Articles tagged with: scam

Small Business Scams and Pitfalls

on Friday, 07 March 2014. Posted in Techniques & Strategies

As I tell our clients, everything you do comes down to two and only two outcomes. You are either increasing revenue or you are decreasing costs. Every business function supports one or the other. I'm going to take a different approach this month. Instead of providing techniques and strategies to increase revenue, we're going to discuss a couple of ways to protect the money you're making today - or decreasing your costs.

Over the last five years, we've worked with hundreds of companies and presented sessions to thousands more. One of the advantages of working with other companies is that we get dozens of emails every week asking if this email or that email is legitimate or what I call an "unethical money grab" that you should run away from.

While there are many more, the following 8 scams or pitfalls have reared their ugly heads more often over the the last six months:

1. Paying another company to do your 8a, WOSB, SDVOSB, or GSA Schedule. On average, most companies take approximately twelve months to complete their own GSA Schedule application and this is before the current nine month certification timeline once submitted to GSA. I should note that this average is based on discussions I have personally had with several hundred companies over the last several years. There are companies, which I call "GSA Application Sweatshops" whose sole service is facilitating, consolidating, submitting, and negotiating your GSA Schedule. There is a reason these companies exist. From personal experience, half are legitimate. Half are con-artists. For full transparency, RSM Federal does perform these services but as a boutique offering when combined with other services and we outsource this to who we consider one of the most knowledgeable application firms in the country.

I've also seen an increase in companies that provide application "consulting" services where you get training and you're responsible for submitting and negotiating the application. These companies require you to fill out the application but provide you with subject matter experts who will "answer your questions and keep you on track." If you can find a reputable firm who has the necessary expertise to make your life easier, you're good to go. This is no different from companies that do the entire application for you.  Neither is better than the other. The training companies came about because they recognized that a section of their target market, small companies, didn't have the cash flow. So they train you to do it yourself and are available when you have questions. Whether you pay $2,000 for training or $6,500 to have it done for you, neither is better than the other.  It comes down to what you can afford, your current level of understanding the GSA process, and the strength of the organization supporting your schedule effort.

And that brings us to GSA Schedule application pricing. Companies charge between $1,500 and $28,000 to complete your schedule. Those that promise or guarantee expedited GSA processing will charge more. The problem is that most of these companies are lying through their teeth. There are three ways to expedite a schedule and all of them are almost impossible to attain. In my opinion, if you're going to pay for GSA Schedule application services, it should be between $4,500 and $7,500. Are there companies that can do it for less and do it well? Of course there are. But I know how extensive the application process can be and the amount of time it takes. Companies that do these applications for less than $4,500, if they spend the right amount of time and ask you the right questions, can't stay in business if they don't make any money. Then you have companies that charge more than $7,500. I know of one company in Washington DC that charges $28,000. That's just plain ridiculous. The owner told me that all he has to do is "convince four companies to pay that amount and he can vacation most of the year." Now here's the strange part - his clients get their schedules but he also tells them that he will help market their services. In other words, you're putting him on retainer for 12 months. Is he strong enough to help your company? I'm not sure - he understands the federal space but the question is whether or not he understands small business and how to help you position in the market?

Bottom line. There is no right answer and there are thousands of companies that are offereing these services. But before you decide, you have to figure out if you and your company is capable of doing it on your own with some help here and there. Final point - for a number of our clients, we don't even recommend that they get a GSA Schedule. . . really. If you have any questions on this, contact myself or a member of the team and we'll help you make the right decision.

2. Dun and Bradstreet Credibility Corporation (DBCC). Dun and Bradstreet provides a very important service. They provide you with a free DUNS number in order to register with the Government's System for Award Management and every government contract (not counting micro-threshold purchases) requires your DUNS number. But they don't harass you. But Dun and Bradstreet Credibility Corporation harasses tons of small businesses with some very unethical scare tactics. They call to tell you that several companies have accessed your profile and due to an incomplete profile you are losing business. Don't fall for it. Ever heard of rippoffreport.com? Look them up. Don't waste hundreds or thousands of dollars.

3. Small Business Teaming Services. It's funny, but I've found this is a fairly standard service offering for new startup consulting folks that target companies like yours. On the outside, it's a phenomenally strong concept that every company should be doing. For example, one of RSM Federal's core strengths is Programmatic Teaming Strategies. However, what is the value of some guy or gal connecting with you with other companies? Better question - why aren't you doing this yourself? Companies that offer you teaming services almost always offer you consulting services as the primary service. So when you get pitched this service, don't focus on "being connected to other companies" - focus on whether or not the consultant or firm is an expert in government acquisition. It's really that simple - don't pay for teaming services. Pay for expert consultation and teaming services should be a no-cost value-add service.

