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How To Read Your Construction Industry Financial Statements
By Tony Burruano
How to Read Your Financials
Many smaller and mid-market companies in the construction industry find that critical information is misunderstood or ignored because their reports and schedules are inaccurate, often because the reports are used primarily as a tool for the accountant to prepare a tax return or to fulfill a bank-reporting obligation, so they do not contain enough information for you to control your business.
But your reports and schedules, when organized, will inevitably help your profits. They represent the "financial control" of your business. It is imperative to understand how to read your financials.
A Balance Sheet
In simple terms, a balance sheet is a snapshot of the assets and liabilities of your company in a particular moment in time. It shows where you stand with what you own and what you owe on a particular date. Your assets are listed "at cost" minus any depreciation or amortization taken over the ownership period of the asset; nothing is shown at fair market value. Your balance sheet should list the amount of money the stockholders will receive before capital gains taxes on liquidation, plus or minus the fair market value of the assets versus the value stated on the balance sheet, (or the "short fall" if there is a negative equity).
The purpose of the balance sheet is to control the accuracy of the income statement. If your balance sheet is substantially inaccurate on the opening or ending date of the income statement period, then the income statement will be substantially wrong. For example, the income statement for the year ending 12-31-06 would need an accurate balance sheet dated 12-31-05 and 12-31-06.
I met with a new client recently whose accountant not only lost his records for the past three years, but could not locate his records for the current year. Knowing that accountants do not ever lose that many records and knowing that accountants normally back up their computer records, I knew we had a big problem. My client thought he had generated about $6 million in revenue from the past twelve months as a result of the revenue generated from his high-end New York City co-op remodeling projects. He had pretty good job cost and billing data but needed bank financing. He had a horrible bid-to-award ratio, and he needed guidance with his plan of revenue and profit for his company.
He needed to know:
� What his margins should be in order to win bids
� How to identify who his customers should be
� If his bid margins allowed for profit after general conditions and overhead
� Whether he was making money or losing it
� What had happened to his business over the last three years
My client and I were in a situation where we could not wait for his new accountant to slowly reconstruct his last three years of records, so we sat down and created a balance sheet. I interviewed him to determine what he owned and owed, located records which included his bank statements; accounts receivables; retainages receivables; an inventory of his trucks and computers; his vendor and subcontractor payables; the amount of debt on his trucks, cars and equipment; the jobs he had in progress; and the estimated costs of those jobs to complete. With that information, I created a balance sheet that covered the beginning and the eleventh month of his fiscal year.
Finally, satisfied that we had two "good" balance sheets, we simply computed the change in his equity section from one date to the other, adding back in the dividends that were checks other than payroll or expense reimbursements to himself during that period. Then, we looked at the payroll records to compute what he earned in salary during that same eleven month period. Our final step was to combine what he earned in salary and profit for the eleven months reviewed. The combined information, within a quick couple of hours, gave us the amount the client had earned. So, when you are unsure of your financial situation, use this short-cut to make sure your balance sheet is correct. Otherwise, look no further at your financials; they will likely be inaccurate and useless.
Estimated Cost to Complete Jobs/Projects
It is my experience that nearly all contractors use the "percentage of completion" method of recognizing revenue and cost other than the residential developer/builders who use the "completed contracts" method of accounting for revenue and cost. "Completed contracts" means just that: When the job is completely done, you "book" or record the total income and expense of construction on the income statement. No income, job expense, profit or loss related to the specific job is to be recorded on the income statement until the home settles. Prior to that, the job costs appear as an item on the balance sheet named "work-in-progress." Revenue appears as customer deposits, deferred revenue or an item of debt.
"Percentage of completion" means that revenue is recognized as income at the rate the job is completed. Job costs are recognized at the rate they are incurred in ratio to both revenue recognized and total job costs expended to date, plus what is estimated to be incurred to complete the job. Your balance sheet will have an asset entitled "costs in excess of billings," meaning that you have costs you have not or cannot bill right now to the customer on jobs in progress. A liability account, or "billings in excess of costs" means that the contractor has billed the customer for work not yet done - which is where all contractors would prefer to be-placing the contractor ahead of the customer on a cash flow basis.
If the costs in excess of billings are greater than the billing in excess of costs, you will likely have a cash flow problem. This means that either you are spending faster than you are billing, your project managers are behind in getting their bills out, or you have costs on your balance sheet that are really losses such as job overruns or change orders that are not or will not be approved. All jobs with costs in excess of billings should be lumped together under a liability account on the current asset side of the balance sheet. Always double-check for losses not yet recorded. You, as an owner, may not know about the losses. A project manager might simply fall behind in billing, which costs you interest expense, poor vendor relationships, cash heartache and sleepless nights.
If your "billings in excess of cost" are always substantially higher than your "costs in excess of billings" it is good for current cash flow as long as that difference is rising. However, this will give you a false sense of cash security once the job comes to an end because the cash flow slows down. The excess billings over costs are not profit; they are simply a positive cash flow timing difference that will change from time to time.
The "schedule" of closed jobs and the open jobs "estimated costs to complete" should be prepared more than once a year when the accountants request it. This maintains a current review of each job's status and addresses problems while the job is ongoing, since you will have problems to face during the project. Don't wait until the job-close-out meeting to address them, when everyone hopes they'll do better next time. Instead, confront problem situations earlier in the project. Review schedules and reports to estimate an opportunity to bid higher or correct a problem in the bid process. This is critical to remodeling companies, as most problems occur during the preconstruction process, specifically in estimating errors or "buy out" of material errors, and in remodeling, jobs are shorter, problems become permanent losses quickly, and persist more often than not in new jobs before the problem is identified.
The Benefits of Regular Reporting
Our firm instituted a weekly job review and estimated cost to complete process for one of our remodeling company clients, Xylem Builders, Inc (t/a Archadeck-South Shore & A.X. Builders). Job margins for the client increased by twenty points as a result of immediately identifying problems and making corrections in preconstruction in new jobs. The company has never incurred a monthly loss in now over a year, sales have continued to rise, they have attained a positive equity after 3 consecutive years of losses...all within two months of implementing weekly job reviews and estimated cost to complete. As stated previously, remodeling projects begin and end quickly, so mistakes will hurt the current job and likely repeat in new jobs. Those mistakes do not have to be repeated if you institute weekly reviews and estimates.
It can be difficult and time-consuming to correctly prepare an estimated "cost to complete schedule" for larger jobs in their early stages, yet it is worthwhile. You may continue to assume your estimate is correct. However, the estimator, project manager, job superintendent and controller must review a job early on to determine what is needed to complete and ultimately uncover looming problems as early as possible. That step will create better value engineering, change orders will be billed in a timely manner and job profit will increase.
Schedule of Cash Flow and Working Capital
The schedule of "cash flow and working capital" provides a map of where your cash resources covering the period of the income statement originated. It consists of profit, new loans or repayment (principle due more than twelve months in the future), purchases or sales of capital assets and depreciation. All of these have the effect of increasing or decreasing cash. An accurate reading of the schedule allows for better billing practices, better collection practices and prevents slower paying of vendors and subs. It shows where and how money was used to absorb losses, the debt principle repayments and may contribute to faster paying of bills. It prevents poor billing practices, slow receivables and reflects retainage receivables, purchase of equipment or other assets. If the opening and closing period balance sheets are correct, then this schedule will be correct. Remember, though, if the balance sheets are not correct, do not waste your time looking at this schedule or any other financial statement because they will be wrong!
Working capital is defined as the total of "current assets" comprised of your cash, receivables, retainages, costs in excess of billings, work-in-progress, inventories and prepaid expenses minus your current liabilities. Your current liabilities are comprised of your lines of credit, principle payments of debt due within twelve months, accounts payable, accrued expenses, accrued payroll, accrued taxes, billings in excess of costs, customer deposits and deferred income. A greater than 1:1 ratio is important.
Your bank may require a defined working capital ratio, so check your loan documents. If your actual ratio is too high, you're likely wasting the use of your cash and resources by making them too idle. A good business analyst will determine the amount of excess working capital/cash that is funding the income statement profit versus normal operations. I have seen many multi-generational businesses with excessive working capital, but upon quick analysis of a profitable income statement, I saw a generous financial income derived from discounts from vendor early pay, interest income and low interest expense. It was a poor business operation masked by the working capital wealth of the company.
Income Statement
Your income statement should be a validation of what occurring with your jobs in the field, assuming that your opening and closing balance sheets are correct. Your income statement should be in the same category as your job-cost comparison to your estimates, and it should be in a format that highlights whether components of your business are operating according to plan. In order for your income statement to be used as the effective management tool and "sanity check" that it was meant to be, the following components must exist:
� It must be an accrual, not cash basis statement. Accrual means you have recorded all your receivables and debt inclusive of payables on the balance sheet.
� It must include not only numbers next to the expense categories but also percentages of revenue next to the number.
� The only revenue in your top line should be job revenue. No interest income, rebates, purchase discounts or sales of equipment should be included.
� The costs of construction must be detailed to identify construction labor and payroll added costs, subcontractors, materials (not net of early pay discounts), equipment rentals, revenue-driven liability insurance, superintendents' costs or other direct costs of construction as detailed in the estimate and tracked in your job cost reports. Some or all of these are your "direct job costs". Labor, materials, subs, equipment rental, permits, direct insurance, etc., are at a minimum included on your job cost reports, regardless of software, and in the estimate.
� Indirect construction costs such as mobilization, trucks, pagers, cell phones, supers, trailers, etc., may be what you call "general conditions." Define what you mean by "general conditions," and categorize these costs separately on your income statement. This will allow you to see if the general conditions you are using in your estimates are making or losing money. General Conditions should be a profit center.
� Categorize your preconstruction costs of estimators and bidding/selling expenses separately on the income statement. Divide the number of bids or estimates produced into this total, and see what it is costing you to bid. Add that to your bid-to-award ratio and you may find that not only are you wasting money in bids you'll never get but also how much you are wasting.
� Keep the office and support staff under an administrative expense category. Be sure to allocate the workmen's compensation insurance, vehicle and equipment insurance, depreciation, payroll taxes, benefits, safety and training to the indirect or general conditions as appropriate.
� Show purchase discounts and interest income as "other income" after computing profit or loss from the construction operations. These are financial incomes which are earned due to ownership, equity and working capital, not from operations.
� Compare the percentage of gross profit from jobs completed and jobs in progress to your income statement. This should be done before general conditions are deducted when you compare the percentage of gross profit. Be aware of additional profit that you may earn in gross profit from the labor rate that you use in estimating versus your labor rate posted to job cost sheets or categorized on your income statement. If you use your own equipment in construction in lieu of renting it, separately analyze these costs to see if you are making or losing money in this regard. If you are earning a profit from this, that's great, but it will likely distort the gross profit from construction if your estimate utilized a fair market rental rate.
Meet regularly with your outside accountants if they are construction knowledgeable or your construction business advisor and/or your controller on a monthly basis to review your balance sheet, income statement, working capital, source and use of funds statement and completed jobs/estimated costs to complete schedules. It establishes control in your business. It also helps create the "sanity" of profit, helps avoid the "insanity" of making the same mistakes over and over again and prevents you from losing profit-or your construction business itself.
Anthony Burruano, owner of Burruano Group, the world's foremost construction consulting company and firm [http://www.burruanogroup.com/], combines over 30 years of small to medium sized business experience in both financial and operational areas, mergers and acquisitions (international and domestic), and turnaround planning and consulting for the construction, manufacturing, distribution, service, and retail business.
