When it comes to offering small-business owners a shot at significant business, the federal government, with its $3.8 trillion budget, leads the way.
“Put aside the doom and gloom about the budget deficit, and it quickly becomes apparent that the U.S. federal government represents [the top of the Fortune 500] in the marketplace,” says Paul Karch, owner of SelltoGovernment.com, a Gardant Global program that helps small-business owners navigate the federal contract bidding process.
“Small businesses are the lifeblood of government contracting,” says Karch, who helped secure more than $8 billion in government contracts for his clients in 2013. “In all industries, the government buys often. When a small business receives a five-year contract with little financial risk, it’s a great path for growth and can be a game-changer.”
According to the U.S. General Services Administration (GSA), 80 percent of Multiple Award Schedule (MAS) contractors are small businesses, and approximately 40 percent of the 19,000 MAS contracts offered each fiscal year generate sales.
Being awarded government contracts can be lucrative, agrees Matt McColgan, regional sales manager with Vology, a value-added reseller of IT solutions. Vology has received a GSA government contract for the past four years and recently bid for an even more lucrative Solutions for Enterprise-Wide Procurement (SEWP V) contract. “Vology has seen a nearly 100 percent increase in the amount of work we do for the government," McColgan says, "and that has positively affected our bottom line.”
If you’re interested in winning a government contract this year or next, it’s important to keep in mind that the federal government’s buying season is in July and August, which is when it spends two-thirds of its budget.
“Applying for government contracts is a lengthy process that can take more than a year, so now's the time to lay the foundation, whether for 2014 or beyond,” says Karch, who suggests the following steps to secure your own piece of the lucrative government contract pie.
1. Register. In order to sell to any government entity, you must obtain a Dun & Bradstreet number. This is used as your contractor identification code. From there, you register on the System for Award Management (SAM), the primary database of vendors doing business with the government.
“After registering on SAM, depending on what you're applying for and what type of classification you’re seeking, such as minority or veteran," Karch says, "there are other certifications you can apply for that are available through the SBA."
2. Think inside the box. When it comes to government contracts, innovative business ideas aren't generally encouraged. “Small-business people are entrepreneurs by nature," Karch says, "but the government by nature exists to support the people and isn't tasked with innovation and isn't measured by the lack of providing it.
“The occasional new technology may create a wave, but for the most part, government contracting is about giving the government what it wants, needs and can afford when it wants it,” Karch adds. “If the government likes your offering and you deliver it in a cost-effective manner, regardless of whether it’s the newest thing, you'll be guaranteed growth and success.”
3. Sell what you know. Given the fact that the government is interested in high-quality work that fulfills a direct need, it makes sense to sell what you do well. “If you're in the technology space, create a niche," Karch suggests. "If you're in construction, create a unique value proposition. Or, if you're in a health-care field, create a unique benefit to the overall wellness of the end user.”
4. Revise when necessary. In order to land government contracts, small-business owners must be diligent in modifying their company offerings so they fit government needs, Karch says. “With technology products or services, think about security; with construction, think about scale; and with health care, think about the long-term process. Of course, these modifications can take time, but making them also benefits your company.”
5. Get help. Errors and omissions can disqualify you, so it’s important to get assistance. “Government contracting is filled with nuances, acronyms, procedures and regulations that require expertise,” Karch says. “The SBA employs procurement representatives at various area offices to help businesses throughout the process, and there are numerous online resources, too.”
6. Check your commitment level. “Recognizing the tremendous effort required to apply for government contracts is essential,” says Burt Wolder, a consultant with Ragland Burton Communications, who was working for Hooper Holmes, a company that provides health risk assessment services to the life insurance and health insurance industries, when it was awarded a multi-year contract to support the U.S. Department of Veteran's Affairs last September.
“The commitment will be greater than you can possibly imagine," adds McColgan, who reveals that 4,000 man hours went into Vology’s current pending SEWP V contract bid. “This contract involves a $20 billion expenditure over a 10-year period, so it was worth the effort," McColgan says, "but it’s important to make sure you have time for the work involved in applying for the contract and for completing the work if you're awarded a contract.”
7. Have patience. Applying for government contracts is a long-term process, Karch says. “It’s sometimes difficult for small businesses to be patient when it comes to revenue generation," he notes, "but in the government contracting arena, patience is more than just a virtue—it’s an absolute must. Your return on investment is measured in quarters and years, not weeks and months.”
Freelance writer Julie Bawden-Davis has written for many publications, including MSN Money.com, Parade.com, Entrepreneur, Better Homes & Gardens and Family Circle.
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