The U.S. government spends more than $500 billion a year on products and services ranging from office equipment to technology development to staffing services, making it the world’s largest consumer of goods and services. The government requires that at least 23 percent of all federal purchases be fulfilled by small businesses, creating an extremely lucrative market for small businesses. Over the past year, I’ve attended a number of small business events, where I’ve had the chance to meet with business owners and talk to them about what is helping them grow and stay resilient. The most common answer I’ve heard among them? Government contracting.
Government contracting can offer not only profitable revenue streams, but also steady and reliable ones. Unlike the private sector which continues to shrink, government spending has remainedfairly consistent: In 2008, federal agencies spent nearly $518 billion on government contracts, $456 billion in 2007, and $423 billion in 2006. While in the private sector, it can take more time to collect payment (or worse, debts go unpaid), the government typically pays and does so within 30 days, provided you follow billing specifications. Even during a recession, the government continues serving the public, and it relies, in part, on small businesses to fulfill the work. And now, with an additional $787 billion in economic recovery funds to be spent, the potential for small businesses is even greater.
Even with the federal mandate, the number of small businesses currently participating in government contracting is still low. Part of the problem may be that many business owners don’t know how to apply for federal contracts or whether their products or services are even purchased by the government. At American Express OPEN, we want help educate and encourage more business owners to take advantage of the potential to grow their businesses through government contracting.
Partnering with Business Matchmaking, SCORE, and Women Impacting Public Policy (WIPP), we recently launched OPEN for Government Contracts: Victory in Procurement (VIP) for Small Business. This program includes mentoring and networking opportunities, as well as an interactive, step-by-step online resource designed to help guide business owners through the government contracting process – from registration on the Central Contractor Registration (CCR) to generating repeat business with the federal government. Among the goals for the program: encouraging 100,000 business owners to get “contract-ready” by registering on the CCR and obtaining the proper certification(s) for their businesses.
If government contracting is something you haven’t previously considered, I invite you to take a look and let me know your thoughts. I also invite business owners who have government contracting experience to share your stories with me. You can e-mail me at email@example.com.
Note: Government contracting data provided here can also be found in the OPEN Insight Guide: An Introduction to Government Contracting.