Small businesses entering federal contracting face a quiet decision early on: how much to spend on accounting. The story of Margarita Howard and HX5 offers one clear answer.
Federal guidance leaves room for choice. The Small Business Administration encourages new contractors to use accounting systems capable of meeting federal compliance standards, but it does not mandate any particular software. Accounting system adequacy falls under federal acquisition regulations, which apply only to certain contract types. That flexibility leads many startups to begin with simple bookkeeping and pursue fixed-price contracts until revenue or contract terms push them toward something more advanced.
Buying Early Instead of Later
Howard took the opposite route after founding HX5 in 2004. She purchased a specialized, government-approved accounting system right away, even though it cost more than most young firms would spend on back-office operations. Implementation demanded training and process changes, and keeping such a system running requires expertise many small companies do not have.
She considered those costs worth absorbing. “A lot of small businesses usually wait many years before making such an investment,” Margarita Howard said, adding that HX5 benefited greatly from having it early.
The Cost of Waiting
Delay carries its own price. A contractor without compliant accounting is confined to simpler contract types and smaller dollar values. It also has fewer chances to partner with large primes, which often need small business subcontractors to meet goals written into major government contracts. When those primes go searching for partners, firms without the right systems get passed over.
HX5 avoided that trap. Prime contractors saw a small company that could bill properly, segregate costs, and handle audits without supervision. That made teaming with HX5 easier and safer for them.
Over time, each completed contract and each clean audit added to the company’s record. Those results helped HX5 grow from a single employee to more than 1,000 people working in more than 20 states.
Margarita Howard also stresses the basics understand the industry first, assemble a strong team, and put the right infrastructure in place before chasing large awards. Read this article for additional information.
Find more information about HX5 on https://ritzherald.com/ceo-margarita-howards-background-shapes-hx5-approach-to-veteran-employment/
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