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Battling Perceptions About Minority- and Woman-Owned Businesses


  At the most recent meeting of the She Owns It business group, Jessica Johnson expressed frustration with the way her company is sometimes perceived. The issue involves small businesses that are certified as being minority-owned, woman-owned or disadvantaged (a business certified as disadvantaged must be majority owned by socially and economically disadvantaged individuals as defined here.). As it happens, Ms. Johnson’s company, Johnson Security Bureau, is all three. This means, among other things, that on state contracts, prime contractors can consider using Johnson Security to satisfy subcontracting goals that call for the use of such firms.

Generally, this is good news for Johnson Security, which is a subcontractor on several projects for much larger security and construction companies. Part of Johnson Security’s successful growth strategy has involved taking on these jobs in addition to its prime contracts. But they come with challenges that include battling the impression that certification programs give these companies a “handout,” Ms. Johnson said.

“It’s an expensive process to become certified,” she told the group. “It’s not like you say, ‘Hey, I’m a woman, let me flash you,’ and then you get the certificate.” The certification process is rigorous, requiring site visits and the submission of paperwork including tax returns and business licenses.

“And you have to be in business a certain amount of time,” added Deirdre Lord, a group member who owns The Megawatt Hour. That’s not an issue for Johnson Security, which has been around for 50 years.

“You have to be a real business — they scrutinize everything,” Ms. Johnson said.

Once a certified business is hired, it is held to the same standards as the prime contractor, Ms. Johnson added during a later conversation.

Despite subcontracting requirements, Ms. Johnson said many big companies dodge their obligations by claiming they made a good faith effort to retain a certified small business, but couldn’t find a qualified one. She said she recently met the owner of a certified woman-owned business that was capable but desperate for work. In fact, she couldn’t even get prime contractors to return her calls. “I could relate to her, because a few years ago that could have easily been me,” Ms. Johnson said.

“So how did you change that up?” asked Beth Shaw, a business group member who owns YogaFit.

“I didn’t take no for an answer,” Ms. Johnson said. She said she kept calling every organization with which her company had certification to ask about coming jobs. She attended meetings and outreach events, site visits and prebid conferences. She got to know the prime contractors. And she eventually convinced many of them that her company could do the job, she said.

So what’s the problem? Ms. Johnson was reluctant to discuss specifics for fear of alienating the contractors that hire her. “We’ve recently run into some issues,” she said vaguely, adding that she hoped to be able to discuss the details in a future business group session.

But in a conversation after the meeting, Ms. Johnson explained that she typically faces two major challenges when working with prime contractors as a certified business. The first arises from cultural differences between Johnson Security and the larger companies. As a small-business owner, Ms. Johnson said, she is responsible for everything — big-picture issues as well as the small stuff. Unlike the owner of a larger company, she said, “I don’t have the luxury of not being hands-on.”

This means she often finds herself dealing with employees at many levels of the larger organizations. While a prime contractor’s top person may not be aware of the details Ms. Johnson needs to discuss, a lower-level manager may lack answers to broader questions, such as, “What does the contract require?” Sometimes, the lower-level employees who see Ms. Johnson come to think of her as “Jessica,” their peer, instead of as “Ms. Johnson,” the owner of a business.

The second challenge is battling misperceptions about the capabilities of certified businesses, she said. Ms. Johnson said she recently attended a meeting and was dismayed to hear members of the prime contractor’s staff say, “Wow, you guys are so professional.” Why, she wondered, would they expect anything else?

She believes these perceptions are at least partly a result of big companies’ misrepresenting the abilities of certified businesses during the bidding process in the hopes of winning the entire contract.

“If I get my millions, I’m going to find a way to pay it forward to other small businesses,” she said.

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Refusing to Compete on Price

Jessica Johnson

Sara Krulwich/The New York Times

Jessica Johnson knows she must continue to innovate if she wants her business, Johnson Security Bureau, to maintain its impressive growth rate in 2012. This year, the company’s annual sales have doubled — just as they did in 2010.

During the last meeting of our business group, Ms. Johnson talked about the continuing importance of differentiating Johnson Security and emphasizing customer service, not price. She had just returned from Building a High-Performing Minority Business, a program offered through Tuck Executive Education at Dartmouth, and said the experience had reinforced these priorities.

To differentiate itself with clients, who may use several security services, Ms. Johnson said her company focused on building relationships, understanding its clients’ different business models, and selling solutions, not security. She emphasized that there was a big difference. Often, clients will call and simply say they need a guard. Other security firms might reply, “This is how much we charge. When do you want the body there?” said Ms. Johnson. “But we ask more questions.”

Ms. Johnson has found that clients don’t always fully communicate their needs, which can go beyond having a “warm body” on site. For example, clients might reveal that a call was prompted by the theft of an employee’s purse. In that case, they may need a guard who can provide a higher level of customer service by remaining alert to who belongs on the premises. Another client may have a problem with graffiti that appears after hours and may need to install cameras.

“Do you install the cameras?” asked Susan Parker, a member of the business group who owns dress manufacturer BariJay.

“We don’t as of yet, but we’ll make a recommendation,” said Ms. Johnson.

“That’s why it’s a solution as opposed to just security,” said Alexandra Mayzler, the owner of Thinking Caps Tutoring.

Unlike many of its competitors, Johnson Security does not try to compete on price. Ms. Johnson said the company’s rates, which vary by service and client type, are toward the middle or high end of the spectrum. She finds that it is often not worth working with clients that want guards who are paid minimum wage. They don’t see the value in having a particularly attentive guard or someone who is able to manage a problem customer, she said.

When it comes to hiring, Ms. Johnson said that, as a small business, Johnson Security has an advantage. “We can really talk to our employees and understand what they want to do,” she said. Just because they didn’t have childhood dreams of becoming security guards doesn’t mean they can’t maximize their relationship with the company, she added.

Johnson Security tells its employees that they are expected to stay for at least a year, and that those who do well will be placed in situations that allow them to make more money. One employee worked as a security guard for six months before being promoted to data analyst, a position that involves collecting and analyzing a range of site-specific reports for clients, and helping Johnson Security track its use of resources, including uniforms and equipment. Another started as a guard and now holds a supervisory job that includes managing the employee review process.

In the last two years, Ms. Johnson said, the company has been able to increase its guards’ average pay rate. “We’ve gotten better at identifying quality clients and getting opportunities for our people to grow,” she said.

Ms. Johnson repeatedly emphasized the value of the executive education program she recently attended, which enabled her to work with Dartmouth business school professors on topics including strategy and implementation. As the meeting wrapped up, Ms. Mayzler expressed an interest in applying for a spot in the program — if she could find the time.