For more information on Business Advisory and Consulting please visit the Burruano Group website at: [http://www.burruanogroup.com/]
Article Source: https://EzineArticles.com/expert/Tony_Burruano/57047
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Owner's Rep in Real Estate Development - Instrumental in Project Success
By JR Riddle
Steve Bentley is a high net-worth individual living in Los Angeles, CA. He has been making a good living for years running the family business that he inherited from his parents. Although, Steve considers himself to be a savvy investor, putting his earnings away in stocks, bonds, mutual funds, and the like, he feels that he needs to diversify his portfolio a little bit more. When the market went south in 2008, Steve's returns on his investments did as well. After researching alternative investments, he has decided to get his feet wet in real estate. He knows a couple of people in the business and is aware of the potential returns of a successful development. He identified a parcel of vacant land near his home that he believes would be ideal to build a multi-family project on. Without really looking at any other properties or running any detailed financial projections on the development, he acquires the property.
Once the property acquisition is complete, Steve hires an Architect to design his vision. You see, Steve is under the impression that all he needs to complete this undertaking is an Architect and a General Contractor. The Architect is quick to alert him that there is much more needed for a project of this magnitude. Not only will he need his Architectural Services to design this 42-unit stick-frame condo structure over podium parking, but he will also need a Planning Consultant to get the project entitled through the governmental authorities; a Structural Engineer to design and engineer the structure; a Civil Engineer to design all of the site utilities and earthwork since his parking has to run subterranean; a Geotechnical Engineer to perform tests on the soil which the building foundation will sit; an MEP Engineer to design and engineer the mechanical, electrical, and plumbing systems; an Interior Designer to design the finishes of the residential units and common areas so they are saleable; a Landscape Architect to design the outdoor hardscape and landscape; an Acoustical Consultant to make sure the sound transmissions coming into the condominiums are code compliant; a Waterproofing/Roofing Consultant to make sure the building design does not allow any water infiltration that could potentially lead to future lawsuits; an Elevator Consultant to design the elevator system; a Building Insurance Inspection Consultant because the insurance provider requires them for condominium work; and since this project is in a neighborhood that is trying to lobby for lower density, he even needs a Political / Community Outreach Consultant to deal with opposition of the local Not in My Backyard ("NIMBY") contingent.
Steve knows that he is not certified to do any of this work on his own and does not want to get sued for a construction defect in 10 years. As such he decides to hire all of these entities but doesn't know how he can possibly manage all of them. Steve has no experience in construction, let alone design and engineering. Additionally, he has blown through his budget for soft costs, which were essentially busted to begin with. As such, he decides to try and manage all of them on his own. Several months into hiring all of the consultants, as well as a General Contractor, things start to fall apart. The consultants are not producing their deliverables by the deadlines promised, the drawings reflect conflicting information, and Steve cannot even manage to get an appointment to submit the drawings into plan check with the city. The contractor forgot to submit his insurance certificate before mobilizing onsite and one of their workers was injured when performing structural excavation, city inspectors have already written several correction notices due to unsafe conditions, the contractor's hard costs are getting carried away, not to mention they are submitting numerous change orders because there were so many holes in Steve's contract with them. Everything is a huge mess and Steve needs help fast. It is now apparent that he needs an outside consultant to rectify these issues and manage the project on his behalf. In hindsight, he should have brought someone on board, possibly even before he submitted his offer on the property.
Introducing the Owner's Rep
Herein lies the need for the Owner's Representative in the real estate / construction industry. The Owner's Representative, also referred to as the Owner's Rep, OR, or simply Project Manager, is sometimes an overlooked asset that can be included in any project undertaking. The Owner's Rep bridges the gap between ownership and all other entities involved with the project. They control the design and construction process, making sure that every decision is made in the Owner's best interest. A true Owner's Rep is well versed in development as well, managing the entire development process and not just design and construction. More often than not, an Owner's Rep has a background in development themselves, so they know what it takes to pull off a successful development project and maximize their client's Internal Rate of Return ("IRR"). In turn, the Owner's Rep can use their ownership experiences to solve problems and offer creative solutions that directly affect the bottom line.
As one can see from the litany of tasks mentioned earlier in Steve's case, there are a myriad of moving parts to a development project, many of which may be a daunting undertaking for most small property owners to handle on their own. If the Owner chooses, the Owner's Rep can manage every aspect of the project, ranging from approvals to lease-up, something that individual Contractors or Consultants don't have experience handling either. Hiring an Owner's Rep is crucial and will allow the Owner to focus their time and resources on more important issues.
Acquisition
A very experienced Owner's Rep can even be brought on before the acquisition of the property, to help the Owner with things like property selection, acquisition analysis, economic studies and due diligence. They may also provide financial support, assisting in the identification of various forms of traditional and non-traditional financing sources and then help evaluate and analyze each of the options. The compilation of feasibility reports may also be necessary for decision making and reporting to various partners such as equity, banks, and appraisers, which include market research, detailed financial analysis, entitlement summaries, and justification for "go/no go" decisions. The Owner's Rep may also put together and update the project pro forma and even lead the project through the typically complex entitlement process, providing coordination with the city officials, land-use attorneys, and Architects involved.
Design
When it comes time to start the design process, the Owner's Rep will assist in selecting the design team, typically at a minimum consisting of all of the players mentioned in Steve's project above. They may create and issue a formal Request for Proposal ("RFP") to go out to several different firms, or they may rely on past relationships to select a firm that best suits the particular project. Once the project team is formed, the Owner's Rep can lead the effective collaboration towards a common goal. Again, the Owner's Rep is typically involved in every aspect of the process and spearheads the flow of information among Architects, Designers, Engineers, Planners, Consultants, Contractors, Vendors, Property Managers, Sales Staff, Lenders, Governmental Authorities and of course, the client. Due to the number of players involved in the process, the Owner's Rep should have a commanding influence to lead this synchronized effort to crystallize the design concept so that it can be built in the field. This point in the project is the ideal time to start exploring/visiting the value engineering possibilities. Value engineering is a technique in which the value of a system's outputs is optimized by crafting a mix of performance and costs. In most cases this practice identifies and removes unnecessary expenditures, thereby reducing the cost. The Owner's Rep should work with the consultants to remove these unnecessary costs and put the money in places where it should be spent.
This may also be an opportune time to perform a LEED analysis if the client wishes to go in that direction. The Leadership in Energy and Environmental Design ("LEED") Green Building Rating System, developed by the U.S. Green Building Council ("USGBC"), provides a suite of standards for the environmentally sustainable design, construction and operation of buildings and neighborhoods. Several Owner's Representation firms have LEED Accredited Professionals ("LEED AP") on staff, which have the capability of analyzing a design and driving it to LEED certification.
Procurement
The Owner's Rep may prepare and maintain a Master Cost Report if the client so chooses, which includes the hard and other related development costs, such as acquisition, design & engineering, permits & fees, legal, FF&E & OS&E, administrative, sales, and marketing costs. This budget should include allowances for any anticipated cost exposures.
Prior to construction, the Owner's Rep can interact with the proper authorities who have jurisdiction to secure the necessary project approvals and permits. Having the design team do this alone may prolong the process as they do not exhibit the same urgency due to their lack of ownership in the project. Many times an Owner's Rep is needed to facilitate this coordination effort in a timely manner. They will also orchestrate all of the contractor bidding and trade buyouts. Whether the plan is to use a General Contractor, several prime Contractors, many direct Subcontractors, or any combination thereof, formal RFP's should be issued and sent to at least three different contractors for each trade to ensure sufficient coverage through competitive bidding. All returned bids should then be thoroughly vetted and a comprehensive bid comparison presented to the client prior to awarding any contract. After this "apples-to-apples" bid comparison has been compiled for a particular trade, negotiations will commence to establish a complete scope of work that is cost effective.
Many times, in order to save costs, materials and equipment may be bought directly through a purchase order to the client. Similar to the trade work above, pricing should be obtained from at least three vendors to ensure sufficient coverage through competition.
Construction
The Owner's Rep should prepare and maintain a Master Construction Schedule which incorporates all construction activities, procurement, material lead times, submittal lead times, approvals, permits, inspections, tenant relations, logistics, sales, marketing and turnover to the end-user. Weekly meetings should typically be held with the General Contractor and Subcontractors to review three-week or six-week look-ahead schedules.
The Owner's Rep should also maintain a working history set of all project documents in the field, including drawings, specifications, requests for information ("RFI's"), submittals, sketches ("SK's") and all relevant tracking logs. Every RFI response needs to be posted onto the drawings to ensure not only proper quality control in the field, but also a complete set of as-built drawings that can be turned over to the client at the end of the job. Additionally, the Owner's Rep should review and provide insight to every submittal, RFI and SK that comes through to make sure everything is warranted and properly clarified. In addition to document control, the Owner's Rep should also provide quality control in the field. In most cases a Superintendent should be part of the OR's staff, walking the job every day, from start to finish. This supervision is key to having a successful project that is built per plan and spec. It is also imperative to have a Superintendent to manage the field labor so that manpower stays at a consistent and productive level.
The Owner's Rep should make sure that each contract carries a complete scope of work in order to minimize the amount of change order requests coming in from the contractors. When they do arise, a thorough review and negotiation will take place to determine the validity of the request prior to approval.
The OR's superintendent should work with the Contractors as they prepare and go through the many inspections required by the authorities having jurisdiction during the construction process with the end goal being to receive final building certifications.
Accounting/Cost Control
As invoices, or monthly applications for payment, come in from the Contractors, the Owner's Rep should review prior to recommending payment to client. It is beneficial to work with each of the Contractor's in preparing their schedule of values during contract negotiations to maintain a proper breakdown and format that is consistent and comprehensive for the client during billing. During these billing periods, the OR should also request and gather all conditional and unconditional waiver and release of lien forms from all Contractors, Subcontractors, and Sub-Subcontractors for progress payments and final payments. If payments are made correctly, this will protect the client from having mechanic's liens recorded on their property.
Every month, as part of the Master Cost Report, a complete cash flow analysis and draw schedule should be updated and presented to the client, projecting costs on a month-to-month basis so that the client has a clear and realistic schedule of anticipated expenditures and bank draws. This service can range from general oversight and direction as to timing the cash with request, and move all the way to full control of the project's cash management in a fiduciary position.
Project Close-Out
As construction nears completion, the Owner's Rep should provide a punchlist of all completed work. A punchlist document will be generated listing those items of work which have been observed as incomplete or requiring correction. The contractor then finishes the items on this list before Final Completion may be declared and final payments authorized. Also, near the end of the project, the OR will gather and compile books of all applicable product manufacturer and workmanship warranties, along with all applicable operations & maintenance ("O&M") manuals for the end-user. In residential construction, these can be put together to be turned over to the individual homeowner, the homeowner's association and/or the property management firm.
For a residential project, one must be cognizant of the Department of Real Estate ("DRE") requirements. The Owner's Rep should be involved with all DRE Filings, creating an itemized checklist of all relevant requirements and then tracking each of these items to ensure that nothing slips through the cracks as a project approaches its various tract map and condo permitting processes.
Sales/Marketing
Some Owner's Representation firms may have the staff and experience to aid the client with sales, marketing, and/or lease-up, either directly or indirectly by providing oversight. They can help identify a competent and appropriate sales team and establish sales and marketing strategies to be used for the project. Particular importance should be placed upon helping the client devise a sales and marketing campaign which helps the project differentiate itself from the competition and attract the right type of customer to the sales team.
If there is a "for-lease" component to the project, an Owner's Rep may be able to source and procure various potential tenants for a client, as well as negotiate the terms of their lease. A savvy Owner's Rep can provide a detailed lease analysis, abstracting and reporting in-place or proposed lease documents, making sure to identify the major deal points and lease clauses which impact the financial results and flexibility of the project.
