, and what upcoming projects they may have.

Ask them about the organization’s

vision for the future and the direction they are heading in to discover if your firm can help them reach their strategic goals. This information could be useful in preparing future proposals. Additionally, ask the POC for tips regarding what they like to see in proposals or what pitfalls to avoid when doing business with their organization. Most importantly, ask them if they can give you the contact information of (or introduce you to) an actual end-user or customer who has a need for your products/services so that you can develop a relationship with them as well. In this regard, you will glean a tremendous amount of useful information and make a better impression if you do more listening than talking during this meeting.

Tip #2 - Value Differentiators In today’s business climate, the market is saturated with a large number of competitors in your industry who offer similar products and services. In most cases, your customer has met with plenty other companies that are similar to yours. The last thing you want your customer to think about your firm is that you are just another staffing company, you are just another IT business, you are just another service provider, you are just another construction contractor, or that you are just another reseller of a manufacturer’s products.

I recommend that you take the time to clearly articulate what sets you apart from your competitors, whether it be

your extensive past performance, your successful track record managing projects, your industry experience, your company’s licenses or certifications, your competitive pricing (particularly if on GSA Schedule, DIR, or TXMAS Contract), etc. This will cause you to stick out in the mind of your customer.

Tip#3 - Be Professional/Display Professionalism

You only get one shot at making a first impression on your customer, and one way to ensure that your first impression is a good one is by being professional (which seems to be a lost art). Be on time for your meeting (don’t keep them waiting). Dress like a professional who wants to be taken seriously.

Keep your conversations on a professional level. Make sure your marketing materials and content look professional (your website, business cards, brochures, capabilities statements, etc).

Tip #4 - Don’t Go Empty-Handed/Take Gifts I recommend that you do your due diligence by researching each agency’s policy regarding accepting gifts from contractors, but in most cases you can offer your customer a gift or a take-away as long as the value of the gift does not exceed $25. Offer your customer promotional items, gifts or novelties containing your company’s information for them to keep (get creative!). If possible, do some research on the person whom you are meeting with to discover their hobbies, continued next page

Feature Publication Supplement to San Antonio Construction News – August 2017

The 3 Financial Statements You Need to Keep Your Banker Happy

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hether you’re looking to get a line of credit, plan for tax payments, or simply identify strengths and weaknesses within your business, keeping clear and accurate records is vital for business owners to succeed.

But managing your company’s finances can be daunting, and there are many ways your financial reporting can get on the wrong track. To make sure your finances run as smoothly and accurately as possible, it helps to simplify.

T

here are three primary financial statements business owners need to focus on to ensure their companies operate effectively.

1. Cash Flow Statement

2. Balance Sheet

Balance sheets are snapshots of what you own (assets) at a particular point in time, and what you owe (liabilities). The difference between those two totals is what you have left (equity). They are another one of the most important financial reports business owners need to be approved for a line of credit.

But as Quickbooks expert Margie Monroe says, you shouldn’t only be preparing these documents for times when you have to present them. You can also use balance sheets to run your business. Having an accurate balance sheet is vital because it allows business owners to reliably evaluate their company’s profitability.

To quote Philip Campbell…

• Your gross margin is only as accurate as your inventory • Your sales and bad debt expense are only as accurate as your net ac-

continued previous page — How to Master Your Capabilities Presentation

interests, school affiliations, etc. and tailor your gift accordingly.

Tip #5 – Follow Up After the initial meeting, I recommend that you continuously follow up with the POC(s) that you met to maintain a consistent level of communication with your target customer on at least a monthly basis. This could be accomplished by setting aside 1 hour a week to send follow up emails with your capabilities statement attached to see if there are any current or upcoming projects related to the products/services offered by your company.

I firmly believe in the saying “out of sight, out of mind,” and by following up with your customer via a phone call or an email on a monthly basis, it increases the likelihood that your customer will remember your company the next time an opportunity arises in your industry. I believe that by adhering to these tips, you will put your company in a good position to make a positive lasting impression on your customer, thereby helping you to develop a business relationship that could lead to potential rev-

enue.

CONCLUSION By following these tips, your company will be likely to make a lasting impression on your target customer, and put you in the best position to receive the information needed in order to successfully do busness with their organization.

