Many small business owners strive to obtain long-term sustainable clients that provide a sense of security. These types of clients create stability within your business and increases you level of experience. These are just a few of the benefits in contracting with the government. Government contracts are a significant financial opportunity for small business and is required by law to consider buying products and services from small business.
Here are 10 things you should consider before contracting with the government:
- The government buys services or products from businesses that are reliable and established. It’s important that your services and products are marketable to the government at a competitive price.
- There are specific requirements that must be met before you can begin bidding on government contracts. The requirements include but are not limited to having a DUNS number, NAICS codes, meeting size standards, register with SAM, and maintain compliance.
- Patience is essential. Winning a government contract can be time consuming and a lengthy process. The bidding process requires a significant amount of paperwork and the awarding process can be extensive as well.
- Pursuing government contracts can be costly and can take a significant amount of time before you see a return. According to SBA.gov, “some businesses spend between $80,000 and $130,000 to earn their first contract.”
- Making a return on your investment can take up to two years. It is essential to sustain your business with enough cash flow.
- Diversify your business with private sector clients and government contracts. Private-sector clients offsets some of the potential losses from pursuing government contracts.
- Use all of your resources. There government provides various contracting assistance programs that serves as a boost in winning contracts. A few of those programs are Women-Owned Small Business Federal Contracting, Service-Disabled Veteran Owned Small Business, 8(a) Business Development, and All Small Mentor-Protégé, HUBZone, and Natural Resource Sales Assistance.
- Find your contracting counselor. There are counselors assigned to your region who are there to assist you with the government bidding process.
- Do your research. Be aware of the different types of contracts that are available. For small businesses, the government limits the competition in order to increase their chances of winning a federal contract. These are labeled as “set-aside”. There are two types of set-aside contracts: competitive set-asides and sole-source set-asides.
- Stay positive. Though this process isn’t the easiest, it is worth it. You will learn so much along the way. You only need one yes to change the course of your business for the better.