Serving businesses or consumers is one thing; serving a government agency is quite another. Businesses that can land government contracts are sure to grow big — and quickly — thanks to the exclusive revenue provided by the feds.
However, not every business is well-suited to pursue contract business. Because of the enormous amount of time and resources required to bid for government contracts, you should know ahead of time whether your promising startup should attempt to curry the feds’ favor. This guide should help you determine whether contract business is good for you, and it will explain the best course of action if contracts are a good bet.
Do Your Homework
There is plenty of homework for budding entrepreneurs, amongst the market research, brand development, plan writing and more. However, if you are considering pursuing the government as a client, you need to add a few more tasks to your list.
First, you need to prepare your business to chase government contracts. Not just any enterprise is eligible for government contracting; you need to meet a few basic requirements before you can even apply. First, you need a few different ID numbers for your business. These include:
DUNS. Your Dun & Bradstreet number (DUNS) is a nine-digit number for each physical location of your business.
NAICS. The North American Industry Classification System (NAICS) offers codes for different types of products and services. Your startup should have a primary code, but you might have multiple auxiliary codes if you sell a variety of products and services.
SAM. Admittedly, this isn’t an ID number, but it is a required registration. The System for Award Management (SAM) is a database that agencies use to find contractors, so if your startup isn’t there, you likely won’t win any contracts.
Next, you need to understand size standards for contracts reserved for small businesses. To qualify as a small business, you need either:
- To be a manufacturing company with fewer than 500 employees,or
- To be a non-manufacturing business with annual receipts under $7.5 million.
Finally, you need to prove compliance with all applicable laws and regulations. In general, that means your startup’s systems need to be fully secure. You can verify the requirements by reading the Federal Acquisition Regulation and 13 CFR 125.
Keep Doing Homework
That’s not all. Once you are fully prepared to apply for government contracts, you need to know what sorts of contracts your business can take up. This requires extensive knowledge of government agencies, to include their primary problems and challenges, their budgets, their spending priorities and allowances and similar info. You can use the Index of Governmental Departments and Agencies to gather contact information, then you can further add to your data by speaking with agency representatives.
Before an agency chooses whom to award a contract, they fully vet the contenders. This means they will dig deep into your organization to understand your structure, your brand, your suppliers, your partners and more. You should have every detail of your startup in order, from the security of your contract management system to the reliability of your staff.
You won’t win any contracts until your business seems and is professional. To that end, you should invest heavily in your brand to ensure it is consistent. All your marketing efforts should point toward the trustworthiness and stability of your brand to reassure government agencies that your business will not waste their valuable time and money. You never get a second chance at a first impression, with both the government and the public.
One study found that more than 80 percent of jobs are filled through networking, and a significant portion are filled before the jobs are even listed. While the government contracting process seems more official than that, in truth, networking is and always will be a powerful tool for getting what you want in the professional sphere.
You should develop a networking strategy that puts you in contact with people powerful in government agencies. This means cultivating strategic partnerships with other businesses, attending agency outreach events and generally connecting with high-powered people in business and politics. It might not seem fair — let alone meritocratic — but it works, and that’s what matters.
“Can your startup win government contracts?” is an easy question to answer: It depends. Businesses in the right markets with the right connections absolutely have the opportunity to work on government projects. The concern is how much you want to work for the government and what you are willing to do to accomplish your goals.