Mr. Aaron C. Sams, PMP, MCM (Service Disabled USAF Vet.) President/Senior Consultant SAMS Contracting Consulting & Training LLC Level II Certified Acquisition Professional - Contracting Licensed Real Estate Agent (Texas) Licensed Commercial Insurance Agent (Texas) Certified Mediator (Texas) 4063 East Houston St San Antonio TX 78220 P: (210) 788-1034 E: aaron@samscct.com www.samscct.com

Feature Publication Supplement to San Antonio Construction News – August 2017

counts receivable • Your repairs and maintenance (and related expenses) are only as accurate as your property and equipment balances • Your overall operating expenses are only as accurate as your accounts payable and accrued expenses.

Ed Lette Business Bank of Texas

Though it may take some time, it’s valuable for business owners to fully understand their financial statements and become completely familiar with their balance sheet.

ferent ways to do this…

3. Income Statement

Income statements play a key role in a company’s ability to evaluate the financial health, value and growth.

When effectively executed, they can also be used for financial projection, estimation of project viability and goal setting.

The income statement, balance sheet and cash flow statement are generally considered the most important documents for evaluating the financial state of a company. By keeping accurate records of each of these important documents, business owners can ensure they’re in control of their company’s finances and position themselves for approval when applying for a line of credit.

Additional articles can be found at the Business Bank of Texas website at the Business Resource Center. https://www.businessbankoftexas. com/business-resource-center Ed Lette is founder, president and chief executive officer of Business Bank of Texas, N.A. and serves as chairman on the company’s Board of Directors.

Serving as a licensed CPA since 1983, Ed’s extensive experience in the banking industry has led him to become the founding president of four national bank charters including Business Bank of Texas, N.A., and the chief financial officer of five national banks during his 45 year career.

Income statements weigh a company’s revenue against its expenses to calculate profits. These statements can be prepared on a monthly, quarterly or annual basis to measure a company’s profits on a macro or micro level. The benefit of keeping accurate monthly income statements is that, over a period time, companies can evaluate where expenses can be reduced and identify potential opportunities to increase profit overall.

Income statements are created by first measuring total sales. To do this, cash-based businesses will simply add up the total cash received during that designated time period while accrual-based companies will recognize transactions once the goods have been delivered (regardless of whether or not they’ve been paid). Businesses that fall under the latter category would also include accounts receivable as revenue.

The next step is to calculate all of your business’s expenses. This means adding up all of the money spent by your business in order to produce revenue.

That list of items includes: cost of goods, services general/administrative expenses, employee compensation and marketing efforts.

The final step is determining your company’s profit. There are a few dif-

• Gross Profit • Operating Profit • Net Income

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Commercial Lending

Although the concept of cash flow is relatively simple (cash coming in vs. cash going out), accurately measuring cash flow can be difficult for business owners. A survey conducted by cash flow expert, Philip Campbell, found that 82% of business owners said they did not feel like they had the cash flow of their business under control. As cash flow is essentially the lifeblood of a business, this is a troubling statistic.

One of the biggest challenges encountered by entrepreneurs and small business owners is that they’re forced to use tools that were designed with accountants — rather than business owners — in mind. But cash flow doesn’t have to be overly complicated.

Preparing clean cash flow reports begins with being able to answer one question: What happened to the cash last month?

As Philip says, answering this question should only take you 10 minutes of work, and you should be able to explain that answer in a short, 2-minute conversation. To simplify this process, we recommend spending 10 minutes

each month on a Cash Flow Focus Report to get your numbers in order.

After you’ve done this for a few months, you’ll be able to spend less time worrying about the state of your cash flow and more time making informed decisions for your business.

You’ll also be able to more easily prepare an accurate cash flow statement for your banker.

Small Business Certifications and Success

S

ince Gabriel Lomas founded GL Contracting 17 years ago, he has had to overcome many obstacles to successfully grow his business and earn multiple certifications that have opened his company to even more growth.

Certifications and Success

E

ager to extend the reach of his fellow small, diverse, and veteran business owners, Lomas shared the wisdom of his experience that extended his reach within the construction industry after starting up his own general contracting company.

One of the first obstacles he faced was that the resources available to him when he was just getting GL Contracting off the ground were not very userfriendly. He couldn’t find resources where information was written plainly and clearly stating what the processes were or where to go to get your certifications.

Lomas researched resources through the Small Business Administration (SBA) and the UTSA Small Business Development (SBDC) Procurement Technical Assistance Centers (PTAC). He also used online resources and his connections in the industry to find out how to get started, where to go, and where to find projects to bid.

Another obstacle that arose in seeking out the answers to his questions was that he discovered that there were prerequisites to applying for those certifications. He notes that before setting out to get your business certified, you may first need to have a LLC filed, a bank account established in the company’s name, general liability insurance, as well as other elements.