Conclusion
In broad terms, the Owner's Representative will be the direct representative of the client, spearheading all aspects of the job and recognizing and solving conflicts. When complex issues arise, they will explore all options available, distill the information, and provide the client with a concise set of options, clearly defined, along with a recommended course of action.
To reiterate, the Owner's Representative is a critical team member to any successful real estate development project. As noted earlier in Steve Bentley's case, poor decisions can easily be made by property owners simply because they do not fully understand the issues at hand and have experience with the processes. Sound advice to any property owner or prospective property owner looking into any type of development venture is to consider including an Owner's Rep on the project team. More times than not, the client will discover that the time, money and hardship saved by having an Owner's Representative involved will more than pay for the OR's fee.
The author, JR Riddle, is a Partner of Urban One, a full-service Owner's Representation firm based out of Los Angeles, CA specializing in Development Management, Construction Management, and Investment Management in the arenas of Real Estate, Infrastructure, and Transit. Urban One help you plan your next development project. For a free consultation, stop by www.urbanone.com.
Article Source: https://EzineArticles.com/expert/JR_Riddle/678466
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The History of the Sebewaing, Michigan Sugar Factory
By Thomas Mahar
One of the men destined to join the ranks of Michigan's pioneer sugar barons was John C. Liken. He was nearly 70 years old when the idea struck him and already rich beyond the dreams he probably had when he carved barrel staves for a living as an indigent immigrant in New York more than fifty years earlier. By 1900, he operated a big business in a small town that referred to him as the town father because his enterprise created the jobs that brought people to the town.
His annual sales during the years preceding 1900, in modern terms, equated to about $7.5 million. In a combination of enterprises that employed two hundred people, he operated four saw mills primarily engaged in manufacturing barrel staves, many of which he shipped to Germany, two flour mills, a major retail outlet for hardware, dry goods, groceries, and drugs which in 1884 employed nine clerks.
Liken's enterprises were headquartered in a small town in Michigan's "thumb". The town was Sebewaing, a small collection of rustic homes nestled on the east shore of the Saginaw Bay some twenty-five miles northeast of Bay City. Its residents were day laborers who worked at one of Liken's establishments or on one of the surrounding farms, or fished in the great Saginaw Bay that lapped the shores within walking distance of the town.
Sebewaing borrowed its name from the Chippewa word for crooked creek and some of its wealth from the abundant fishing in the bay. Not long before the 19th century came to a close, nearby forests fell to swift axes, making room for German settlers who quickly set about the twin tasks of removing stumps and planting crops.
Liken, a native of Lower Saxony in northwestern Germany met Wallburga Kunkle, the woman who would become his wife, in Binghamton, New York. She was a native of Bavaria and bore the name of a canonized nun who traveled to Germany from England in 748 to perform good works. St. Wallburga became the patron saint of plagues, famines and a host of other discomforts, including dog bites. John Liken had arrived in Binghamton after working for his passage aboard a sailing vessel.
After the birth of their fourth child, Emma, in 1864, who joined her siblings, Mary, born in 1856, Hannah born in 1858, and Charles, born in 1859, John and Walburga moved the family to Sebewaing, a Lutheran settlement that was attracting fishermen, farmers and timber men. The town's population upon his arrival in 1865 was insufficient to proclaim it a village, but with the arrival of John Liken, that was about to change. He established a sawmill where he made barrel staves. Later, he would develop retail outlets, a creamery, granaries, and ships, incorporating in one person a source for all the goods and services required by the local farming community. The cream and crops, he placed on boats and shipped some thirty miles along the Saginaw Bay shoreline to Bay City, a bustling and growing city where the daily demand for groceries grew apace with its burgeoning population. In was in this connection, shipping, that he became acquainted with ship owner Captain Benjamin Boutell and it was through Captain Boutell that he would learn about sugar opportunities.
The hamlet grew into a village and the town folk began to think of Liken as the town father. Having brought two daughters and a son into the community, who like their father were all of good form, good health, and good cheer, it wasn't unexpected that the Likens began to add substantially to the population. Mary took for a husband, Richard Martini and a few years later, Hannah allowed a youthful Christian Bach to turn her head (In later times, Christian adopted his middle name, Fred as his given name of preference. He appears in the Michigan sugar chronicles authored by Daniel Gutleben as C.F. Bach.) Charles and his wife, Elizabeth settled into the community to take up management of his father's affairs.
John Liken had departed his Oldenburg home at the age of eighteen after completing a four-year apprenticeship in the cooperage trade. He would have known of sugar beets because of that experience and certainly would have been aware that men from his homeland had been enjoying some success with them in Michigan's Bay County where three factories were then in operation and one more was underway and yet another was under construction in Saginaw.
Altogether, a total of eleven beet factories would soon pour sugar and profits into Michigan towns if one believed the hoopla created by railroads and others who would profit from the construction of factories. The excitement that had been stirring farmers and investors across the state seeped into Sebewaing. Liken saw no need to drum up support by the usual methods, holding town meetings, enlisting editors of local newspapers, hiring bands and front men to call upon the farmers. He was convinced of the need for a beet sugar factory and since a good portion of the local wealth resided in his coffers, he saw no need to persuade others to take up the cause. The Likens possessed sufficient resources to build a factory.
He formed an ad hock committee consisting of his son Charles, Richard Henry Martini, the husband of his daughter Hannah, and daughter Mary's husband, Christian Fred Bach. All three had held important positions in Liken's enterprises for many years and all were in their late 30's, thus steeped in experience. In addition, the three resided next to one another on Center Street in Sebewaing, with Martini at Number 69, Charles next door at 68, and Bach at Number 67, thus the trio could convene at leisure and without formality. Should he and his committee approve the idea, the plan would go forward without the usual sale of stock to community members. It did not require a great amount of research on the part of the committee. They had plenty of arable land at their disposal. The Liken family controlled one thousand acres on their own account that combined with others, eliminated a need for a rail line to convey beets to a factory situated on Lake Huron's shore. They had the financial capacity.
John C. had been generous. Each of his daughters and his son enjoyed full-time servants in their homes and each was well enough off to invest in the new sugar company on their own account and each had demonstrated managerial ability over a long period of time. They had every attribute needed for success in the new industry save one...experience in sugarbeets. News of the activity in Liken's headquarters leaked into the community at large and inspired some farmers to plant beets, although a completed factory was nearly two years in the future. Those beets, when ready for market, were shipped to Bay City for processing.
Thinking to add the missing ingredient to an otherwise perfect equation for success, John Liken invited Benjamin Boutell and a few of his trusted friends to join in the endeavor. As a consequence, in a short time Liken learned first-hand, how the camel's nose under the tent fable came into existence. Boutell, no doubt delighted that his expertise was in greater demand than his money, quickly enlisted men of wealth and experience. Among them was John Ross, who would soon become treasurer of the German-American Sugar Company, the last of four beet sugar factories built in Bay County. Next, came lumbermen Frederick Woodworth, William Smalley and William Penoyar, and a ship owner named William Sharp. When men of the stature of Ben Boutell and Penoyar signaled their interest, the floodgates opened; more men of wealth clamored for a stake in the new company. A pair of Saginaw attorneys Watts S. Humphrey and Thomas Harvey climbed aboard as did George B. Morley, legendary grain dealer and banker. Rasmus Hanson, a wealthy lumberman from Grayling, and future president of the German-American Sugar Company, bought in as did William H. Wallace, a quarry operator in nearby Bay Port.
Unwittingly, Liken in attracting investors from Saginaw and Bay City, brought together two distinct groups which could be described as two separate circles of influence. Boutell's circle consisted of Bay County investors, Woodworth, Ross, Smalley, Sharp and Penoyar. George Morley's circle included James MacPherson, Humphrey, Harvey, and William H. Wallace, all Saginaw residents, although Wallace was a native of nearby Port Hope and had been a long term resident of Bay Port, a village snugging the shoreline thirteen miles northeast of Sebewaing. In the wings was Ezra Rust, a wealthy Saginaw resident who had won a fortune in the lumber industry. While all of the Bay County investors had lumber interests, of the Saginaw group only MacPherson had a lumber background. The two circles would take up the sport of in-fighting once the new company got underway.
Representatives of what amounted to three distinct groups, Boutell's Bay City contingent, Morley's Saginaw faction, and John Liken's family, gathered in Watts Humphrey's Saginaw office in July 1901 to take up the matter of organization. Humphrey's fame would come not from sugarbeet processing but from the fact that his then 12-year old son, George M. Humphrey, would one day achieve stature as the Secretary of the Treasury under President Dwight D. Eisenhower, serving from 1953 until 1957.
Wasting no time, the organizers had at hand, four representatives of construction firms specializing in building beet processing factories. They were Fuehrman & Hapke, E. H. Dyer, Kilby Manufacturing, and Oxnard Construction. It was expected that as soon as the shares were taken up by the attendees, a contract would be awarded to one of the four bidders. To Benjamin Boutell and his Bay City group, there was only one bid of any interest to them and that was the one from Kilby Manufacturing for $900,000. The price was a hefty $1,500 per ton of beet slicing capability, nearly double the $850 per ton price tag of the Essexville factory and almost $600 more per ton than the price for the German-American Sugar Company factory that was currently under construction. Oxnard's bid of slightly more than $1,800 per ton (including, as usual, a Steffens process) and Dyer's next to the lowest bid of $1,416 per ton were beaten out by Fuehrman & Hapke's winning bid of $1,320 per ton for a total price of $792,000.
The first order of business called for the election of officer and directors, a normally placid affair when the company founders knew one another as well as did the gathering in Humphrey's office. Representatives of each of the three main shareholder groups secured positions. Bay City lumberman, W. C. Penoyar was given the presidency, while Sebewaing's Christian Bach took on the vice-presidency, and the Saginaw group saw William Baker and Thomas Harvey took the secretary and treasurer seats. Benjamin Boutell and William Wallace joined the executive committee. At the top of the agenda was the matter of deciding on the winning bid for the factory's construction, which would be, as usual, a full turnkey operation. That's when the temporary alliance between Bay City, Huron County, and Saginaw County investors fractured.
Boutell's crowd, said the low bid made no difference, they would accept none other than the one submitted by Kilby. To the Saginaw group, this was tantamount to drawing a line in the sand. They believed firmly in awarding the contract to the lowest bidder. Accordingly, the Sebewaing-Saginaw representatives who controlled three of the officer positions, ignoring the fact that Boutell and his friends controlled 45 percent of the company and that a member of their faction just secured the presidency, gave the nod to Fuehrman & Hapke. Boutell and company recoiling from the suggestion that anyone except Kilby would build a factory in which they had invested, cancelled their stock subscriptions, resigned their positions and withdrew from the board of directors.
When the dust settled, Boutell and his co-investors were out and the Saginaw contingent held the controlling interest at 55 percent with control divided between the Morley and Rust families. The Rust family headed by Ezra Rust would leave its mark on the City of Saginaw in the form of a city park and a major thoroughfare bearing its name. Ezra's confidence in the sugar industry may have stemmed from a stint he served as an engineer in a Cuban sugar mill during his youth. Morley held 5,000 shares in his own name, while various members of the Rust family held 4,000 shares. Family members and friends of John Liken held 45 percent.
The sudden withdrawal of Bay City investors necessitated a second election. The presidency went to Thomas Harvey. John Liken's son-in-law, Christian Bach, retained the vice-president's post and a seat at the director's table. Liken's son, Charles, accepted an appointment as treasurer but did not win a board seat. William F. Schmitt, a minor stockholder and Christian Bach's sister Emma's suitor, became secretary. In time and after having been tested by fire, he would prove that his advancement was owed entirely to his skill, not to his relationship to the Bach family. In 1906, he took charge of the Sebewaing factory which he then guided for six years before leaving the company for a senior position with Continental Sugar Company. Directors, in addition to Harvey and Christian Bach, included William H. Wallace, Watts Humphrey, George Morley, James MacPherson, who replaced Benjamin Boutell, and Richard Martini.
