The United States government spent $694.2 billion in contractual services in 2022, specifically spending $162.9 billion on small businesses, making it the world's largest employer for contract work. However, to have access to most contract opportunities in government contracting (GovCon) you have to register in SAM.gov. This process can be a little cumbersome to navigate. The Small Business Administration (SBA) provides guides, contract assistance programs, and references to federally funded counseling resources to help you get started. Also, there are many organizations and communities, like Hive39, that exist to help facilitate relationships, share useful information and events, and provide all types of free, ready to use assets to assist you in growing your business. Every market has its pros and cons and GovCon is no different. Some of the benefits to pursuing government contracts include:
- Flexibility to add the GovCon strategy over time so that you are not overwhelmed all at once. You don’t have to jump all-in upfront. As a private business owner you have more wiggle room in your business activities and can start by learning the basics from SBA, registering your business SAM.gov. Also targeting small micro-purchases or simplified acquisitions, and/or evaluating or developing your network to identify smart, trustworthy partners to team with as a subcontractor in the space are a few additional activities you can do to soft launch your business into GovCon.
- Government contract awards usually have multiple year periods of performance; which can provide a consistent, stable source of revenue for your business to balance inconsistent cash flow. Although there are market disturbances, like continuing resolutions and sequestration in GovCon, there are several strategies to mitigate these concerns.
- Servicing contracts with the U.S. government can be very rewarding. In pursuing government contracts you will have access to unique and exciting opportunities and experiences that only exist in this market; as well as front row insight and participation in enabling the many missions government agencies are responsible for achieving.
A few drawbacks to government contracting include:
- There are A LOT of processes and understanding how to navigate those processes can be difficult and costly. This is one of the major pain points for new businesses entering into GovCon.
- To prepare your business to be competitive enough to win your first prime contract can take a while. It is not always the case, but the typical timeline to win a traditional contract that is released as a competitive request for proposal (RFP) can take nine (9+) or more months to win because of the effort required to prepare your business to be competitive amongst other GovCon companies. There are strategies to win contracts sooner, but understanding that GovCon is not about getting rich quick and that it offers the opportunity to create stable, extended revenue is an important first lesson to accept.
- Strict compliance requirements are a fact of life in government contracting; and ensuring your business complies with the rules and regulations can be very time consuming and costly. However, appropriately scoping your growth strategy can help to mitigate and disperse the implementation of necessary resources, technology, and infrastructure over time to allow your business to mature before taking on complexity.
Although these drawbacks may seem like difficult barriers to overcome, GovCon provides significant opportunities for businesses to grow, especially small businesses. Don’t automatically dismiss this growth opportunity because it “sounds too complicated” or you think “I don’t know what the government buys” or maybe “I don’t even know where to start”. If the benefits we shared look interesting to you and you need assistance determining your readiness to pursue government contracts, Twenty39 provides free assessment consultations to help you make that decision. So what’s your next move?