Yet another consideration is that these certifications and the qualifications required to pursue and obtain them cost money. You may need an administrative employee to put together the paperwork. There may be financial documentation or statements you need to have prepared. There may be fees to set these moving parts in motion, which may include paying a consultant to do some of the legwork on these certifications or to handle the certification process for you.

There are some certifications that Lomas explains are easier than others to apply for yourself, but there are also more in-depth certification processes when you want to work for entities such as the federal government that can be more complicated and entail a lot more than local or state certifications. He adds that there are also some costs in getting some of those certifications.

The solution to tackling this challenge is also relevant for several other obstacles the small, minority, woman, or veteran business owner may run into getting started or trying to grow and expand.

Getting the finances in place to start your business, to work toward certification, and to run your business efficiently while growing manageably is the key to success in many arenas.

One of those arenas is business development and marketing. When you’re self-performing all of your work, both in and out of the office, you also have to make time for business development and marketing, at least until you have the revenue to start hiring other people to help in these areas of your business.

“The main thing to overcoming those obstacles would be if you have people in your office to do business development or marketing or estimating, continually researching and looking for new project opportunities,” says Lomas. “You’re going to have to continually touch base with the people in that industry, general contractors, architects, and engineers. A good tool to have is either a Blue Book

16

or a Virtual Builders’ Exchange – some kind of subscription to let you know what work is being bid.”

Lomas states that there are tools and opportunities out there, such as SBA programs and even luncheons where you can find out if SAWS is looking to fulfill a requirement for a percentage in a certain diversity group. He advises figuring out who you want to work for and then finding out where those entities solicit for their work. He points out that the City of San Antonio, Bexar County, and TxDOT all have their own websites for these purposes.

As you’re trying to grow from working on two jobs to having a steady backlog, Lomas says, “Your general business and your daily revenue are going to be based on who knows you’re out there and that you can perform the work that you’re actually doing.”

To do the necessary hiring to help you with these tasks, finding the financial balanced threshold between having people wearing many hats – or wearing many hats yourself – and hiring new people to fill more positions, cover more duties, and take on more responsibilities that come with building a healthy and steadily growing backlog of work.

How quickly you can hire qualified personnel will depend upon fiscal revenue. While you may be ready to take on employees, Lomas cautions that you should weigh how payroll for those new hires will affect your business against how it will impact your financial stability. He emphasizes that once you make the commitment of bringing more people onboard, that overhead starts accumulating immediately and adds up every week and every month.

“You have to get the backlog, win the work, and forecast the work that you will win to be ready and start looking to commit to new employees or new consulting to help you grow,” he explains. “Wait until you win the work or the work is contracted, and then immediately look for the people and resources you need to complete the contract.”

GL partners with other contractors on some projects, either through teaming or joint ventures, such as their joint ventures on airport work with DRH Construction, in order to break through the threshold.

With these partnerships, GL has been able to do more, build its equity in the company, and build its line of credit. Lomas notes that in building your line of credit, you will have more resources at your disposal to take on an estimator or a superintendent to help you get through more work.

“If you’re doing it on a cash or revenue basis, it’s really hard to bridge that gap unless you have a product or service that is always backlogged, and so you know you’re going to have the daily income and revenue to support new hires, new techs, or new estimators,” he observes. “Once you have a steady, revolving workload, as you go into different types of work or larger projects, you continually have to work on that side to make sure that you’re out there, bidding, doing the work, so that can help with the next step as far as going to the next level.”

Again, the key to overcoming this obstacle is building up your revenue in the beginning and creating a backlog. Lomas adds that finding the right bank that will be able to help you grow is also very important to this process.

One last obstacle worth mentioning is that the regions and requirements for certain percentages of jobs allocated to different diversity groups change.

Lomas says that spending shifts, and it’s not that every diversity group gets 33 percent in allocations all year long across all projects. Right now, for instance, he observes that a lot of projects with emphasis on woman-owned participation are coming out, which isn’t a certification GL Contracting has or can attain.

With that being the current direction of the work he typically pursues, Lomas and his company have to pursue more projects in the open market, which is highly competitive.

When you don’t have the certifications that are the focus of jobs coming out at the time, you should consider if you can look into getting those new certifications or if you can start another teaming agreement or joint venture with a company that has those certifications.

At the same time that he attributes a lot of value to being certified, Lomas also cautions that certifications do help when you are bidding to a general contractor that needs to fulfill requirements for those percentages, but a certification doesn’t guarantee you the job.