The appointed contractor for the factory's construction, Henry Theodore Julius Fuehrman, normally addressed as Jules, arrived from New York where he had constructed a similar factory at Lyons and before that, Pekin, Illinois. He appeared in September for the groundbreaking ceremony. With him was his partner, Theodore Hapke who won high regard from area farmers of German extraction because of his knowledge of sugarbeets and his ability to explain the subject in the mother tongue.
Fuehrman had been closely involved with the construction of a beet factory in Grand Island, Nebraska, which to his good fortune happened to be in the place after Germany that he called home. He was the only son of Henry and Tulia Fuehrman of Brunswick, Germany. Beginning at the age of fourteen, he served an apprenticeship in the mason's trade. After deciding to prepare himself for the duties of an architect, he devoted himself to the study of architecture in different polytechnic institutions throughout his native land. When twenty years of age, he entered the Germany Army, serving one year, and in 1882, he emigrated to America where after spending two years in Chicago he settled in Grand Island. There he accepted a number of commissions, including the design of the city hall, a church, a university, and eventually the Oxnard beet sugar factory in Grand Island.
Fuehrman's success attracted the prestigious architectural firm of Post & McCord, the firm that built the roof over Madison Square Garden and the large iron frames for the skyscrapers that dotted Broadway and Wall Street and in 1931 would construct the world's tallest skyscraper, the Empire State Building. Post & McCord partnered with the equally prestigious American Bridge Company, thus the Sebewaing factory's formation was destined to be of solid construction. With William H. Wallace serving on the board of directors, the question of whether the foundation was going to be made of solid stones or the new building material, concrete, was resolved without discussion. The stones came from Wallace's quarry, thirteen miles distant where they were carved by his expert workmen into squares that conformed to the architect's specifications. Crushed stone from the same source made roadways for hauling equipment and later, beets to the factory. Already the community was enjoying the fruits of the presence of a sugar factory, improved roads and a richer economy as workers discovered gainful employment on the many work crews needed to fashion a factory that would soon win recognition as one of the largest of its kind in the nation.
Emile Brysselbout, Fuehrman and Hapke's newest partner, was also on hand. Brysselbout's credentials included the recently constructed Charlevoix, Michigan sugarbeet factory and he had supervised the construction of the Essexville factory.
The cornerstone was laid on October 21, 1901 but the absence of qualified engineers delayed construction. Experienced construction engineers had become a premium in a nation that suddenly could not have enough beet sugar factories. Twenty-five beet sugar factories were constructed between 1900 and 1905 of which ten were in Michigan. Adding to the difficulties was Fuehrman's absence. He had departed for Dresden, Ontario to construct a similar factory for Captain James Davidson, a Bay City magnate who had decided to dedicate a portion of his wealth to the beet industry.
By appearances, Davidson's contract held greater importance for Fuehrman than did Sebewaing's. William Wallace, noted for always taking a firm hand where one was needed, approached Brysselbout with the insistence that Joseph Eckert be hired. Eckert was a man with a can-do reputation and one who would tolerate no obstacles in the path to his goal. Eckert had just finished an assignment at Mendall Bialy's West Bay City Sugar Company where he had increased productivity more than one-third.
Gutleben relates that when Eckert arrived in Sebewaing, he found nature busy at the task of reclaiming the site. Weeds and wild flowers occupied the space intended for a factory. The few columns that had been erected on Wallace's stone foundations were poised as if ready to fall to earth. Worse, there was no gear on hand to correct the steelwork in place or to install the balance of it. Fuehrman promised a steam engine but its delivery would have to wait until the steel erection work in Dresden was finished. It was April. The farmers wanted to know if they should plant a beet crop. "Plant 'em!" exclaimed Eckert who then placed an order for the delivery of a steam engine to be charged against Fuehrman & Hapke's account. Wallace backed the credit. Fuehrman's complexion turned the color of spoiled liver during his next visit; he fired his innovative engineer for insubordination. Wallace accompanied by Brysselbout turned the decision around in a hurried meeting with Fuehrman.
One of the advantages of having Brysselbout and Eckert on staff was their ability to draw men of similar skill. Brysselbout, inspired by Eckert's enthusiasm and unquestioned role as chief project engineer after Fuehrman's failed effort to fire him, secured experienced and highly educated operators, men like Hugo Peters, an 1898 graduate of Leipzig University who would become Sebewaing's first factory superintendent. James Dooley soon followed. He carried a reputation for practical application of scientific principles and a cool head during emergencies. Eckert attracted outstanding engineers such as Eugene Stoeckly and Pete Kinyon, a master at erecting the steal grids that became the frames for the factories. Nearby farmers, long experienced with neighbors William Wallace, "Bill" to all, and John Liken, both hard driving can-do business leaders, had full confidence that a factory would stand in their midst at harvest time, as promised. They set about planting the second sugarbeet crop in Huron County with results that would prove fortuitous for themselves and for the investors.
When the trees began to blaze red and orange and cool dawn breezes dried the morning dew before farmers stepped from their doors, the county's first sugarbeet crop waited in neat soldiery rows for men, women and even children to approach them. A lifter, a device designed to loosen the beet from earth's hold, operated by the farmer, would proceed across the field at a walking pace. Harvesters would follow, pulling the beets from the ground then knocking two of them together to loosen soils and then casting them into a pile to await topping. Eventually, automated motor driven machines would perform the task, a task enhanced by pre-topping and then cleaning of the beets via a shaking system and dumped into waiting trucks. But for now, it was brute work.
On October 10, 1902, it was done. The main building sixty-seven by 258 feet and five floors comprising approximately sixty thousand square feet, made of brick and filled with the most modern equipment available to the industry, opened for business. In a town where the average home consisted of fewer than seven hundred square feet of space, it was an awesome presence. It was one of the grandest and largest buildings constructed in the American Midwest up to that time.
It was agreed that only one man in all of Huron County deserved the honor of delivering the first load of beets to the factory, the man whose dream set off the chain of events that led to the magnificent building now standing at the end of the town's main street. He was John C. Liken. His family had gathered round two months before on August 9, to celebrate his seventieth birthday and now at an age beyond that which men commonly set aside for the cessation of physical labor, he guided a team of four horses drawing a gaily decorated wagon brimming with sugarbeets onto the scales. The Liken family, standing beside the constructors, Bill Wallace and a contingent from Saginaw, applauded the advance of the high-stepping horses and the contented Mr. Liken. Within the week, Hugo Peter conducted an operational test, allowing only water through the factory to test the readiness as well as the harmony of the equipment. After making a few adjustments to correct weaknesses detected during the water test, he ordered the slicing of beets to begin on October 27.
The farmers delivered beets containing 13.23 percent sugar of which they harvested nearly seven tons to the acre. According to Gutleben's history, the factory yielded more than 91,000 hundredweight of sugar on an extraction rate of seventy-one per cent giving it returns greater than from the West Bay City's factory, the Essexville factory, the Bay City Sugar Company and certainly Benton Harbor, Kalamazoo, and the first year of operation at the Caro factory. The operational results mirrored those of the Kilby built Alma factory. Financial results, however, were far greater because the 48,250 tons of beets delivered by Sebewaing growers exceeded by two-hundred fifty percent the 19,100 tons delivered by Alma growers for that factory's first campaign. Sebewaing growers delivered the greatest number of beets delivered to a single factory up until that time, loud evidence of the confidence Huron County farmers placed in Wallace, Liken, and Bach, confidence, as events revealed, that was not misplaced. Estimated profits for Sebewaing's first year of operation approximated $140,000, 26 percent on sales and providing a 17 percent return on investment.
Soon, two important personages representing the American Sugar Refining Company called on Bill Wallace. They were Henry Niese, head of operations and W. B. Thomas from the company's treasury department (Thomas would become president of American Sugar Refining on December 20, 1907 following the death of Henry O. Havemeyer earlier that month.). Their mission was to scout candidates for admission to the Sugar Trust. The visit occasioned a significant change in the company's make-up when Charles B. Warren, a Detroit attorney who represented the interests of the American Sugar Refining Company arrived shortly afterward to offer an investment of $325,000. The company issued an additional thirty-five thousand shares of stock of which he acquired 32,500; other shareholders each increased their stake by approximately 8.3 percent, effectively giving Warren a 50 percent interest in the company with the other half in the hands of the Liken family (24 percent) and Morley's Saginaw investors (26 percent).
The bloom of youth still graced the cheeks of Charles Beecher Warren when he appeared in Sebewaing like a godsend to drop what would amount to in current dollars nearly seven million dollars in a start-up company managed entirely by local investors. His youth disguised a young man bearing a sound education and a steely resolve to make something of himself. Before his time passed, he would become the US ambassador to two nations (Japan in 1921 and Mexico in 1924), write the regulations for conscription during World War I, head a major law firm and direct the affairs of a number of corporations.
In 1903 when visiting Sebewaing, however, he resembled not so much the power broker and respected lawyer he would become but instead, a pleasant young man with a pocket full of cash. He was fresh from Saginaw where he persuaded the owners of the Carrollton factory to take his cash in exchange for a 60 percent stake in the factory that came into existence when Boutell's Bay City crowd parted company with the Sebewaing investors. He would, over the course of a few years, dispense more than three and half million dollars in Michigan alone ($60 million in current dollars) while acquiring sugar companies that would immediately report to the New York office of the American Sugar Refining Company-not bad for someone who had been taking rooms in a boarding house situated near Cass Avenue in Detroit in 1900.
His rise to power began six years earlier when he was appointed associate counsel for the US government in hearings before the joint high commission in the Bering Sea controversy with Great Britain. The matter concerned England's perceived right to harvest seals notwithstanding the United States opinion that extinction would surely follow that practice. By 1900, he was a partner in the law firm of Shaw, Warren, Cady & Oakes a Detroit firm representing a number of banks and manufacturing firms, chief among them the American Sugar Refining Company. A few years hence, he would adopt the title of president of Michigan Sugar Company, a position he would hold for 19 years in addition to the presidency of a sugar company in Iowa and another in Minnesota. During that same time period he returned to the international arena once again where his carefully watched performance won accolades from imminent lawyers in Europe and America. This time, he appeared on behalf of the United States before the Hague tribunal to resolve a dispute between the United States and England concerning North Atlantic fishing rights.
The son of a small town newspaper editor, Robert Warren, he listed Bay City as his birthplace, but because of the nature of his father's profession, moved from time to time while growing up, always within Michigan. He graduated first from Albion College then attended and graduated from the University of Michigan before attending the Detroit College of Law where he graduated LL.B. At the Detroit College of Law, he studied under Don. M. Dickenson and then joined Dickenson's firm when he was admitted to the bar in 1893, the year he graduated. A few years later, he joined John C. Shaw and William B Cady in organizing a separate law firm, a firm he would eventually head throughout his career. Early on, displaying an understanding of the value of macro management, he tended to see to the installation of experienced managers and then leave them unmolested as they carried out the day to day requirements of conducting business.
