When the economy is grimacing, credit becomes tight, unemployment rates skyrocket, and consumer and business spending slows dramatically. But even in such economic situation, one sector of the economy remains unruffled: the government.
With all the budget cuts, downsizing and expenditure reductions going on in private establishments due to the instability of the economy, the government has become a major target of a lot of suppliers and business owners. Rather than slow down its activities in line with the state of an ailing economy, the government usually rises to the situation by spending more money to stimulate the economy—directly or indirectly through the states as well as small businesses.
Selling goods and services to the government is very lucrative and secure because apart from the financial benefits, it also raises your business profile. There are contracting opportunities to be found in state, local and federal government agencies. Some of the jobs that the government awards include construction, purchasing and supply, service rendering, training services, project supervision, management consultancy, information and communication technology amongst others.
If you are a small business owner, you don’t need to fret about registering as a government contractor because most governments have rules and policies in place designed to favor small business owners.
In countries like the United States, the law requires that government purchases worth from $3,000 to $100,000 be directed to small business. In addition, the United States government has set a goal that 23 percent of all contracts go to small businesses. This is to ensure that small businesses, which form the majority of businesses in the country, are used as instruments for reviving the economy whenever it’s going comatose. The story is about the same in many other countries.
Virtually all the funds spent by the government are used for purchases. This makes the government a very big customer. And since most governments favor small businesses, many small business owners aim to become government contractors, providing their products or services to federal, state, or local agencies.
While the norm in the business world is for businesses to try to attract customers, the opposite is the case when the government is the customer: the “special” customer attracts businesses, instead—for the following reasons:
Why the Government Seeks to Issue Contract Purchases to Small Businesses
- The government makes its needs publicly known through various media, such as radio, television, newspapers, and the Internet.
- The government conducts its sales in an open environment, playing by and laying down many rules to ensure a fair process.
- The government usually buys in large volumes and over a period of time. This kind of customers can provide a solid foundation for any small business.
Having the government as a customer gives your business a stamp of approval. If you can meet the government’s requirements, chances are that you can meet the requirements of any other customer. With the huge number of small businesses vying for an opportunity to become government contractors, it can be difficult landing the government as a client. Here are seven tips for boosting your chances becoming a government contractor:
How to Become a Government Contractor
1. Choose a product to sell or a service to provide-:Your first step towards becoming a government contractor is to figure out what to sell. Are you offering a product or a service, or both? You also need to figure out whom you’re selling to. Are you targeting your federal government, state government, or local government?
After deciding on which level of government to target, you need to find out which agencies buy your product or service and how they purchase it. Most government agencies have an approved list of products they buy and services which they outsource. You can look into this list to decide on a product or service. You can also study the budget for the year to look out for revenue allocations and recurrent expenditures. A look at approved expenditures for the year would give you a clear insight of hot products and services for the year.
2. Re-evaluate your business-: Doing business with the government requires a lot of protocol. And researching for bids as well as bidding is a tedious and ongoing task. So, ask yourself if you really have the time and skill to fill out initial paperwork and apply for contractor status.
Remember, too, that doing business with the government requires certain certifications and other criteria. You don’t want to get to close to landing a government contract and then have your hopes dashed because you are required to provide a document you don’t have.
3. Check your finances-: Many government contracts involve delayed payments—which means you will have to use your money for the project before getting paid by the government. Make sure your business has enough money to depend on while waiting for the government to pay you for a project.
4. Register as a government contractor-: In most countries, you would be required to register your business and obtain an identifying number which qualifies you to bid for government contracts when they are available. Apart from the general registration, you may also be required to register under the specific government agency you want to work with.
5. Consider collaborating with others-: Sometimes, you will have the opportunity to take government contracts that involve more skill or machinery than your business can provide. Rather than ignore such opportunities, go ahead to apply for them—but with the aim of partnering with another business that has the required skill or machinery.
6. Network with government officials-: The gospel truth is that you cannot succeed as a government contractor without fully learning and understanding the art of networking. There are very few jobs available for thousands of competitors and to be able to stand out and get jobs, you have to know the right people who can help you push the right buttons. You would need to make friends with decision makers and people in high places and your socializing skills must be very high.
Attend conferences and other events where you can get to meet potential contractors. Network with politicians, government officials, and everyone involved in government that you meet, from city council members to staff of various government agencies.
7. Build your experience-: It is not very common for inexperienced new comers to get government contracts. Because the government is always careful with the people it chooses to do business with. Companies with proven track record and experience are usually preferred over new comers. Therefore, it is recommended that you carry out some jobs in the private sector first in order to build your experience portfolio before you start applying for government contracts.
8. Send out samples or demo-: You can also get your foot in the door faster if you send in a demo or a sample of your products or if you are offering some services, you can offer some free services as a way to create demand for what you are selling.
9. Improve your financial strength-: Government projects are usually capital intensive and to undertake these projects you would need a lot of money because you might not be given full payment until you complete the project. This means that you would need to have enough money to finance these projects or have access to loans and credits. Therefore, before you bid for any job, you must liaise with your bank or a financial institution which would be ready to provide you with the necessary financial banking.
10. Send out project proposals-: Another way to create demand for your products or services is to send out a well drafted project proposal to the agency you are targeting. This proposal would carefully explain what you are offering and how it would be of benefit. A brilliantly written project proposal may get you some jobs.
11. Employ the right people-: To be successful as a government contractor, you have to provide excellent services or supply products that are of good quality and this can only be possible if you engage the right team or work with the right people. Employ experienced and qualified professionals who understand the importance of providing quality services, to work for you.
12. Start as a sub-contractor-: I mentioned earlier that you would need to gather some experience to increase your chances of getting government contracts. What I didn’t mention however is that you can build your experience by becoming a sub-contractor. As a sub-contractor, you would perform smaller jobs for established government contractors. For instance, if it is a building project, you can take up the electrical installation aspect. Gradually, you would be able to build your portfolio and gain some experience to help you stand on your own and become successful.
13. Certify your business-: The government favors businesses owned by some category of people in the society who are seen as under favored. Examples of such people are veterans, women and people from certain communities. If you belong to any of these categories, then you should certify your business to increase your chances of getting jobs.
14. Keep your cool-: Selling to the government is different from selling to any other customer. If you’re too aggressive with your proposal, this can be perceived negatively and might kill rather than help your chances of landing a contract.
15. Start bidding for jobs-: This is the most competitive aspect of being a government contractor and is the major determinant of whether you would get a job or not. When a job is advertised, different registered companies would submit their bids and a winning bid would be chosen.
Take your time to read and understand the specifications of any contract you want to apply for. Address all government’s concerns in your proposal, and state as much as possible strong reasons why you should be given the chance to handle the contract
In order to place a winning bid, there are two things you have to put into consideration. First, you have to be able to show that you understand the project and you have the necessary skills, knowledge, experience and equipment that would be required to complete the project. Then, you would have to come up with a price that is neither too high so that it becomes unreasonable nor too low such that it looks like you don’t know what you are talking about.
Your price must be just right and backed with evidence of careful and adequate research. Also, you should use the agency’s budget as a guide to determine the most suitable price to choose in your bid. Furthermore, reading government publications, newspapers and attending forums and events organized by government agencies is a good way to network and meet people who can assist you in building a successful business as a government contractor.