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Business Development & Growth

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Could Your Small Business Benefit Big from Runway Rules for Government Contracts?

by Kim Koster Business Development & Growth, GovCon

Jan 15, 2020

Recent initiatives adopted by the U.S. Small Business Administration to act on 2018 legislation are expected to open the door for more small businesses to vie for federal government contracts. Enacted by SBA in January 2020, the long-awaited rules implement provisions of the Small Business Runway Extension Act of 2018. As detailed in a 2019 Unanet-sponsored webinar on recent legislative and regulatory developments impacting small businesses, the law extends the look-back period for calculating the size of a business (based on annual revenue using receipts-based size standards) from three fiscal years to five fiscal years. Here at Unanet, we expect this “runway” extension will be a positive for small businesses by essentially enabling more companies to stay within the small business size standard for the purposes of competing for federal contracts. In particular, it may enable companies that have experienced a recent surge in annual revenue to retain their small business status and thus their eligibility for small business set-asides. For more on the law and the new rules that implement it, check out this article in Government Executive. Want to tap into Unanet’s expertise in small business government contracting for a deeper understanding of the new rules and how your company may benefit from them? Get in touch! We’re here to help!

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Cash is King for Government Contractors: How to Accelerate Cash Flow

by Kim Koster Business Development & Growth, GovCon

Nov 05, 2019

The ability to generate positive cash flow is important for a government contractor to create value and for so many small businesses, lack of cash can result in failure. Profitability is a good sign, but it’s not sustainable if the profits are stuck in accounts receivable (AR). There are two important metrics you can use to evaluate cash flow: Days sales outstanding (DSO): the number of days between making a sale and collecting payment – calculated for the year by dividing AR by Annual Sales and multiplying by 365. Invoice cycle in days: the number of days between the beginning of the billing process and customer acceptance. Keeping these numbers as low as possible ensures that your company can put cash to use more quickly. Days Sales Outstanding (DSO) In the 2019 GAUGE Report, 70% of respondents reported DSO below 45. Contractors are focused on reducing DSO, which has improved from last year in the Breaking it down by revenue scale, companies with higher revenues tend to have higher DSO. Among those with revenue up to $25M, 80% have DSO below 45, compared to just 37% of companies with revenue above $101M. Compare your DSO to others in your revenue band. Are you better or worse than the respondents? Invoice Cycles Since last year, invoice cycles are 12% better in the Breaking it down again by revenue scale, we see trends similar to DSO. The speed of invoice cycles for companies with up to $25M of annual revenue surpassed the other revenue scales in the survey. Compare your invoice cycle to others in your revenue band. Are you better or worse than the respondents? Characteristics of an ERP with Cash Acceleration in Mind Cash is king for government contractors! As a GovCon, it is critical to be able to automate and shorten the bid-to-bill lifecycle and to keep revenue recognition and billing completely in lock step. When looking for a tool, it is important to have: A time application that is part of the project based ERP system so that billing can be done quickly Traceability of all transactions Multiple, standard invoice formats to be used across projects, showing summary or detailed level information Ability to hide or show cost element detail on Cost Plus invoices Ability to include Fixed Price, Time & Materials, Pre-Bill Labor, and Additional Items on the same invoice Ability to defer items from the current invoice for future invoicing Ability to add one-time items such as additional fees or discounts After switching to Unanet, Phase One Consulting Group completes all month-close procedures in 5 to 7 days, reduced their invoicing process from 20 to 7 days, and improved DSO from 60 to 50. To learn more about cash acceleration for your government contracting organization, read Unanet and CohnReznick’s 2019 GAUGE Report. The GAUGE Report is a valuable benchmarking tool for GovCons who seek deep insights into industry practices and metrics. Download your copy today!