Much as Caro served as a training ground for factory operators, Sebewaing acted as a school for factory managers who were sent throughout America to beet and cane factories owned by American Sugar Refining Company and others. Hugo Peters moved on to Dresden to oversee James Davidson's operation and then took similar positions in Idaho, Utah, California and even the West Indies. In 1920, Peters turned his attention to spectro-photometric analysis for the US Bureau of Standards, making serious contributions to color analysis. Jim Dooley stayed on as manager at Sebewaing for a few years then headed operations for all of Michigan Sugar Company when it came into existence in 1906. Wilfred Van Duker, Sebewaing's first chief chemist, dedicated the larger portion of his career to improving cane milling in Hawaii. There, he eventually managed four sugar estates. Richard Henry Martini became General Agricultural Superintendent for Michigan Sugar Company and Henry Pety moved on to Utah for a superintendency before returning to Michigan to manage the Mount Pleasant factory. The Sebewaing factory continued to expand by adding physical structures and equipment in the form of diffusion towers, automated affairs that replaced the older battery operations, evaporators, modern centrifugals, storage bins and other equipment that caused the daily beet slicing capacity to gradually expand from 600 tons per day to more than 5,000 tons per day.
Sources:
Estimated profits for the first year of operation: Records did not survive. The author determined an estimated profit by applying an estimated selling price of $5.12 for each one hundred pounds to the total hundredweight available for sale and then deducted costs estimated at$3.57 per one hundred pounds.
GUTTLEBEN, Daniel, The Sugar Tramp - 1954 p. 182 concerning purchase of sugar factories by the Sugar Trust, p. 177 concerning organization of Sebewaing Sugar and operating results, printed by Bay Cities Duplicating Company, San Francisco, California
MICHIGAN ANNUAL REPORTS, Michigan Archives, Lansing, Michigan:
Sebewaing Sugar 1903, 1904
Sebewaing Lumber, 1901, 1904
Bay Port Fish, 1901
Saginaw Courier Herald, July 11, 1901 - reporting on the meeting of stockholders of the newly formed Sebewaing Sugar Company.
Portrait and biographical album of Huron County:
John C. Liken, Christian F. Bach, Richard Martini
U.S. Census reports for Sebewaing, 1900, 1910
Copyright, 2009, Thomas Mahar, All Rights Reserved
About the Author: br> Thomas Mahar served as Executive Vice President of Monitor Sugar Company between 1984 and 1999 and as President of Gala Food Processing, a sugar packaging company, from 1993-1998. He retired in 1999 and now devotes his free time to writing about the history of the sugar industry. He authored, Sweet Energy, The Story of Monitor Sugar Company in 2001, and Michigan's Beet Sugar History (Newsbeet, Fall, 2006).
Contact: Thomas Mahar E-mail [email protected]
This blog provides a history for each of the 24 beet sugar factories constructed in Michigan beginning in 1898 and ending in 1920.
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Houston Fixer Uppers - 13 Real Estate Investment Tips
By Paige Martin
Houston Fixer Uppers are great investments and just need a little TLC, right? With the right foundation and a bit of work, buying, renting and reselling fixer-uppers can be a very profitable hobby or full time profession.
However, there's a level of risk involved in this process. It typically requires more time than you originally expect if you haven't been involved in home repairs or the Houston real estate market in the past. If you're up for the challenge, it can be a very rewarding experience.
Following is a guide to get started identifying profitable Houston Fixer Uppers:
1. Know your budget. If you're looking for an initial investment of $50,000-$100,000 you're looking at very different homes, areas and contractors than if you have $200,000 - $300,000 to invest in finding and fixing the right Houston home.
2. Decide on the right Houston neighborhood you'd like to start with. Whether you plan on living in the home or not will impact where you want to buy. It's important to remember that your ideal place to live may not be the best place to make a fixer upper investment. If your budget is under $100,000, you'll probably want to focus your search on areas like Houston Heights, Garden Oaks, and Braeswood. If you have more to invest and you're looking for the best neighborhoods where property values have been appreciating at the highest rates, you'll want to consider areas like West University Place, River Oaks, and Southampton.
3. Investors say that you make half of your money on the original purchase. Be prepared to make an extensive Houston real estate property search. Typically, the best Houston properties for sale go quickly. It pays to work with a well qualified Houston Area Realtor who knows what you're looking for, in addition to spending time driving Houston neighborhoods looking for "For Sale" signs.
4. Keep in mind that the old real estate catch phrase "location, location, location" is important for a reason. We recommend avoiding neighborhoods that have been decreasing in value and ones that are going downhill. Neighborhoods like the Houston Heights, Intown near Washington Ave, Downtown Houston and Bellaire have been appreciating at great rates due to the amount of revitalization and work going into those communities. For people willing to hold onto their investment for 3-5 years, these Houston neighborhoods can offer great opportunities.
5. In addition to working with your Houston Area Realtor, read Craigslist and other classified advertising posts. Look for keywords including: "fixer upper," "priced to move," "handyman special," or "diamond in the rough."
6. Review Houston listings of foreclosed properties. As the sub-prime mortgage turmoil has affect Houston home prices in the $80,000 - $130,000 range, there are a number of properties that investor can purchase for reduced rates, knowing they'll need to invest some money in the property to resell it or put it on the rental market.
7. Look for homes that have been vacant for significant periods of time. Your Realtor can run a search for you of homes that have been on the market for a long time. Often vacant homes that sit on the market are less appealing to new Houston home buyers as they "smell funny," collect dust and aren't properly shown. As sellers wait, often their prices come down. Investors looking for fixer-uppers can often find a good opportunity by buying a vacant home, putting in some TLC, staging the home and putting it back on the market.
8. Look for homes that need cosmetic work, not major structural damages. Especially for Houston investors just beginning their fixer-upper career, it's very difficult (and often very expensive) to fix problems like: foundation crack, stucco repairs, terminates, bad roofs, or major water damage. Look for "ugly homes" that could use new paint, carpeting, flooring, and appliances as these are the easiest and least expensive to fix.
9. Get pre-qualified for a mortgage with a Houston mortgage broker. By securing mortgage pre-qualification, you'll be able to make a firm commitment to buy and make your offer more desirable to the seller.
10. Know your target purchase price. HoustonProperties recommends a simple financial model that tells you
a) What you think the "fair value" of the home is using a CMA,
b) How much you need to invest in the home,
c) What you think you can rent or sell it for when it's complete
d) How much investment return you expect to make (e.g. if you can make 3% keeping your money in the bank, 5-8% in the stock market, you'll want a higher return for your fixer-upper project)
Using these guides, this will help you create the right purchase price for your target home. Typically, this translates into a price that's 15-25% less than it's fixed-up value. This model helps rationally guide you through the home purchase process and serves as your budget for the project.
11. After you've selected a home and are going through the Home Buying Process get several bids from local contractors. See my prior article for tips on selecting the right contractors.
12. Make the final closing contingent upon obtaining satisfactory bids for home improvements. If after you've started inspections on the home, you find it's too expensive to complete the repairs, you can back out of the deal.
13. After you close on the home and make the necessary repairs, make sure you get the house ready for sale, including completing proper Home Staging. See my prior article for tips on selling Houston area homes.
To speak with a Houston Realtor about finding attractive Houston area fixer-uppers and investment properties and a free fixer-upper financial model template, please call 713-384-5177 today or contact [email protected] for more information.
To speak with a Houston Realtor about finding attractive Houston area fixer-uppers and investment properties and a free fixer-upper financial model template, please call 713-384-5177 today or contact [email protected] for more information.
Paige Martin is a member of the prestigious Martha Turner Properties' Circle of Excellence, an award given to honor the company's top producers. Paige is a member of the Houston Association of Realtors, Texas Association of Realtors, and the National Association of Realtors. Her website, http://www.HoustonProperties.com features over 500 pages of Houston real estate information and details on over 40,000 properties of Houston Texas Real Estate for sale as well, as free tips on how to quickly sell Houston homes. Paige Martin, Realtor, Martha Turner Properties.
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SBA 8a Program Certification - Qualify to Bid on Upcoming Federal Sponsored Projects
By V. Karen Miller
There is no better time than now to make the investment and seek SBA 8a certification. Why? With all of the new federally funded project monies flowing into states, certified SBA 8a companies are at the right place, at the right time.
What is SBA 8a Certification? The Small Business Administration has a program specifically created to help "level the contract playing field" for historically underutilized businesses (woman-owned, minority-owned, service disabled veteran-owned). The SBA 8a Business Development Program provides federally certified small business owners with the opportunity to bid on "set aside" contracts. Certified small business owners are encouraged to contact purchasing representatives of local offices of federal agencies (NOAA, Department of Commerce, NASA, Department of Veteran Affairs) about upcoming bid opportunities. Many agencies has a supplier diversity database that is a good entry point.
In addition, prime contractors (Siemens, Northrup Grumman, URS, etc) are required to subcontract about 15-20% of all of their huge projects to qualified small businesses. Subcontracts can be from $50K - Several Million dollars based upon the small business service. The time to start cultivating relationships with prime contractors is NOW, even if you are not SBA 8a certified. People do business with people that they know.
The SBA 8a certification process starts with entering your business into four databases: EIN ( IRS Employer Identification Number), Dun & Bradstreet, CCR (Central Contractor Registry) and the GLS (Global Login System). You should register in these databases in this order. Applying for and getting your login/ password information back can take about a week. Once you have received your GLS login, you can go online and begin your SBA 8a application process.
Previously, a business owner could choose whether to submit their application online or in hard copy (paper-based). Now the norm is electronic applications, with a checklist and followup with paper copies of all data you entered, plus income tax and company business filings. Depending upon your situation, you may have to provide additional information.
Once your online application has been filled out and you have printed and mailed your application to one of the two SBA processing centers (Philadelphia and San Francisco), you can expect to hear back on an initial screening within a couple weeks. At that time you might be told your application is not valid or the SBA will request additional paperwork. It is important to respond back as soon as possible and address all issues. Once your have responded, there will be about a 90-day review process. After the review, you will be notified if your company was accepted. Again, you may have to provide additional information, so do so in a timely manner.
If you are thinking that is it, hold on. There is one more hoop. Within a month of receiving your acceptance letter you will be contacted by the local SBA 8a office about making an appointment to meet with a Small Business Representative. At that meeting you will go over the SBA 8a program benefits and then be handed another form (33 pages - no I am not kidding!) that outlines your business and marketing plans for the next year. I recommend that you download the form and get it completed to take with you on the initial visit. Then you can hand it to the Rep and be done with it. It should only take a couple more days and POOF, you are officially in the SBA 8a program. You can now legally bid on SBA 8a set-aside contracts.
What are the components of the SBA 8a Application? There are two main parts: the online application where you copy numbers from tax forms into various online forms. The second part is completing a social / economic disadvantage narrative. This is the most difficult part of the application. Why? Because you are telling the story of all of the humiliations, disappointments and failures you have endured moving from student to employee to business owner.
The narrative is a "lemons" story, instead of lemons to lemonade. Many people get stuck on this part and never complete their application. There are no clear instructions or criteria given by the SBA on writing the disadvantage narrative. We recommend that since the small business arena has become so competitive, you will want to examine getting help preparing your application or at least the disadvantage narrative.
There are many choices out there, but we recommend that you go with a company that specializes in SBA 8a application preparation rather than just a small business generalist. The SBA is changing their processes frequently, so you need a specialist to turn to.
This is an historic time to get your company certified. Catch the 8a wave and ride it through these tough times as you grow your small business towards prosperity.
Design2Train, a SBA 8a certified company, was founded by Karen Miller in 2001. Since 2006, Karen has helped small business owners across the nation prepare their social disadvantage narratives. In May 2009, Design2Train has welcomed Mark McComans, a new consultant who was a former SBA 8a Reviewer on staff. Together Karen and Mark bring a holistic approach to counseling small business owners on getting SBA 8a certified, locating SBA loan opportunities and getting that first SBA 8a contract to success. Download our free Special Report and learn more at: [http://www.form1010narrative.com]
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Empowering Entrepreneurs - Purchasing Co-ops Give Small Businesses an Edge
By Donna Abernathy
Howard Brodsky set out to conquer the carpet world. Dan Bleier just wanted to save his family-owned business. But both cherished their independent status in a retail chain, "big box" business world. Now, each realizes success through a purchasing cooperative.
