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Most government contracting firms follow a familiar funding path. They secure angel investors, court venture capital, or bring on partners to share the financial burden of building infrastructure and winning contracts. Margarita Howard did none of these things when she founded HX5 in 2004.
Howard built the Florida-based contractor from a single-employee operation to a firm with more than 1,000 employees across 20 states and 70 government locations—entirely through internal cash flow, personal risk, and one small business loan from a bank willing to take a chance on an unproven firm.
The decision to forgo outside capital was central to how HX5 operated in its early years. Without investor pressure to scale at predetermined rates or hit specific revenue targets, Howard could focus on building systems that would sustain the business through the unpredictable funding cycles and contract transitions that define government work.
Early Banking Rejections and a Single Bet
Securing initial financing tested Howard's persistence. She spent the early years knocking on doors at banks across Florida, attempting to secure lines of credit and small business loans. Most declined. The company had fewer than 50 employees at the time. Its track record was thin. The government contracting sector remained unfamiliar territory for many regional lenders.
One bank said yes. That institution offered Howard access to a veteran-owned business loan program, which came with layers of approval but provided essential working capital. HX5 repaid the loan within a year—ahead of schedule. The company has remained with that bank ever since.
"We went from the early years where a big part of my job was going and knocking on doors, meeting with banks, and trying to get a line of credit, or small-business loan and being turned down the majority of the time," Howard said. "One particular bank did listen and took a chance on working with us when we were very small and less than 50 employees, and now we are over 1,000 employees and that particular bank is still our bank today because they gave us that first chance."
Infrastructure Over Appearances
Howard made a calculated gamble during HX5's first years. Rather than invest in visible markers of success—office furniture, prominent locations, polished marketing materials—she directed early capital toward back-end systems that would prove essential for competing on larger contracts.
The most consequential purchase came early: a specialized accounting system built for government service contractors. The software cost more than many small businesses would spend on infrastructure during their startup phase. It required government approval to use. It was, Howard determined, non-negotiable.
"Right from the beginning, we invested heavily upfront in purchasing and implementing a specialized accounting system developed for government service contracting firms," Howard said. "A system we knew the government was very familiar with and that would provide us the necessary accounting tools to pass government billing audits and gain government approval for use in the performance of our government contracts."
The investment paid off. Large contractors seeking to meet small business subcontracting requirements found HX5 unusually attractive. The company possessed the operational rigor of a much larger firm while maintaining its small business designation. Prime contractors could partner with HX5 without concerns about billing disputes, audit failures, or administrative headaches that often plague less-prepared subcontractors.
"That was also very attractive to large businesses, that we were very small at the time and that we already had this government accounting system in place that those large businesses had," Howard said. "It was a risk that we took and it highly paid off."
Fiscal Responsibility as Strategy
Howard describes fiscal responsibility as the foundation of every decision HX5 makes.
"While that may sound simplistic, in reality, it ultimately includes virtually every decision that has to be made," Howard said. "Building a team of professionals who are highly skilled in understanding the importance of fiscally responsible decision-making is absolutely critical for any business owner."
The approach becomes more complicated when government budgets remain unresolved. Federal contractors face September deadlines with regularity. Funding delays can force difficult choices. HX5 has occasionally worked "at risk" on mission-critical contracts, essentially self-funding operations until budget approvals come through and reimbursements arrive.
"We know that with the work that we do, we will get reimbursed," Howard said. But the practice requires substantial reserves—something many smaller contractors lack.
Building Without Partners
Howard qualified for 8(a) status with the SBA, and the program helped HX5 secure four contracts quickly during its first year. But Howard had witnessed other 8(a) companies struggle after graduation, having never learned to compete for contracts outside the program's protections.
"I knew that I didn't want HX5 to be dependent on sole-source awards from the SBA,” she said. “We had been in the industry, we knew small businesses in our area, and that's what many of them did. And once the program was over after nine years, they were done. They had never competed. They had never really done it on their own."
HX5 used its 8(a) years to build capabilities for open competition. While in the program, the company pursued prime contracts that required full competitive bids. It developed systems for responding to complex requests for proposals. It invested in the technical talent needed to win work based on merit rather than set-aside status.
According to Founders Network, 0.9% of U.S. startups secure venture capital funding, making bootstrapping the default path for most founders. But defense contractors face unique challenges. Government work requires substantial working capital to cover labor costs during payment delays. Contracts can take months to win and years to execute. Performance requirements remain exacting. The barriers to entry are high.
Howard circumvented these challenges through disciplined financial management and strategic infrastructure investments. The company assembled external advisers specializing in government compliance—legal experts, accountants familiar with federal regulations and who understood defense sector requirements.
The result: a company that could compete with much larger contractors while maintaining the flexibility of a smaller firm. HX5 now operates as both prime contractor and subcontractor, depending on the opportunity. The firm has received recognition as Prime Subcontractor of the Year for its subcontracting performance. It has won large prime contracts that would be uncommon for a company of its size.
Howard's approach represents an alternative model in a sector where scale often determines survival. She built slowly, accepted only the financing she could repay quickly, and prioritized systems over growth for its own sake. Twenty years later, HX5 employs more than 1,000 people and maintains partnerships with NASA, the Army, Navy, Air Force, and General Services Administration.