Deciding when to go forward with your 8(a) application is often not an easy decision. While there is a considerable amount of time and investment when going through the application process to become 8(a) certified, always keep in mind that at this time 8(a) firms earn an average of over $7MM per year in federal contracts.

Definite Go - $500K+ Revenue
Firms that enter the 8(a) Business Development Program with over $500K in annual sales are usually able to take full advantage of their 8(a) Certification. This is because they have experience and are positioned to win contracts during the first two years in the program. Firms with revenue over this amount should obtain their 8(a) as soon as possible.

Go with Planning - $200K-500K Revenue
Firms in this range need to make a determination as to whether or not they are ready for obtaining the 8(a) Certification. Does the firm have the financial capacity to take on federal sales? Does the firm have a game plan for how they will market their services to the federal government?

Take a Hard Look - $200K or less in Revenue
Firms with $200K or less in revenue can do quite well in the 8(a) BD Program. However, they must have a plan, and seriously consider joint venturing with past 8(a) firms or other larger firms they have networked with in order to obtain contracts. The challenge of being too small is that in order to be awarded a contract the SBA must believe the firm has the capabilities to perform on the contract. If the firm does not have the capability, and the owner's resume is not strong enough to support an argument for success, then the firm will be forced to start off with smaller contracting opportunities.

Flip Side of Waiting
If a firm is successful, the owner may quickly lose 8(a) eligibility due to losing his/her economic disadvantaged status. Once you are over these thresholds you can no-longer apply for an 8(a) certification:

1. Net income past three years must be under $250K per year.
Excluding - The SBA does remove retained earnings that flow through onto the personal tax return where the money is kept in the business as well as taxes paid on those retained earnings.

2. Net Worth must be less than $250K per year.
Excluding – A. Primary Residence of the applicant. B. Value of the business being certified. C. Retirement accounts.

Generally, I advise that firms obtain the 8(a) Certification as soon as they are eligible, however firms with lower revenue need to develop a workable plan for their first two years in the 8(a) BD Program.

If you are wondering how an 8(a) Certification could benefit your small business directly, or you have any other questions regarding federal certifications and the federal marketplace, I always recommend contacting an industry expert like ez8a or Advance 8a. Neither charge for an initial consultation.