By Gloria Larkin, Expert Guest Editor – Government Contracting and owner of TargetGov
Hundreds of thousands of business across the United States have used government contracting as an effective strategy to grow their business. However, many others have gone out of business pursuing this market. How do you know if the market is right for you?
Advantages of Selling to the Government
First, let’s take a look at the overall market. Last fiscal year, the federal government spent over $500 billion, yes, that is billion with a “B”, with private sector businesses. This means that the federal government bought goods and services worth over $500 billion directly from small and large businesses of all types. That figure does not include non-contracted expenditures such as the government payroll.
Second, as a rule, federal government agencies always pay their bills and with proven payment process like government credit cards and electronic direct deposit payments, you get paid very quickly. While there are exceptions to this rule, the government has a great track record of making payments in comparison to consumers or business as a whole.
Third, once you have experience as a contractor and have established a good track record, you have a very good chance of getting regular, repeat business.
What kinds of companies benefit from selling to the government market?
The federal government buys just about everything imaginable from companies of all sizes. Buildings and roads need to be built and maintained, people and infrastructure supported, communications and computer systems installed and serviced, equipment, supplies and commodities purchased and services of all kinds provided. If you are providing a product or service to consumers or other businesses, there is an excellent chance that government agencies will also buy what you sell.
Where Do You Start?
Government agencies are open for business and actively seeking new contractors with which to work. When you realize that there are over 200 federal government agencies with thousands of offices spread throughout the U.S., fifty states and over 3,000 counties, cities or boroughs it can seem like an insurmountable task just to find out how to open the doors to getting government contracts.
One of the first decisions you will make is whether to start with your local, state or the federal government. If you have a small company with limited capital, you want to make this decision carefully. Generally, breaking into the government contracting market can take up to a year or longer. You want to make sure you have the time and money to invest in building this market opportunity.
One of the most cost-effective places to start is by investigating the business opportunities in your own backyard. Explore your local city or county government and inquire about the necessary registrations needed to do business with them. Local governments usually have more simplified paperwork and processes compared to the state and federal agencies.
If you choose to start with the U.S. federal government, you are choosing the world’s Fortune One customer. They exceed the largest expenditures of any company in the world and offer a wide range of opportunities for companies both large and small. Two of the best places to start is the U.S. Small Business Administration (SBA) and the Central Contractor Registry (CCR). The SBA website (www.sba.gov) has a wealth of information about government contracting under the “Contracting” tab. CCR’s web site (www.ccr.gov) is a no-cost mandatory registration step for any person or company who wants to sell to the federal government.
Common Processes for All Levels of Government Contracting
All government agencies are responsible for their own budgets and expenditures. This means that there is no one central agency or organization responsible for making purchases for all agencies. Therefore you must contact each individual agency to register, ask for notification of upcoming contracts and submit and negotiate proposals and contracts.
All agencies participate in socio-economic programs designed to help small businesses tackle the contracting market. The federal government has set up guidelines for qualifying a business as large or small. State and local governments will generally accept these guidelines. You can determine where your business fits in by checking the SBA website. The socio-economic programs have goals for certain groups such as minorities, women, veterans and others. Please be aware that you may need to get certified at your state level as well as that the federal level, depending on where you will pursue the business opportunities.
If you do not yet accept credit cards for payments from customers, you will want to do so when selling to the government. Agencies at all levels utilize credit cards for smaller purchases. Do not be misled by the word “small” as here it amounts to billions of dollars every year. Last year, the federal government made over twenty five billion dollars’ worth of credit card purchases. Should you be receiving some of that business?
Gloria Berthold Larkin is president of TargetGov and an expert in business development in the government and corporate business markets. She is a dynamic speaker and book author and is very adept at negotiating the government contracting maze on behalf of clients. Visit www.targetgov.com or call toll-free 1-866-579-1346 for more information.