A full 80 percent of startup businesses fail within their first 18 months, according to a 2013 study by Bloomberg.
The reasons vary, but in many cases it’s because those businesses are a small fishes in big ponds that struggle to attract the clients they need to get established or to remain viable.
Those difficulties can be particularly acute for businesses owned by women and members of certain minority group that in many cases are trying to fight those trends while breaking into fields long dominated by white men.
That’s why in 1983, the federal government created the Disadvantaged Business Enterprise (DBE) program, which requires that at least 10 percent of funding provided for federal highways, transportation research, technology programs and mass transit work is awarded to those businesses.
“The program started in response to surveys done nationwide about highway construction, where federal funding was going to and what businesses were getting that work,” said Ramon Ceballos, who manages the DBE program for the Delaware Department of Transportation (DelDOT). “It showed that historically, minority-owned firms were not getting that work. Their participation was low, or not at all in some jurisdictions around the country.”
Ceballos and a staff of three monitor the program for Delaware, which includes overseeing the process that awards the DBE certification and determining whether contractors are complying with the law when hiring subcontractors.
The certification process is rigorous, Ceballos said. To qualify, a majority of the firm must be owned by a minority or a woman, and their personal assets, not including their homes or the business assets, must be worth less than $1.32 million.
The DBE certification only applies to transportation projects built with money provided, at least in part, by the federal government. Contract awards are not automatic, Ceballos said, and companies can’t assume contractors will be calling them just because they have a certification.
“They still have to compete,” he said. “They still have to be aggressive. We can’t tell contractors who to use.”
Part of the DBE program includes intensive training and classes to familiarize small companies with rules, regulations and the bidding process.
“It’s really hard for small firms to break in,” Ceballos said. “We try to drive that in to them. They need to come to meetings. They need more than just a business card and a handshake. That’s what we’re really good at.”
There are 402 DBE-certified businesses in Delaware, although only 99 actually are headquartered here. The rest have DBE certifications in their home states as well as Delaware.
One local DBE business is civil engineering firm Mountain Consulting Inc., which is owned by Kim and Troy Adams. The company also has been designated under the HUBZone program for working to bring businesses back to underutilized urban areas.
The company, which has six employees, received a federal contract at Dover Air Force Base under the HUBZone program, and recently designed two local, non-federal projects, including the construction of a community center at Dover’s Solid Rock Church and a parking lot/handicapped access for the renovated Baird Mandalas Brockstedt law firm on South State Street.
While the Adamses are happy with their DBE certification, they say it is of greater value to firms that bidd for work on construction projects, and not as much to those who design them.
“We got our first certification as a company through DBE, but we’ve put in the work and we’ve built the business ourselves,” Adams said.
However, they did say the training classes they took part in and the networking opportunities presented through the DBE program have been of considerable value.
“It was good,” he said. “The knowledge they provided, we can use that across the board to run our business.”
Ceballos noted that two major, federally-funded projects – construction of the Indian River Bridge and work on the Del. Route 1/U.S. Interstate 95 intersection in Christiana – took advantage of Delaware DBE firms.
Beginning in October 2011, Crawford Trucking of Frankford, provided hauling services for the Christiana project with its large tri-axial dump trucks. The firm has three employees, including Tammy Crawford, who not only owns and manages the business, but also drives the trucks.
She won the bid because her company had what the builder did not, Crawford said.
“A lot of times, the prime contractor uses their own trucks first,” she said. “It was the chance of a lifetime for me. The contract gave us work, steady employment.”
Having the DBE certification helps, but as Ceballos noted, having it doesn’t guarantee a DBE firm will get a particular contract.
“The DBE office is great and the support services you get are phenomenal, Crawford said. “They let you know when the bids come out and they do their best to help you get the work.”
With work on the Christiana project complete, Crawford said she is hopeful of winning additional contracts for work on the U.S. Route 301 project through Maryland and New Castle County.
“It all depends on how much work is out there and if we’re going to get it,” she said.
The DBE program also opened doors for Brandi Redrow, who owns American Flag Inc. in Townsend. The company provides 103 safety flaggers, who work on various federally-funded road projects in the state. The company is currently working on 20 separate projects, she said.
“Being part of the DBE program has definitely helped in getting the word out about our company and what we do,” she said. “It’s helped a lot with jobs over the years.”
American Flag is an offshoot of a construction company run by her mother, which also is DBE certified, she said.
“She had the idea of starting a flagging business, and I decided to go for it,” Redrow said. “I’ve learned a lot about what they can do through working with my mom. She helped me through the process of owning my own business and getting certified as a DBE.”
Kathleen Kriss, vice president of Hartly’s Kriss Contracting, calls the DBE program “fabulous.”
“It opens up the door of opportunity to smaller contractors that the larger general contractors may not have given a chance to,” she said.
But getting a contract is not a given, she added.
“We still have to work very hard, and do a great job, to continue to get work and contracts,” Kriss said. “It’s no guarantee of work. We are expected to be responsible contractors, and do our job and do it well.”
The company, which has been in business for more than 30 years, specializes in general commercial and industrial contracting work.
“We greatly appreciate the opportunities the DBE program has given us, and their continued support if we need assistance, in many categories, is fantastic.”
To learn more about the DBE certification program, contact Ceballos at 760-2035.