The pair spent almost eight months reviewing different business models, disqualifying one after another. Then they looked at cooperatives. Brodsky and Bleier are founders of two of the estimated 300 purchasing cooperatives in the United States-a sector which serves roughly 50,000 independent business owner-members.
"The co-op was the ultimate choice to bring (buying) scale to local ownership while honoring their differences and valuing their independence. It also allowed us to leverage our efforts to serve their best interests," says Brodsky, chairman and co-CEO of CCA Global Partners. "By comparison, other business structures didn't endure."
Entrepreneurs across the American business landscape-from furniture dealers to funeral service providers-are using co-op power to level the playing field between family-owned enterprises and mega-retailers.
Purchasing co-op owner-members are joining together to increase the competitiveness of their independently owned businesses. By pooling their buying power to acquire inventory and services, they lower operating costs, better respond to competition, and improve their businesses' overall performance.
Conquering the world
By virtually every business standard, CCA has more than endured. It has exploded. Starting with 13 members, the cooperative has grown to 650 owners who operate 3,600 independent stores around the world. The company reported sales exceeding $10 billion last year and has never experienced an unprofitable quarter in its 24 years of existence. Sales have jumped 325 percent in the past eight years.
"If you give a smart entrepreneur the best tools, he can outplay the big guys. He needs to buy better, brand better, have the best training, best hiring and best marketing," he adds. Today's CCA members engage in the flooring, mortgage banking, lighting and bicycling industries. Considered together, CCA's flooring affiliates represent the largest group of retailers in the world.
Competing effectively
Reading about the success of co-ops like CCA inspired Bleier, who needed to find a way for his family-owned Able Distributors to effectively compete with "the big boys like Home Depot." He reversed the negative trend by becoming a founding member of Blue Hawk Cooperative in 2005, a Phoenix, Ariz.-based co-op with 200 members-mostly family-owned companies-that own 871 distribution locations in 50 states.
Like typical purchasing co-ops, Blue Hawk offers its members centralized, cost-saving buying plus warehousing, marketing, merchandising and financial reporting-services that give members like Bleier the ability to compete in the marketplace. But competing is not enough, says Lance Rantala, the co-op's chief executive officer.
"Our plan is to have each Blue Hawk member-owner grow their combined market share by 10 percent," he says, explaining how partnerships with manufacturers and contractors help build a healthy and profitable business environment for all participants.
Blue Hawk members like the control they enjoy as owners. The co-op business model provides a welcome contrast to buying groups-a common inventory procurement option for independent HVACR distributors-which the members neither own nor govern.
Furniture First's membership is by invitation only. Prospective members of the Harrisburg, Pa. headquartered co-op undergo an intense evaluation process, complete a 16-page application that includes a detailed credit history. Hartman believes the rigorous process is necessary to determine which retailers will make the best members.
Beyond Buying
Though collective buying of goods and services is at the core of every
Purchasing cooperative, today's member-owners want- and need-more to succeed. Their co-ops are obliging by offering industry-specific support to enhance almost every facet of business management.
From the beginning, CCA has provided its member-owners with "a better level" of services, marketing, training and merchandising. The co-op offers an extensive selection of online training courses for the employees of member stores. To date, employees have completed almost 300,000 courses.
Blue Hawk members benefit from "extras" such as improved marketing channels, public relations, lobbying efforts, educational and training programs, networking opportunities, sharing business best practices and technology support.
Across the purchasing co-op universe, many consider peer-to-peer networking a bonus of membership. Most co-ops hold membership conferences annually, giving members opportunities for face-to-face discussions, and provide online networking tools to help members share ideas and information.
Surviving Tough Times
Small business is risky business these days. A distressed national economy is not favorable for smaller enterprises, which account for about 99 percent of the country's business. "It's the worst I've ever seen it," Furniture First's Hartman says about the rising costs and shrinking profits for independent businesses.
Though they can't deliver miracles, purchasing cooperatives can provide relief to beleaguered small businesses-sometimes in unexpected ways. For instance, a new movement that brings together retailers by common location rather than business sector is gaining steam.
Knowing firsthand the power of purchasing cooperatives, CCA's Brodsky believes these independent business owners are learning one of the most important realities of co-op life: There is strength in numbers. "In troubled times, you don't want to be alone. That's the worst," he says. "Join a co-op because it gives you all the support and tools to compete."
Sidebar: How to Start a Purchasing Coop
Whether they sell home building supplies or hamburgers, savvy independent business owners are finding that working cooperatively is the key to surviving and thriving. Rosemary Mahoney, chief executive officer and cooperative developer for Lovingston, Va.-based MainStreet Cooperative Group, offers these start-up tips to entrepreneurs interested in cooperative development:
1. Find friends. Every cooperative begins with a group of like-minded people. Determine if the perceived threat or opportunity you have identified is shared by other independents. Work to form a core of organizers who are respected by other independent business owners as well as vendors. Not getting the right members at the start is a mistake that can lead to failure.
2. Explore the options. Before making plans to organize your own purchasing cooperative, determine whether any other cooperatives are
already serving your sector. If so, can you join that cooperative?
3. Crunch the numbers. Estimate the total amount of your sector's business volume that is handled by independents. Is this amount of volume significant to your suppliers? Do your suppliers need independent businesses in the sector? The ability to convince vendors to support a start-up cooperative is essential to its success. You must be able to prove that your co-op can deliver a significant amount of volume and bring value to the vendor.
4. Do your homework. Find one or two cooperatives in similar industries and talk with their management and some members to learn more about how cooperatives work. You'll be surprised at how many cooperators are willing to talk to those seeking more information.
5. Lay a strong foundation. If you decide to go forward in establishing a purchasing cooperative, be sure to work with an attorney who understands this business model. Also, raise enough capital to hire a chief executive officer who is both an industry expert and well respected by vendors and potential members. Trying to self-manage a co-op is a mistake. Most entrepreneurs are too busy running their own business to successfully and simultaneously manage the day-to-day operations of a co-op.
Donna Abernathy writes for the National Cooperative Business Association (NCBA). NCBA develops new cooperatives through partnerships with CooperationWorks! -a network of rural co-op development centers-and the Urban Cooperative Development Initiative. For more information, contact Adam Schwartz, vice president of Public Affairs and Member Services, at 202-383-5456 or [email protected].
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Tips on Picking a Roofing Contractor
By Justin Ewart
Consumers need to feel that the roofing contractor they pick can be trusted to perform the work that needs to be done in a timely manner and with safety concerns taken into account. By following a few simple tips, consumers can be assured that they are hiring the best roofing contractor to do their work.
All contractors in Southern California are required to be state licensed and insured; this includes the roofing contractor that the consumer picks to do their work. The roofing contractor should not only be state licensed and insured, he is also required to provide Worker's Compensation Insurance for all of his employees. Consumers need to check the status of the contractor's licenses and insurances, as well as retain a copy of said paperwork for their files. Doing so will ensure that the consumer is protected in case any accidents occur on the job.
When choosing a potential roofing contractor, homeowners should obtain a minimum of three bids with clear details of the proposed work. It is also a good idea to get some references from each contractor as well. A roofing contractor might be the nicest and most congenial individual the consumer has ever meet, but his previous work and past customers can give a homeowner much needed insight into what to expect for the duration of the job.
After the homeowner has settled on his choice of roofing contractor, a meeting is required to sign all of the formal contracts. This is the perfect opportunity to make sure that everybody involved has a clear understanding of all of the work to be done and eliminates the potential for surprises or cost overruns. No matter how good the contractor is, there can sometimes be things that the roofing contractor will be unable to anticipate, like unseen damage to substructures or the need for repairs from unseen water damage.
During the formal signing of any contracts, the roofing contractor will ask for a deposit before starting the job. This is typical, but the homeowner should never feel pressured to pay more than ten percent up front and should never pay for work that hasn't been done yet.
Roofing jobs are usually messy projects and the homeowner needs to be aware of this. Homeowners should feel comfortable addressing any concerns they might have throughout the duration of the project. Trees and shrubberies might end up damaged during the job and homeowners need to feel comfortable that the contactor will take the necessary steps to minimize any problems or damage that might happen. It's as simple as feeling comfortable with discussing any potential issues and building trust in the chosen roofing contractor.
By following these simple tips and by establishing good communication with the roofing contractor, many potential problems can be avoided. Consumers need to keep in mind that the roofing contractor they choose will be coming and going during the course of the job and therefore, they need to feel comfortable that their roofing contractor is someone they can trust.
Justin Ewart is a Roofing Contractor and owner of 4myroof.com. Specializing in residential, commercial and green roofs 4myroof services most Los Angeles roofing needs.
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4 Step Guide to Contracting Opportunities For the Disaster Relief and Reconstruction Process
By Gloria Berthold Larkin
The federal government anticipates spending over $150 billion dollars for the Katrina and Rita hurricane disaster relief and reconstruction efforts. Contracting opportunities abound for businesses of all sizes and types and there is a great need for varied services and products. Businesses throughout the US can explore the contracting opportunities by following these four steps.
The disaster-related services and products needed in the Gulf states will cover every aspect of life, business and government in the affected areas. Savvy companies are working to fill the needs now. However, this is a long-term, multi-layered process. While initial contracts have already been secured, there will be many more contracts worth billions of dollars to come over the next 6-12-18 months and longer. Those firms that employ both short-term and long-term strategies will be the most successful.
Step 1: Identify the Agencies with the Budgets to Buy What You Sell
This is one of the advantages in doing business with the federal government. Unlike the corporate environment, you can find out what agencies have budgets projected for your products and services and when they are planning to spend it.
The Department of Commerce Hurricane Contracting Information Center (HCIC) will help U.S. businesses, especially minority and small businesses, participate in the Gulf Coast rebuilding efforts. The HCIC allows companies to register with government agencies that are providing contracts to rebuild the Gulf Coast. The HCIC also provides basic information on doing business with the government, e-mail alerts regarding specific contracting opportunities, links to other government and local agencies, and information about minority business services.
The Department of Homeland Security (DHS) is constantly changing to best serve the nation's requirements. The 22 agencies that initially made up the DHS originally maintained independent purchasing power. Now, the eight offices listed here are responsible for all procurement functions of the DHS.
DHS Acquisition Offices:
DHS Headquarters
Federal Emergency Management Agency (FEMA) Note: FEMA is the key agency responsible for the majority of disaster-related budgets
Customs and Border Protection (CBP)
Federal Law Enforcement Training Center (FLETC)
Immigration and Customs Enforcement (ICE)
Transportation Security Administration (TSA)
U.S. Secret Service (USSS)
U.S. Coast Guard Office of Procurement Management (USCG)
FedBizOpps is a federal government website that provides a central listing of most current federal contracts. Register at their website to receive the notices of bids and contracts that go through the normal contract advertising process. However, it has been noted on the FedBizOpps web site that many emergency contracts may not make it to this public forum. You may need to contact each agency to determine the specific opportunities available.
For past expenditures, check with the Federal Procurement Data Center (FPDC), part of the U.S. General Services Administration. The FPDC manages the Federal Procurement Data System (FPDS), which is the current central repository of historical information on Federal contracting. The system contains detailed information on contract actions over $2,500. The Executive departments and agencies award over $200 billion annually for goods and services. The system can identify who bought what, from whom, for how much, when and where.
