Small business owners should be excited about the growing prospects in the public sector. Federal agencies alone awarded $132.9 billion in government contracts to small businesses in 2019, up from the $120 billion awarded the year earlier. State and local governments are also increasing their small business award targets – and often exceeding them!
Yet, we often hear from startups and small businesses that are less optimistic about the prospects. There’s a perception that government contracting is complex or that there’s a risk-reward imbalance. Sometimes those things are true. But in most cases, they’re not.
Agencies at all levels of government have been working extremely hard to make the vendor registration, certification and bidding processes simple. Many are trying to standardize on eProcurement systems that allow for greater visibility into bid opportunities, make it easy to communicate with contracting officers, and allow you to submit bids electronically. Procurement leaders are also implementing more flexible sourcing methods so that buyers can look beyond statewide contracts to find the vendors (and goods and services) that offer the highest quality and value. For example, many state governments are now permitting buyers to shop online in the Periscope Marketplace, which provides access to both statewide and agency contracts as well as co-op contracts and even suppliers directly. (If you haven’t already uploaded your catalog to the Marketplace, I highly recommend you do that this week.)
Of course, I appreciate that small businesses must aggressively work to grow, and the public sector’s sometimes-long sales cycles make it challenging to secure large, steady revenue streams right out of the gate. However, the effort put into building relationships, increasing brand awareness and submitting bids will almost always yield the results you want. The majority of small businesses I’ve worked with – many of which have been Periscope Supplier-to-Government (S2G) customers for years – have secured either prime contracts or subcontracts pretty quickly. Of course, “quickly” is subjective and it does take time and some money to get the ball rolling. But the investment required is minimal when you consider the payoff. Just look at the success that Whitaker Brothers and Carver Electric experienced both in the short and long term once they streamlined their market research efforts, made the right contacts and completed their pre-bid due diligence. Knowing that it might take a little time to secure some contracts, I recommend you start doing these three things as soon as possible, even if you’re still pooling resources, building your workforce and figuring out pricing.
A Final Thought
Small businesses don’t necessarily have to take big risks to strengthen their competitive position when competing for prime government contracts, or even subcontractor opportunities. They just need to be more strategic in their “sales” approach and more diligent in their market research and response preparation:
The Small Business Association (SBA) publishes an annual federal contracting scorecard that grades each agency’s Prime Contract and Subcontract Spend with regards to small business contract awards. This one summarizes each federal agency’s grade for the last five fiscal years, while this government-wide performance scorecard shows overall agency progress against small business Prime and Subcontract award goals. Each state and local jurisdiction should have similar scorecards that they can provide to you. At a minimum, you should be able to find their small business contracting goals online.
That doesn’t mean that you should overextend your business, overbuy materials or compromise your standards to submit the lowest bid and secure the win. Just realize that government contracts may not help you “get rich quick” – at least not at first. Know your bottom line and set your anchor price accordingly when submitting bids or heading into negotiations. For sealed bid opportunities, be ready to drop your pricing as much as possible – without taking a loss – if you’re serious about getting your foot in the door to prove your value and establish a performance record that will pay off more in the long run via more government contract wins.
No matter what you do, just be careful not to price yourself out of contracts simply because you think market demand warrants a premium. (You can read more on this here.)
Last, but not least, don’t forget the fundamentals. Take advantage of the many free resources available to small businesses. And, remember that state and local agencies offer just as many contracting opportunities to small businesses as federal agencies do, if not more.
Want proof? Periscope finds and notifies its users about more than one million bid/RFP solicitations from 100,000+ state and local government entities each year. That’s a lot of new sales leads in your inbox every day with customizable plans available to meet your business objectives.