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Unlocking Growth Strategies

by Kim Koster Business Development & Growth, Professional Services

Aug 07, 2019

Using your financials to make sound business decisions and craft growth strategies. Growing is the goal of most businesses. What is difficult is formulating a plan to make the growth a reality. Where do you start? The answer is in the financials, both past and current. Best in class companies know that using financial information and measurable key performance indicators (KPIs) is the key to unlocking growth strategies. This blog will help you understand how to use financial information to find possibilities for growth. Data Quality Data quality deserves its own discussion because without it, there are no reliable KPIs. Here are some tips that will help ensure that you can gather reliable financial data that can be used confidently for making critical business decisions: Treat data like any other asset Use an integrated system (system = people, processes, and tools) Establish processes and procedures Train team members on tools and processes Have the discipline to enforce process adherence Have both historical and current data accessible to decision makers Good quality data can be put to work to help unlock growth strategies with the six steps below.  Define the KPIs that help drive your strategy Use internal and external benchmarks Look for trends in the data Account for Anomalies Take the time to probe deeper Utilize an Integrated Tool Set STEP 1 – Define the KPIs that help drive your growth strategy What is your overall strategy? Is it to grow a by a certain % over time? Or to grow a specific region or product line? Once a basic strategy is defined then associated KPIs can be identified. For instance:  If the desire is to grow 30% in 3 years the Compounded Annual Growth Rate (CAGR) is a KPI that can be utilized. If the goal is to grow one product line then looking at profitability and CAGR for each of the business portfolios would be an indicator of which product line to invest in. STEP 2 – Use internal and external benchmarks Benchmarking is a great methodology to look internally and externally to see what others are doing to be successful. Internal benchmarking across divisions, departments, portfolios can be very helpful. Unfortunately, many companies are still siloed with varying processes and procedure and disparate systems making the exchange of information difficult. External benchmarking can be very powerful and there is no prep or manipulation of the data internally ultimately saving money and time. Why is benchmarking externally so important? Gives a perspective of the overall industry Provides an understanding of what others are doing to be successful Produces ideas for improvement Makes the company more competitive Helps win more business and grow the organization STEP 3 – Look for trends in the data Data analysis is the process of inspecting, cleansing, transforming, and modeling data with the goal of discovering useful information, suggesting conclusions, and supporting decision-making. It requires that you look for patterns and relationships within the data. For instance, when looking at labor forecasts or utilization there will likely be more vacation taken in June, July, and December. Looking at trends will help you have a better understanding of the data and what it is telling you. Step 4 – Account for anomalies Look for special occurrences in the data. Occurrences like a huge snow storm that shuts the office down for a week resulting in no billable work performed should be analyzed and understood. It may not snow that much for another 20 years so make sure that does not skew the data you are making decisions from. Step 5 – Take the time to dig deeper KPIs are great but is can be worthwhile to understand what the underlying data looks like. An example is that the overall company profit rate was 10% and that is great! It would be important to drill down further to see what each portfolios and project contribution is to that number. You may have one portfolio that is excelling and other that is dragging down the average. Growth will likely happen in the successful portfolios and projects. Step 6 – Use an integrated tool set A fully integrated system will assure that the data is linked together properly increasing the probability of the data being correct. There will be no manual efforts to mash the data together from disparate systems. The “mashing” takes labor to join the data into one source costing money and introducing human error. Integrated systems like Unanet give you an all-inclusive look at financial data and there are easy to use reports and dashboards that provide all of the information you need to develop a growth strategy backed by great quality data.

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Tips for Developing Key Performance Indicators for Your Organization

by Kim Koster Business Development & Growth

Apr 16, 2019

If you can’t measure it, you can’t improve it! And if your organization is not measuring its performance, how can you hope to improve? Key Performance Indicators (KPIs) serve as important measures of your organization’s progress. They provide actionable insights to help you run your business on one single screen. These can be invaluable benchmarks that your team can use to determine if you are on track to reach your project and financial goals, giving you a clear path to growth. The Advantages of Key Performance Indicators They allow you to focus on corporate and strategic goals Real-time information gives you the ability to be proactive vs. reactive You can study lessons learned so improvements can be made in the future They provide insight into what types of projects to chase Tips for Developing KPIs It is clear that KPIs can greatly benefit organizations, but how can you ensure your KPIs are the best for your company? Some organizations use common KPIs within their industry. While this can be valuable for gauging industry-wide success, your organization will not grow efficiently unless you develop KPIs specific to your company’s resources, needs, and goals. Naturally, no two organizations’ key performance indicators will look exactly the same, but here are a few general tips for making sure your KPIs are a good fit: Avoid KPI multiplying—KPIs should reflect overall corporate goals The data quality must be good to have accurate indicators The person responsible for the KPI must have direct control over results Relevance to all levels of the organization KPIs should be in simple terms Benchmark both externally and internally Collect lessons learned and learn from the past Utilize a system that has easy access to KPIs that are real-time and accurate Examples: Utilization, %Complete, Earned Value, Gross Margin%, Net Margin%, Burn Rate, etc. In addition, you must make sure that your KPIs are not vague, abstract goals you hope to achieve someday. You need clear, actionable performance indicators that your team will use as benchmarks on the path to success. Each KPI you create should have the following details outlined: Concrete, specific details about what you hope to achieve. Goals that are realistic for your organization. Many organizations think too big and cannot reach these goals within their current means. A way to measure your progress. Do not think in abstract terms. Establish a system where each KPI is measured with thorough, real-time data. A realistic deadline by which you will complete your goal. Define benchmarks by which parts of the project or goal will be completed to keep you on track every step of the way. Define and Measure Your Key Performance Indicators with Unanet ERP software like Unanet is designed to help your organization manage its projects, people, and financials to promote project success and company growth. Unanet provides real-time insights and data that project managers, directors, and CEOs alike can use to measure their organization’s progress and make changes when needed. With an ERP system streamlining your processes, you can watch your business thrive and break new ground. To learn more about how Unanet’s project based ERP system can benefit your business, download our ebook, Selecting an ERP for Professional Services.