MIlitary Contracts: Steady Revenue in Tough Times

MIlitary Contracts:  Steady Revenue in Tough Times

(page 1 of 3)

Military personnel as far away as the Far East can wake up
to a cup of fresh-brewed Hawaiian coffee thanks to Sharon Zambo-Fan,
who ships her local products worldwide.
Photo: Mark Arbeit

The U.S. military is one customer every small business needs, especially in a recession — just ask Sharon Zambo-Fan, the president of Favorite Foods of Hawaii. She started her company just two years ago and is already selling her Asian-style meats and gourmet coffees in about 250 commissaries worldwide. This year, while most companies are shrinking or standing still, she’s expanding her product lines and is projecting 50 percent more revenue.

Local small businesses are getting a big share of the billions of dollars that the military will spend in Hawaii this year. Many are supplying the commissaries, but other local companies are selling technologies and services that were originally created for the civilian market — so-called dual use companies — while still others are winning construction contracts to build or renovate military housing.

However, as Zambo-Fan explains, success does not come without challenges. “When you work with the military, there is a process, and you need to be patient and flexible, in some cases,” she says. “There may be stricter guidelines and certifications and you need to go through the proper channels to get in. But I tell you, once you’re in, the sky is the limit.”

Charles Ota, vice president for military affairs for the Chamber of Commerce of Hawaii, says for some local companies, the military can offer a lifeline in challenging times.

Ota estimates about 50,000 active-duty military personnel are based here. Add 75,000 family members and about 120,000 veterans, and you’re looking at a very lucrative market. He says defense spending is probably the most stable source of revenue for Hawaii and its businesses.

“When tourism is down and the planes aren’t as full, our military personnel and their families still have to eat and shop,” Ota says. “And when the hotels are half empty, our soldiers still need homes and communities. That’s where small businesses in Hawaii can really benefit from the steady income.” However, he says, businesses shouldn’t focus on the military market only in tough times. “We should be giving them our attention all the time because they provide steady revenue year-round,” Ota adds.

The Defense Commissary Agency, where many military families buy food, operates 255 stores in 12 countries. Last year, DeCA sales totaled $5.8 billion. Oahu’s five commissaries alone brought in $235 million. That’s big business that Zambo-Fan wanted to tap. The first thing she did when she opened up shop was scour the local commissaries and identify holes in their selection. Then, she developed product lines to fill those voids. Her items are now sold in commissaries throughout Hawaii, Alaska, the Mainland, Europe and the Far East.

Zambo-Fan says the beauty of selling to the commissary is that when soldiers live in Hawaii, they become acclimated to the local culture and, in particular, the food. Once they deploy or get transferred to another base, they want to continue to enjoy local cuisine. That’s where Zambo-Fan found her niche.

 

SmallBiz Sponsors