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Business Observer Thursday, Mar. 4, 2010 12 years ago

Beyond minority growth

Revenues continue to grow for J2 Engineering, a 2007 Review Entrepreneur of the Year Tampa runner-up. The company is growing through the delicate are of mastering work with government.

For most companies, a backlog of $85 million in work would represent an exceptional year of business. But for Jose Morales, that total misses the mark.

“Our goal was 90,” he explains.

That impressive total demonstrates his company's ability to continue to do work during a down economy. For his firm, Morales says 2009 was “a reflection of some of the long-term contracts we've won.”

It doesn't hurt that the company's focus is government contracts and that represented most of the building in 2009, and that it qualifies as a minority-owned business.

Morales is founder and president of J2 Engineering, a business that specializes in public sector work with an environmental focus. By mastering the fine art of working with government clients, J2 fills a niche that has given it an opportunity to grow steadily.

“It's not easy to work for the federal government,” Morales admits, so when a company is able to do so successfully, both parties benefit. Not only does J2 get more work — as Morales points out, “It makes it easier for them.”

The company was founded in November 2001, with Jose Sosa joining Morales as a minority partner, hence the J2 — Jose times two. And on day one, the business had two clients: Sosa's other company, J.J. Sosa and Associates, and Tampa Electric Co.

That quickly changed once J2 became part of the U.S. Small Business Administration's 8(a) program, which helps minority business owners win government contracts. From 2002 to 2005, revenue grew from $250,000 to more than $15 million.

As of June 2007, contracts associated with the SBA minority program made up roughly 85% of the company's business. At that time, the Review noted J2's propensity for growth with its selection as runner-up for Tampa Bay Entrepreneur of the Year.

Since that time, the percentage of jobs associated with the SBA program has fallen, and could drop below 50% this year, Morales says.

And revenues have continued to grow.

J2 collected roughly $60 million in 2008, more than double the $24 million made in 2007, and became one of only a handful of Gulf Coast area contractors that grew in 2009, with roughly $75 million in revenue.

That success goes back to J2's ability to take advantage of their previous opportunities to complete work within the public sector. “We've done a good job in the years before,” Morales says, and that's no easy feat.

In fact, as private sector work dries up, competition is spiking for public jobs — but Morales is seeing competitors struggle with a combination of low bidding and inexperience with government work.

Beyond expanding their revenues, the company has grown geographically as well, adding an office in Texas in 2009 to go along with existing facilities in Florida, Georgia, and Arkansas. That growth has had a positive effect for the company thus far.

“As we open these offices, new work fills in the gaps,” says Morales.

In 2010, the focus will shift to maintaining and building upon existing relationships. Already, however, Morales is certain that this year will be better than last year. Of course, that backlog of $85 million will help.

In fact, J2's existing projects are allowing Morales to already focus on growth for two years out. “We're actually working on 2011,” he says.

The goal for that year as of today is $100 million in work. The company's history during this recession suggests that is more than pie-in-the-sky optimism.

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