Prime or General Contractors (GC) will be a source of sub-contracts for companies of all sizes. This disaster is of a magnitude that the US has never seen before and many contracting operations will be handled directly by Primes or GCs.
Action Items:
A. Check the agencies that have a history of purchasing your products and services.
B. Use some sort of contact manager software like ACT! or Goldmine to build your own government procurement database and schedule regular follow-up.
C. New vendors: Get registered in the Central Contractor Registry: http://www.ccr.gov
Step 2: Find the Specific Offices in Your Targeted Agencies That are Most Likely to Purchase Your Products and Services
The DHS and US Army Corps of Engineers (USACE) have nationwide agencies and offices, as do Primes and GCs. Do you want to target areas that are geographically convenient to you? Do you have service, shipping or delivery issues that demand a local presence to your customers? How will this affect your bottom line? Can you effectively offer regional, national or international support? You will be most effective if you geographically prioritize the specific agencies, primes, GCs and offices to target.
Action Items:
A. Contact the agencies to participate in their Vendor Outreach and one-on-one sessions.
B. Review the DHS Prime Contractors list on the DHS website for the top five that are your best matches. Contact the small business liaisons to schedule capabilities briefings.
C. Visit the USACE website: http://www.usace.army.mil/ and identify the General Contractors (GCs) that are your best matches.
Step 3: Identify the Specific PEOPLE in Your Targeted Offices
You want to find the specific decision-makers because they are your best connections to getting the business you want. They are THE KEY to your success. Finding the right people and taking the time and effort to building solid relationships will guarantee your long-term success.
Finding the agencies and end-users who buy what you sell is one of the most difficult aspects of government sales. And yet it is one of the most important because finding the people who buy your product or service is the most critical step in a successful targeted marketing and sales program.
Within the agency, thousands of program managers, program professionals, operating supervisors, engineers, and scientists participate in deciding what to purchase and from whom. These are the people you want to take the time find and to whom you want to introduce yourself.
The strategy is to identify both the end-users and the people involved in the actual procurement process. Market your abilities, solutions and products to the end-users so that they recommend your products and service specifications to the procurement personnel, so that yours is the company the bid "was written for."
Action Items:
A. Use the DHS and USACE websites to identify the following people who are keys to your success and put them in your contact manager software:
--The Points of Contact (POC) for the US Army Corps of Engineers, DHS agencies, State agencies, Red Cross, etc.
--The Small Business Specialists
--Prime Contractor Small Business Liaisons
B. Use the information you have researched from the FPDC web site to detail the specific people who have purchased your products or services in the past. Add them to your contact manager.
C. Set up a schedule of contacts with these people. The contacts should include personal phone calls, emails, direct mail, visits during procurement conferences and all out-reach sessions. Try for at least 12 to 18 touches per year. Since active procurement projects are progress, step this up to every few weeks.
D. Long Term Action Item: As you build relationships with the Contracting Officers and Specialists, ask them for the names of the end users who are involved in the projects related to your products and services. Ideally, as you work with them you can begin to really understand the problems they experience and educate them how you can solve those problems. And perhaps become a preferred vendor.
E. Join the International Association of Emergency Managers
Step 4: Identify Business Development Processes Appropriate for Your Services and Products
If you want to develop both short and long term business opportunities involved in the disaster reconstruction process you must develop a strategy that utilizes a variety of tactics. These are the most effective:
Web site: Make sure it is specifically addresses the government's purchasing best practices on your home page. Does your home page also note your GSA schedule and certifications?
Email: Is it professional? Do you use your business domain name? Or are you still using yahoo, hotmail or some non-business related address? It is very important to appear as professional as possible. Your business should be stable, reliable, established. Free or personal email accounts make you appear fly-by-night or non-professional.
Do you accept government purchase cards? This is mandatory in the government contracting environment. And it also works to your advantage by speeding up payments.
Action Items:
A. Take a critical look at your business development tools to determine if they meet the specific needs of your government prospects and clients. Give your website TOP PRIORITY.
B. Identify the companies that could be good teaming partners. Add them to your contact manager and start the relationship building process.
C. Schedule a pro-active contact process with all targeted contacts and assign specific tasks to specific people in your firm.
If you use these specific tactics and strategies you will find that you will have better opportunities for government contracts in both the short and long term.
FedBizOpps can be found at http://www.fbo.gov
Gloria Berthold is President of TargetGov at Marketing Outsource Associates, Inc. She is one of Maryland's Top 100 Women, a Winner of the Innovator of the Year Award, Past-Chairwoman of the Baltimore/Washington Corridor Chamber of Commerce, a national speaker, educator and expert in government contracting and effective business-to-business marketing strategies. She can be reached through http://www.targetgov.com
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Small Business - Survive the Economy - Bid on Government Contracts
By Sean P. Murphy
To say U.S. small businesses are struggling in this economy is an understatement. Businesses today are finding that materials cost more, insurance premiums are skyrocketing, the credit markets remain frozen, and consumers are staying home more often. To make matters worse, current economic forecasts predict this recession to continue into next year.
However, some business leaders are finding that there is still one customer that actually looks to small business now more than ever before - The U.S. Government.
Each year, the U.S. Government spends approximately $500 million on goods and services - a figure that will grow under President Barack Obama's stimulus plan. As the world's largest consumer, the government regularly procures bulk quantities of virtually every type of goods and services. For example, last year in my home state, Illinois-based contractors were awarded over 4,000 contracts totaling over $13 billion - $1.6 billion of which was competitively awarded to the only contractor that provided a response to the government's solicitation. Most of those contracts went to businesses employing less than 50 people. In fact, the government actually requires that small, women-owned, or disadvantaged businesses receive preferential treatment in the selection process.
But for many business leaders, the mandatory steps to becoming a government contractor is often too complex and burdensome of a challenge to overcome. The process is regulated by the 1,900 page Federal Acquisition Regulation and varies from agency to agency. Business leaders without government procurement expertise or knowledge of the federal bureaucracy are left without access to the 500-1000 bidding opportunities released by federal officials every day.
Fortunately, there are some avenues that attempt to bridge this gap. For example, the U.S. Small Business Administration and U.S. Department of Commerce offer information to businesses attempting to navigate the administrative processes and hurdles associated with getting started. Businesses interested in supplying goods to the government should look getting on GSA Schedule, a supply-side purchasing program administered by the U.S. General Services Administration that makes products of lowest cost and highest value readily available to government purchasing agents. Also, though bidding requires advanced registration through the central contracting registry and other registries, the government website [http://www.fedbizops.gov] offers notice of government procurement actions over $25,000. This can be a great tool for any businesses looking to gain entry into the government contracting world.
Companies wishing to aggressively market themselves in Washington may choose to directly engage program officials to demonstrate their product's value in person. It can an arduous task to get on busy administrator's schedules, but if successful, it can be an extremely effective approach as product awareness often effects program officials sourcing decisions.
As budgets in Washington grow, so will the demand for new products and services. In the coming months, President Obama will continue to staff his administration and both the pace for need for goods and services will increase. Literally billions of dollars will be spent on goods and services on projects all across America. In this historic time, businesses of every type would be well advised to survey the opportunities before them.
Sean P. Murphy founded The Gadsden Group after having served as a federal official for nearly 10 years in Washington, D.C. Helping small and mid-sized businesses get out of recession survival mode and begin profiting again, The Gadsden Group navigates the federal bureaucracy on behalf of its clients and offers it's knowledge to businesses looking to sell their products and services to the U.S. Government.
Business leaders interested in bidding on government contracts or selling to the federal government should visit [http://www.thegadsdengroup.com] or email Sean P. Murphy at [email protected].
Article Source: https://EzineArticles.com/expert/Sean_P._Murphy/31910
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Local, State and Federal Government RFPs: What's the Difference?
By Tony Pasquo
Government requests for proposal or RFPs are contract possibilities for your firm. Even with the tightening of finances all through recent years, the government continue to acquires items and solutions on a substantial scale. Within local, state and federal sectors, 1000s of RFPs are distributed on a daily basis. There are a large number of resemblances in the government RFP operation at the localized, state and federal stages.
As an example, all government organizations are required to hold to rules fashioned to be sure that taxpayer cash is spent properly, RFP deals are not accorded for fraudulent causes, and all businesses (small and big) are granted a fair possibility to release a response to the RFP written agreement. Virtually all state RFPs and localized municipality RFPs moreover share the exact same essential core equipment found within a federal RFP as well as a due particular date and official solicitation bid data(s) submitted by the government company, like forms and instructions crucial for bid distribution. So, what is the change between state RFPs and federal RFPs?
Local Municipality and State RFPs
A request for proposal from a localized or state agency could possibly have a considerably more local target audience of future contractors. Often, a localized government needs to maintain the arrangement for the RFP with a "localized" contractor. The problems may be in finding these localized and state agency RFPs. Just about every localized and state run agency has its unique process of placing the RFP. Agencies will work with their unique website, the paper, a shared system for the district (such as the Michigan Inter-governmental Trade Network or Florida Online Bid System) or a blend to submit RFPs. There are actually no central, government-run online state and local bidding marketplaces. However, a government bid matching service such will put together all of the localized and state RFPs on the net and at the same time present electronic email messages of localized and state RFPs gathering your type and territorial standards.
It is most effective process to always "know" the agency and develop a bond with them in the course of the RFP bid reaction time period. This is specifically accurate for localized and state agencies. A strong rapport with the localized agency soliciting the request for proposal is a must.
Federal Government RFPs
The agencies within the federal government have stricter regulations when soliciting requests for proposal. By law, federal agencies are required to build contracting targets for distinct types of businesses (small businesses, women-owned businesses, small disadvantaged businesses, etc). Federal government agencies should totally adhere to the monetary condition, workforce capacities and monitor record of a prospective contractor. As of October 1, 2001, the federal government agencies should post all procurement opportunities estimated to surpass $25,000 on FedBizOpps, a central data bank of all federal government RFPs. Expert services also gather the details from federal government RFPs enabling your localized, state and federal government RFPs to be centralized and your RFP outcomes to be customized to your product/support categories and location.
Being aware of the resemblances and differences within the government RFP procedure at the local, state and federal levels can make all the difference when publishing your coming bid.
http://www.bidnet.com/bne/en/public.supercategories.statelocal
http://en.wikipedia.org/wiki/Request_for_proposal
http://blog.confluentforms.com/2009/06/6-steps-to-writing-better-request-for.html
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Government Websites - Cook A Cake Or Buy A Jet Engine
By Donald Yates
Even though the United States Government is a body of laws and restrictions, it also offers many little known opportunities for its citizens. The federal government, being the largest employer in the United States (state governments being second) is also a treasure trove of information and goods, much of which are at little cost or free for the asking. Because the government deals in public safety and statistics, there are specific agencies directed toward providing information on all aspects of living and doing business. There are teams of fact finding people gathering information on subjects ranging from the life span of a bug to space travel and everything in between. Each agency maintains a data base of facts on their particular charge. Most of these facts are public information and can be used for study, research or publicizing, without having to acquire special permission.
Try Out A Government Auction
Federal and State governments hold scheduled auctions for public benefit. The Federal government also holds an on going surplus auction which is open to the public. Also, many new items the government purchases are offered to the general public at a reduced price. From bedding to commercial kitchen equipment you can buy new, from the government. Non profit organizations fair even better because they can buy many surplus items not offered to the general public.