“It always falls back to your self-performance capabilities, the financial capabilities of your company, and your past performance to really win you work,” he says. “I would stress that those are probably a little bit more in the forefront than your actual certifications.”

Overall, Lomas says that getting your revenue up and working to build your company encompasses a broad scope of obstacles that small, diverse, and veteran-owned companies face, and his accumulated wisdom on using your revenue to grow successfully can be summed up in this piece of advice.

“I would say the biggest thing is to invest in your company,” he emphasizes. “Invest in what works, and invest back into what gets you more work. If equipment gets you more work, if manpower gets you more work, if you can get into a different specialized industry or find one that you can partner into – spend money where you think it will return money for you. Don’t spend it on a nicer office. Don’t spend it on anything unless you think that thing can produce something for the company. Spend it on the things that you think will help the company work more efficiently or open up the opportunity to bid on more types of work. Make sure that the money in the business stays in the business as it’s growing. People should invest in their business, whether it’s time or money, and you’ll see the return in that.”

Established in 2010 and headquartered in San Antonio, GL Contracting does government work, TxDOT airport improvements, and commercial construction and renovation. The general contractor has 8A, DBE, HUB, DIBE, MBE, ESBE, HABE, SBE, VBE, and SDVOSB certifications.

Feature Publication Supplement to San Antonio Construction News – August 2017

Lessons Learned While Overcoming Obstacles

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roudly born and raised on the south side of San Antonio, my four brothers and I (yes, I was the only girl) had our fair share of adventures of fun and survival. I’ve been “running side-by-side with the guys” since I can remember! I have approached my life and career with the same sense of adventure as I did growing up. Not sure that it’s truly untraditional, I just know what I know and I followed my own path.

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ly, I have always found it easy to connect with people as I genuinely care to learn more about them.

I believe we all have something to offer and that it’s so important to share and learn from each personality.

Historically and locally, many small businesses started from zero like I did. We can connect by asking “how did you do Julissa Carielo, Owner this” and “be careful with that,” Tejas Premier Building Contractor, Inc. etc. I think sharing information by giving and taking advice is really what inspires us to want to do more. That is one of the pillars of the Maestro Entrepreneur Center - a business incubator organization based on the historic west side of San Antonio.

Times are changing as the younger generation is becoming stronger and more informed. They are asking more questions and easily take risks. They are more integrated than we were as kids. I believe this will definitely change our industry and our community should be more united. I know I see my kids and their friends have this sense of confidence that I did not have growing up. They truly believe they can do anything and they will.

Diversity Projects

Mark Langford Photography

A T & T Center

Mark Langford Photography

Alamodome Feature Publication Supplement to San Antonio Construction News – August 2017

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Overcoming Obstacles

hen I started working in the construction industry over 22 years ago, it was not common to see small minority firms competing as primes, or even to see women in the industry. My passion and expertise for the construction business inspired me to start Tejas Premier Building Contractor, Inc. 11 years ago. To this day, I love the industry and the people we work with take pride in what we build. Being a trailblazer has its risks and yes it’s difficult, but the passion for my company drives me to find innovative ways to succeed.

The biggest challenge has been managing people and developing processes. Tejas Premier has been growing rapidly and at times it feels like we don’t have time to catch up. It’s not an easy task, but I embrace it because I believe strongly that our people are what make Tejas Premier great.

When a new employee comes on board, it’s very important to me to make them part of the Tejas Premier Family ASAP. Employees need to know they are part of our success. No, we are not perfect and we do not know everything, but we continue to refine and tweak processes until we get it right! At Tejas Premier, improving every day is part of our mission.

Overcoming obstacles comes easier when you are finding YOUR passion and doing what you love. It also makes it easier to stick to the plan.

Finding innovative ways to use technology, streamlined processes and clear strategic goals will forge a path toward success in due time. Building alliances with other small minority firms that share the same vision is key to positive growth and more doors opening. The stronger you can build your network, the stronger our business community will thrive. Fortunate-

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The City of San Antonio Empowering Small Businesses One Contract at a Time

he City of San Antonio is dedicated and committed to empowering local small, minority and women-owned businesses (S/M/WBEs) through a variety of programs that help grow their business.

One of the City’s most significant programs to empower S/M/WBEs is the Small Business Economic Development Advocacy (SBEDA) program, which leverages the City’s purchasing power and offers incentives to promote the utilization of S/M/WBEs on City contracts.