4. Marketing Catalogues or Books. This one is legal but highly unethical. There is a fairly large industry for these services but the market does not exist . Most companies are used to paying $500 to $3,000 for a quarter or full page advertisement in their local paper or an industry magazine. In fact, RSM Federal just spent $1,000 on such an advertisement. But there are at least a dozen companies I'm aware of that create two to three inch thick catalogues, separated by industry, with quarter and half-page ads for hundreds of companies. They distribute these to approximately 25,000 contracting officers in the Federal government. The only problem is that if contracting officers need to find a company, they do it online via existing government vendor systems. Never pay for this. Money down the drain.

5. Outsourcing Proposal Writing. I recently met a gentleman by the name of Steve Krause who is a Principal with Catalyst Partners in Washington DC. Where we both help businesses grow, we focus on different segments within the market. But we both agreed that there are two terrible decisions a business can make. One is outsourcing your sales and the other is outsourcing proposal development. First it's expensive. Second, it's learning how to think and position which provides a company with the most value. Having a copy of another company's proposal provides you with a template - but it does not help you understand how to strategically plan and design a proposal response. RSM Federal will not write another company's proposal. We've been offered a lot of money to do it and because we know it's absolutely not in the Client's best interests, we have an ethical and professional responsibility to decline. There are techniques and strategies to increase your maturity in this area but outsourcing it is not one of them.

6. Speed Dating Events. Okay, that's what I call them. DoD and various federal agencies call them by other names. It's when you sign-up for an event and you get five minutes with someone and then move to the next table for another five minutes, and you do this for an hour. If you go in with the objective to sell - don't go. If you've never been to one of these and you decide to attend without understanding how to approach these events - don't go. The majority of the folks you meet are not decision makers. The majority of companies attending are in the same boat as you so plans on meeting other companies in order to team with them is not a strong strategy. Most companies waste their time at these events - not because they can't be valuable, but because they don't understand how to approach the event. For small and large business alike, cash flow is king. Don't waste it.

7. Cold Calls. Because RSM Federal is a registered government vendor, even we get two to three calls per week. Drives us nuts. Makes me want to staple the CAN SPAM anti-spam act on their foreheads. We're all in business to make money. Some companies are very good at what they do and others are one or two folks who couldn't find a job, put up a sign on the outside of a vacant building, and told the world they're experts who can get you a $1 million contract in ninety days. When you get a cold call, you really can't tell the difference. Well. . . I can because I know the four or five questions that will immediately tell me if they are competent. But this is also what I do for a living. I'll give you the first question - "What is the URL for your website?" and you ask them to wait while you pull it up. Half the time, you'll quickly be able to identify if they know what they're doing or if they just need some quick cash (your hard-earned cash) until they can find another job. Unfortunately, these are the folks that everyone refers to when they say, "Oh, I've used consultants. . . oh yes I have. .. and I can tell you I spent money and didn't get anything for it." Ask yourself this question: "How many times have you actually paid for services from a cold-call?" Not many. If you're looking for a quality consultant, advisor, whatever term you pick to help your business grow - talk to your colleagues and friends. Get a referral. Yes, exceptions always exist but are you really willing to take that chance?

8. Gmail, Hotmail, and Yahoo Email Accounts. This primarily applies to entrepreneurs, start-ups, and young small businesses. If you're doing business under one of these email accounts, you are severely impacting your brand, your credibility, and the opportunity to make money. If you don't have a an email address where the domain is the name of your company, e.g. @rsmfederal.com, then you're not serious about your business. This is not meant to hurt anyone's feelings. Starting a company is hard and you have to prioritize all of the activities it takes to be successful. But your email domain should be a key priority. Most business owners delete these emails without reading them. Now here's the good news. If you need a professional MS Exchange email account, there are dozens of options online (including Go Daddy) where you can have email for $100 - $200 a year. While RSM Federal's website is managed by another firm, our email is through GoDaddy. Something to think about.

 

Which key ones did we miss? Let us know examples you've had to deal with. 


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Joshua P. Frank is Principal and owner of RSM Federal, a federal consulting and business-acceleration strategy firm that represents small and large businesses in accelerating the education and processes necessary to win government contracts. For more information and videos about RSM Federal, please visit www.rsmfederal.com   

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