David Steward started his now $5-billion technology business with the help of a loan from the U.S. Small Business Administration (SBA) and a $10-million contract with the government. His company, World Wide Technology Inc., is now the largest African-American-owned business in the world.
SBA programs are one of the government’s best kept secrets, Steward said.
However last week, SBA Administrator Karen Mills went on a national tour with SBA’s “Small Business Week,” pledging that the agency will no longer be a secret. On June 19, both Mills and Steward spoke about SBA resources at the agency’s daylong seminar at Harris-Stowe State University.
“The president said, ‘I want everyone out on the road, making a difference,’” Mills said. “That’s been his philosophy. We’re here, and most of our resources are free.”
Mills interviewed Steward about how SBA helped him grow as an entrepreneur.
Steward said for his first business, he decided to buy an existing company. After working for Missouri Pacific Railroad Company and Federal Express in sales, he decided to carve out a niche for himself.
“I found a guy who had a business,” he told the audience of about 200 people. “The problem was, I didn’t have any money. You know about that too, don’t you?”
Audience members laughed and nodded.
“It’s important to know what your options are,” he said. “I didn’t know about SBA actually right then.”
Steward convinced the company owner to sell him the business for no money down. He then leveraged the company’s assets to get a loan and give the owner a down payment. He used the rest for capital for his business, Transportation Business Specialists, an overcharge audit firm.
“My first loan was through a local banker, Stockyard Bank of St. Joseph,” Steward said. “To many, the obvious is Bank of America or First Bank. No one thinks about the small bankers who are looking for entrepreneurs out there and ways to collaborate with the SBA.”
Mills said the agency has streamlined and simplified SBA loans to make sure that entrepreneurs have an easier time filling out the paperwork and local banks can get into the SBA loan-making business.
“We guarantee up to 85 percent of the loan so that it’s easier for the bank to make the loan to you,” Mills said.
Mills said business owners can go to SBA’s offices to get connected with banks that are making SBA loans.
“Innovation is going to come from small business,” Steward said.
In his first business, he was auditing to find overcharges in freight costs among businesses such as Chrysler and Ford. Then he realized he was finding just as many undercharges as overcharges.
“So I am going to go back to Union Pacific Railroad and talk about a relationship where I can find undercharges that they have not collected from customers,” Steward said. “Out of the 150-year history of railroad company, they had never done that. But I was bold enough to ask the question and to convince them to do this.”
In 1987, he started a sister company, Transport Administrative Services, which audited freight bills for undercharges for the railroad industry. The new company won a contract to audit three years’ worth of freight bills for undercharges at Union Pacific Railroad. He received rate information involving $15 billion.
“I had to manage it some way,” he said. “I had a file server that was 660 megabytes, and it was state of the art.”
Steward’s company built a local area network to handle the data, revolutionizing the way railroad audits were completed.
“I was beginning to recognize that technology was changing so rapidly and that I wanted to be a part of the technological revolution,” he said. “In 1990, I started this company called World Wide Technology.”
The audience was silent and still.
“Yea, that’s the same response I got back then too,” he said, getting some chuckles and claps from the audience.
Steward said SBA’s 8(a) Business Development Program took his business to the next level. Through the program, he landed a $10-million government contract and then started growing his business from there. He stayed in the 8(a) program for eight years, and then SBA helped him transition into the commercial realm.
Mills said, “This is one of the real important doors that SBA can open.”
On the SBA website, people can take a Contracting 101 course to find out how to get into government contracting. The webpage has free online training courses, workbooks and other resources.
For more information about SBA programs and to take free online courses, visit http://www.sba.gov/gcclassroom.