To accomplish its objective, the SBEDA program requires individual review of City contracts to determine the most appropriate tools to promote S/M/

WBE participation on City contracts.

The tools range from evaluation preference points to make S/M/WBE prime respondents more competitive when responding to solicitations, as well as subcontracting provisions for S/M/WBEs in which prime respondents are required to meet.

Each year, the City of San Antonio undertakes numerous construction projects throughout the City and these projects present valuable opportunities for local S/M/WBEs. Recently, the 2017 2022 Bond Program was approved by voters which will lead to 180 projects worth approximately $850 million over the next five years.

Empowering Small Business

Business Empowerment Plan 2016 graduates pose with City and Alamo Colleges staff after their graduation.

The impact of the SBEDA program posal development, managing your San has been successful as demonstrated in Antonio Electronic Procurement System the chart below, which shows the dollars Profile (SAePS), and SBEDA Program respent by the City of San Antonio, overall quirements. Last year, more than 300 and to S/M/WBEs, within the construc- vendors attended these sessions and had the opportunity to meet with City detion industry.

In addition to the SBEDA program, partment representatives to receive onethe City administers the Business Em- on-one assistance as they navigated powerment (BE) Plan in partnership with through the City’s procurement process.

Alamo Colleges which includes the Furthermore, in keeping with the Bonding Assistance and Mentor-Protégé City’s commitment to strengthening the Programs. These capacity building pro- small business community, several regrams begin with a series of courses that sources are available to assist entrepreparticipants complete called the Small neurs at any stage of their business deBusiness Boot Camp. Depending on the velopment. program, the courses include How to The City’s Small Business Liaison is Write a Business Plan, Managing Your Fi- the first stop for business assistance and nancials, Access to Credit, and Market- serves as an ongoing resource for busiing. Once completed, the participants nesses that are growing or may need inare either paired with a mentor for two formation regarding permitting, licensing years or become eligible for a letter of and regulatory issues. The Small Busicredit to enhance their bonding capacity. ness Liaison is conveniently located in Since its inception in the spring of side Launch SA, a one-stop shop located 2012, both the Bonding Assistance and in San Antonio’s Central Library where Mentor-Protégé Programs have assisted entrepreneurs, startups, and small busimore than 150 S/M/WBEs. In addition, ness owners (new or established) can get over 45 small businesses have graduated personal support, information, resourcfrom the BE Plan. Graduates of the pro- es, market data and guidance to start and grams have collectively reported annual maintain their business. Through a partrevenues of $61 million, representing a nership with the City and LiftFund, 24 percent increase from their reported Launch SA has also developed programming to help entrepreneurs launch their revenues when entering the BE Plan.

To increase awareness of City con- ideas or help small business owners tract opportunities and S/M/WBE pro- overcome challenges and build their cagrams, the City hosts “Vendor Orienta- pacity. tions” to help vendors registered in the Any business owner, either estabCity’s Central Vendor Registry (CVR) lished or in their beginning phases can learn valuable information about the visit www.sanantonio.gov/sbo or contact bidding process. Representatives from a the Small Business Office at (210) 207variety of City departments, including 3922 for more information on the City’s Aviation, Economic Development, Fi- programs, opportunities, and resources nance, and Transportation and Capital that are listed throughout this article. We Improvements, cover topics such as pro- look forward to hearing from you!

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Feature Publication Supplement to San Antonio Construction News – August 2017

Insurance for Small Businesses and Contractors The entire responsibility for a construction project belongs to the Property Owner.

This fact influences the insurance that general contractors buy and the insurance general contractors require their subcontractors to carry.

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he owner carries insurance protecting him from the existence of the project. He requires insurance of the general contractor that will adequately protect the owner from his responsibility for the entire project.

The general contractor carries insurance protecting him from the exposures of the work he self-performs and from the exposure of supervising subcontractors.

The general contractor has insurance for his own actions and for the supervision of others, which provides protection for all interests.

Complications occur when one or more of the parties avoid responsibility by shifting liability or failing to protect themselves.

Builders Risk These policies are not standard among companies, however, most have similar provisions: The policy covers the interests of the owner, general contractor and all subcontractors and suppliers.

The policy covers all materials and suppliers incorporated into the project or consumed in construction.

The insurance applies at the project site, at temporary storage locations and while in transit. Storage and transit coverage limits are lower than applicable to the building.

Commercial General Liability Provisions of this insurance that will be helpful for you to understand are: The policy insures against legal liability for bodily injury, property damage and personal injury (libel, slander, false arrest and wrongful eviction or entry).