I have had the experience of buying at government auctions. The range of products found at auction never ceases to amaze me. I have seen every thing from dental equipment to Jet engines sold at ridiculously low prices. How about a building or, what the heck, a C-131 airplane? You can find them at government auctions. True, for some items you have to sign an affidavit as to what you are going to do with the product which is easy for law abiding citizens but not so easy for felons. Most items are sold in lots, meaning there could be ten to one hundred items in a lot. You should be careful however, the pictures they show can be deceiving. I once paid forty five dollars for what looked like twenty or so new uniform pants and shirts. When I picked them up there were three huge boxes full, adding up to over a ton. Luckily I was driving a heavy duty 4X4 pickup that could handle the load. Another thing, you will probably have to travel a few hundred miles to pick up your product. Take into consideration the cost of retrieving your purchase or having it shipped to you. This cost will outweigh the purchase price itself by a huge margin.
Use Caution
Another time I bought some shelving. I drove all night from Tennessee to reach Maryland and to my surprise found there were over 45 hundred pounds of shelves. My pickup wasn't big enough and I couldn't justify the cost in renting a truck so I had to abandon the purchase. When you do that they re-auction the item with no refund. On the other hand I bought two portable generators that I picked up in Virginia that were like new, but they had oddball government receptacles that had to be converted. Oh, and there are thousands of cars for sale, of every make and model, for very little cost. The same rule applies, be careful, you could end up with a pile of junk. Call the sale administrator and ask some questions. They are always happy to assist with a thorough description of the item. I called once on what looked like a dozen or so tires. It's a good thing I did, it would have taken a eighteen wheeler to pick them up.
It's a little intimating
Go on-line to gsauctions.com or gogov.com just to name a couple where continuous auctions are in progress. Register, the same as you would with ebay, and sort through or search for an item to bid on. Place a bid, using a credit card as your collateral. If you are outbid and at bids close you will be notified by the email address you provided to them. If you win, you have a set number of days to pickup the item. Caution: Find out which days they are open for pick up. Be sure to be there within their operating hours, and have all your paperwork ready. It wouldn't hurt to tip the loader if you will be coming back another time. The people who run the auctions are contractors and have their rules while they are on a military base which has its rules. It's just a matter of following instructions and working with both entities for a smooth experience.
Like anything else, Government auctions can be a good or bad experience. Just be cautious and your experience will be good. Be prepared for anything from having difficulty getting onto a military base to a crabby loader but the transaction will go smooth nine times out of ten. It's that one time that is aggravating. Remember, the customer is always right does not apply when dealing with the government and its contractors. If you want that really good deal, you will have to put up with condescending people. Not to say they are all that way, they are not. Most people are very nice and willing to bend over backward to make your experience a good one.
In Concussion
The Government is a valuable resource for information and will provide assistance in obtaining grants or government backed loans. State and Federal Government has auctions and sales open to the public. They have how to publications on saving money on heating cost as well as driving tips. Use your Government they get paid to be there for you.
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Water and sewage management in the United States is a million dollar industry under control of the federal or state government. If you take up government contracts, there is a lot of work and of course, your business prospers. However, government bidding process is decentralized and often you have to be on the concerned government agency's bidding list to get to know of bids or RFP opportunities. But, if you are in the water utilities industry and want to efficiently increase your sales and business you can find extensive listings of water and sewer utilities bids and RFP opportunities at H2bid.com.
As a vendor, you might spend a lot of time trying to find bids and RFP opportunities that are posted on various different sites; tracking the best water and sewer utilities bids can indeed be a massive task. However, with the water utility companies following the modern approach of e-procurement of services, the task is somewhat easier for the vendor. H2bid.com has made the vendor's task even easier by compiling extensive listings of water and sewer utilities bids and RFP opportunities at one place.
H2bid.com focuses exclusively on the water and sewer utility sector; all the information pertaining to water and wastewater bids, requests for qualification, request for proposal, requests for information, etc. is easily available in one place. In short, H2bid is a complete database on water and wastewater utility projects that are open for bidding. The H2bid website is extremely user friendly and provides access to extensive listings of water and sewer utilities bids and RFP opportunities.
Water utility companies - whether it is a private or government agency - can post bids and RFP opportunities on the website. Posting of bids is free for the water utility contracts companies. Online bidding facilities are available at H2bid and vendors who have a premium membership at the site can also opt for the online bidding process and thus save a lot of time.
The water and wastewater industry as we know is huge and there exist thousands of opportunities for work contracts. These include jobs like construction of water treatment plants or dam construction or setting up of sewage treatment plants which are large contracts meant for big business houses. But the industry also requires services like laying of pipelines, setting up of drainage systems, desalination of water, installation and supply of water pumps, supplying of meters, manhole covers, pipes, water tanks and ancillary material. These present work opportunities for small vendors and businesses.
No matter what the type of job is, if it is related to the water utility sector, you are bound to find extensive listings of water and Water utility tenders and RFP opportunities at H2bid.com. Using the proper keyword, you can search for the utility bid of your choice, very easily.
The purpose of wastewater treatment is to dispose off human and industrial effluents back into the natural environment without causing undue damage or posing health hazards. The process of wastewater treatment involves physical, chemical and biological processes that aim to improve the quality of the wastewater released in the environment. There are three levels of wastewater treatment, namely primary, secondary and advanced.
Primary wastewater treatment is designed to separate the solid, suspended and floating objects in the raw sewage. It includes a preliminary process of screening the raw sewage to trap suspended particles as well as sedimentation to remove the solid particles.
Secondary wastewater treatment involves biological processes that aim to remove organic matter dissolved in the sewage with the help of microbes that consume it for their own growth. Additional sedimentation process in settling tanks may also be carried out to remove the sludge from the sewage at this stage.
Advanced or tertiary wastewater treatment tries to remove all the impurities from the wastewater to produce almost drinking quality effluents. However, this is an expensive process requiring high level technical expertise, resources and machinery.
Finally, disinfection of the treated wastewater may be carried out to destroy harmful bacteria and other organisms that may still be present in wastewater.
Wastewater treatment is a huge business opportunity. Municipalities and local government authorities that manage the city water systems are constantly on the lookout for service providers that undertake wastewater treatment processes. Generally, Dredging tenders are posted by water utilities advertising water treatment-related jobs and service providers with the relevant expertise bid for it. Finding water treatment bidding opportunities is now extremely easy using online resources.
New Desalination Bidding Opportunities
Desalination is a process where seawater is converted into fresh, drinking water by removing the salts and other harmful substances. In places where there is scarcity of potable water, desalination is undertaken. Desalination can be done with a process called 'Reverse Osmosis'. In reverse osmosis, the water is filtered for impurities and salts by passing it over a series of membranes.
New desalination bidding opportunities are available online, just like those for wastewater treatment and purification. H2bid.com is one of the leading online resources that you (water utilities) can use to post a project.
Service providers with the technical expertise in this area of the water business can simply log on to H2bid.com and search for bidding opportunities corresponding to their line of work. They can get detailed information about such projects and bid for suitable ones. Members at the portal can even bid online if the utility company has opted for the e-bidding process.
H2bid.com is a useful resource that brings together service providers and Scada tenders companies in the water industry. Check out the site if you need to know about the latest water treatment and new desalination bidding opportunities available.
Provided that you are a minor business attempting to look for additional salary chances, having an administration office as an accomplice is likely your best step. At the same time how, you will clearly ask. Yes, a considerable measure of little entrepreneurs like you have no information about how to offer merchandise and administrations to the central government. This is in spite of the way that it designates a tremendous entirety of cash for these sorts of organizations. This is additionally notwithstanding the way that there are national government contracts composed particularly for them.
Gave me a chance to let you know that offering on government contracts is not simple. Some even portray this as an extreme excursion to billions. At the same time hey, winning billions of dollars for an elected contract would all say all is worth the trouble, correct? Snatch the possibility. Look for the national government offers. They are accessible on the web.
Aside from the open-to-open offers, a few orgs, however, are making private welcomes for offers. Anyway since you are new, you can at first rely on upon joining government offers that are interested in everybody. In the first place, however, you should know how to offer on government contracts.
The Small Business Administration (Sba) records some contracting chances for little entrepreneurs like you. Read this painstakingly. Don't quickly plunge into the particular case that you find intriguing all due to the tremendous sum included. Be correct to yourself. Check your ability to deal with the undertaking.
You additionally need to read the necessities. The legislature is exceptionally strict with this. Check provided that you can generate every last one of them. If not, don't squander your exertion and time. Go search for the particular case that will give you a battling risk.
Furthermore, when you attempt to offer on government contracts, you are up against different organizations. Thus, don't be excessively sure with your proposal. As you teach yourself with the offering process, attempt to study how to do an adequate and winning offer. All the more critically, show the national government that you are deserving of their trust and obviously, cash. Incidentally, keep in mind to enroll with the Ccr or the Central Contractor Registration. It is the place the potential elected builders kind of present themselves for offering.
Knowing how to offer for government offer chances will help you to winning an elected contract for your organization. It will furnish you with the best possible headings to solid national government offers. It might take a protracted perusing and a period devouring study, yet it will be all worth the trouble.
To study more about government offers, snatch a duplicate of the Government Procurement Exposed ebook. It will instruct you on the most proficient method to do government offers. It has complete data that will help you expand the possibilities of your minor business
The State of Colorado
By Michael Tasner
Located in the Rocky Mountain region of the United States of America, Colorado may also be considered to be a part of the Western, Southwestern, and Central regions of the United States. The United States Census Bureau estimates that the state population was 4,753,377 in 2006, a 10.49% increase since U.S. Census 2000.[3] Denver is the capital as well as the most populous city of Colorado. Citizens of Colorado are known as Coloradans.
Living and Working
The beautiful spot in Rocky Mountain National Park, the beautiful wildflowers, sunshine and blue bird skies add a surreal glow to snow-capped mountains, aspen-lines streams, red-rock formations, cascading waterfalls and glassy alpine lakes are just some of the most spectacular scenery which would make just about anybody choose to buy a house in Colorado.
From the majestic Rocky Mountains to the sights and sounds of one of the nation's most vibrant cities, living and working in Denver, Colorado is always exciting. Denver has great schools, leading universities, famous parks, cultural and world-class sporting events, and vacation spots that attract visitors from around the globe.
Doing Business
Bid Notification System - Vendors who would like to sell goods and services to the state should register for the Bid Information and Distribution System (BIDS). Vendors can review all competitive purchases conducted by state agencies, institutions, and colleges on the state's Internet web site, and registered BIDS vendors can review and download the Invitations for Bids (IFB), Requests for Proposals (RFP), and Documented Quotes (DQ).
Responding to Solicitations - The solicitation package includes a very detailed description of what the state wants to buy and how the vendor must respond. Many first time bidders mistakenly consider these directions to be guidelines or just a general picture of what the state wants. However, just the opposite is true. Proposals and bids must adhere precisely to the specifications and the procedures stated in the solicitation. For example, a bid must be received at the stated place, by the stated date and time. Late bids - even 5 minutes! - cannot be considered. Also, in most cases, vendors must be registered for BIDS in order to submit a bid, proposal, or quote.
Minority and Woman-owned Businesses (M/WBEs) - The State of Colorado works to ensure that minority and woman-owned businesses have an equal opportunity to compete for the state's business and to ensure that state purchasing policies and activities do not facilitate illegal discrimination. To that end, purchasing offices collect information about the goods and services they buy and the vendors from whom they buy. However, the state does not utilize preferences or set-asides to reach specific levels of M/WBE participation, and it does not require that businesses be "certified" in order to be considered minority or woman-owned enterprises.
Education
The Colorado Department of Education (CDE) is the administrative arm of the Colorado State Board of Education. With an organizational commitment to high standards, challenging assessments, and rigorous accountability measures, CDE serves the preK-12 public education, adult education and family literacy, and library communities of Colorado.
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