The insurance applies to liability arising from: Ownership or use of premises Operations in progress Completed operations Supervision of independent con tractors Liability of others assumed under insured contracts Automobile Liability Protects the insured against loss if held legally liable for bodily injury to

Workers’ Compensation Provides statutory coverage for the Workers’ Compensation Act. The policy pays benefits according to the Workers’ Compensation Statute. Another part of the policy covers employers liability (a claim that is outside the Act such as willful or gross negligence). The limits required are for accident and disease under the employers liability portion.

Excess or Umbrella Liability This is liability insurance with the same or similar terms as Commercial General Liability, Automobile Liability and the employers liability portion of Workers’ Compensation.

The policy functions to raise liability limits above the underlying policies.

Umbrella limits are in $1,000,000 increments. They will meet a requirement for limits higher than the underlying policies provide.

The named insured is the person or organization shown as such in the policy, which may be either a property owner or a general contractor.

The designated contractor is the person or organization that has purchased the coverage to protect the named insured.

Priorities of Standard Requirements Remember from the introduction that insurance requirements exist to assure everyone protects against his own negligence and negligent supervision of others.

ADDITIONAL INSURED: An additional insured endorsement has two problems in meeting the goals: Both the subcontractor’s policy and the general contractor’s policy have other insurance provisions that prorate the policies in losses involving the additional insured.

Losses involving both the named insured and the additional insured are subject to one policy limit, reducing the amount potentially available to each.

INDEMNITY AGREEMENTS: Subcontractors who read these agreements often oppose indemnifying for sole negligence. Their trade groups advise against it and courts have been very strict in approving such agreements.

WAIVERS OF SUBROGATION: Subrogation refers to an insurance company acting to recover a paid loss from a third party. The waiver is used to isolate the general contractor’s program from losses covered by a

Feature Publication Supplement to San Antonio Construction News – August 2017

subcontractor’s policy. The waiver removes the general contractor from responsibility for his own actions.

Be wary of these clauses: The subcontractor agrees to defend, indemnify and hold harmless the general contractor and owner from and against any claim, cost, expense or liability attributable to bodily injury, sickness, disease or death, or damage, loss or destruction of property, caused by, arising out of, resulting from or occurring in connection with the performance of the work by the subcontractor, whether or not caused in part by the active or passive negligence or other fault of a party indemnified hereunder.

The subcontractor assumes full responsibility for any and all damages, death, or injury of any kind, including any injury or damage to all persons, whether employees or otherwise, and property arising out of or in any way connected with its work and shall to the fullest extent permitted by law defend, indemnify and hold harmless owner and contractor from and against any and all claims, losses, damages, legal and otherwise arising out of or in any way connected with subcontractor’s work.

The subcontractor agrees to assume the entire responsibility and liability, to the fullest extent permitted by law, for all damages or injury arising out of , resulting from or in any manner connected with, the execution of the work by the subcontractor and the subcontractor agrees to indemnify and save harmless the contractor from all such claims.

The subcontractor releases the general contractor from, agreed that the general contractor shall not be liable for, and agrees to hold the general contractor harmless against any loss (including attorneys’ fee) or damage to property, or any injury or

Tom Hewitt, BDI Insurance

death of any person that may be occasioned by any cause whatsoever pertaining to the project or subcontractor’s work.

In the building and subcontract negotiation process, subcontractors should strive to limit the indemnification obligations in the following ways: The scope should correspond to available contractual liability insurance coverages by encompassing only claims for personal injury, death and property damage arising out of negligent acts or omissions of the subcontractor or parties for which acts the subcontractor is responsible.

The indemnification language should not expressly or by implication require the subcontractor to indemnify another party for the consequences of that other party’s sole negligence.

The subcontract indemnification provision should be modified so that liability is predicated upon the comparative fault, and only proportionate to the relative fault attributable to the subcontractor, by including qualifying language such as: “provided, however, that such duty to indemnify shall only be to the extent caused in whole or in party by the negligent acts the subcontractor may be liable.”

The subcontractor should consult his attorney before accepting any liability for another’s wrongful or negligent acts.

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Insurance

Types of Project Insurance: The responsibilities discussed in the introduction result in the following types of insurance required on a construction project: Builders Risk Commercial General Liability Automobile Liability Workers’ Compensation Excess or Umbrella Liability

others or for damages to property of others caused by an accident and arising out of the ownership, maintenance or use of an automobile.