In the search for new customers and new sources of revenue, some small businesses forget that the largest buyer of goods and services in the world is the United States federal government. According to the General Services Administration, small businesses were awarded $83.1 billion in contracts in fiscal year 2013. Still, many businesses don't pursue government work because of the misperception that the paperwork and other hurdles are too daunting. While setting up your business to be eligible for government dollars does require following strict guidelines, there are many resources to make the process easier—and, as many businesses that sell to the government will attest, worth it.
Seek out help
"I often recommend that small businesses go to the Small Business Administration and to their local procurement technical assistance center first before they even start the process and have a conversation to determine if federal government contracting is where they want to be," says Stephanie Wilson-Coleman, senior advisor, office of small business utilization with the General Services Administration.
Next, Wilson-Coleman says that every business needs to get a DUNS Number for identification purposes and then choose a NAICS code that best describes the product or service they sell. With these classifications in place, the business can register online with the System for Award Management in order to interact with the government.
Federal agencies are required to put out quarterly reports of goods and services they intend to buy, which can help businesses decide which contracts to apply for. Wilson-Coleman recommends checking out these websites, along with her comments, to familiarize yourself with the federal procurement process:
Acquisition Central: "This will take you to the procurement forecasts of all the agencies, so you can get an idea of what solicitations or proposals you need to be geared up to respond to."
FedBizOpps: "A portal for advertising government-wide information about federal contract solicitations and awards that have an estimated value of $25,000 or more."
Federal Procurement Data System: "To see a history of how federal agencies buy certain things. For example, if you sell Widget A and you notice that these four agencies buy Widget A in April, then the procurement process could be six to nine months prior to April. That's when you can start to make contact with that federal agency so they'll know you're out there and you can get acquainted with the agency itself."
Small businesses must adhere to the dates in a solicitation—such as when the contracting officer can be questioned and the final date for submitting proposals—and to read the solicitation carefully. "In the beginning, I would encourage small businesses to limit their reach to one or two agencies," Wilson-Coleman says. "They need to give themselves the opportunity to learn how an agency works before they move to another agency which might work totally different."
Show your dedication
"The government is very risk-averse. When they get comfortable with organizations that have a track record of delivering, they tend to keep them around awhile," says Kevin Lancaster, CEO of Winvale, a Washington, DC-based firm that supports and advises government contractors.
Still, Lancaster warns that securing a government contract is not an excuse to rest on your laurels. Small businesses should be proactive in providing exceptional service, getting to know procurement officers, and building dependable relationships. "That's how you'll expand your footprint within an agency. You become a trusted advisor and demonstrate that you're able to mitigate their risk," Lancaster says.
A simple but often overlooked way for a small business to show their openness for working with the government is to say so on their website. "These end-users and procurement officers do their research like everybody else," Lancaster explains. "Make sure you have at least a little callout or tab or an industry page that talks about government because you want to speak to your audience. They're looking for vendors that have a commitment to the space."
An alternative to direct solicitation of the government is to work with a reseller or subcontractor. Small businesses usually encounter less scrutiny of their operations and sometimes more flexibility in terms of pricing. "We can get our partners on our schedule within two to three weeks compared to three to 12 months if you're going after a schedule [yourself]," Lancaster says. "You have a broader sales reach and faster time to market going through a third party."
Be a PEST
Some small businesses are able to build their livelihood almost entirely on government contracts.
"Around 2003, my company was asked to join a group that was working on a Congressionally-mandated study to see if you could take industry best practices in medical case management, which I do, and apply it for civilian federal employees of the Army," says Lisa Firestone, CEO of Managed Care Advisors, a Bethesda, Maryland-based company that designs and manages compensation programs. "That's how I got my start. I saw this as an opportunity and an unmet demand and jumped on it."
Today government work accounts for about 90 percent of her company's revenue. To help other small businesses navigate government contracting, Firestone came up with a four-part strategy that she calls PEST:
Persistent: The sales cycle can be longer than in the commercial environment. Following up with key buyers and staying positive are paramount.
Education: "Understand the different types of contracting models and be aware of the avenues that exist for small business set-asides," Firestone says, such as contracts for women-owned businesses, HUB zones, and service-disabled veterans.
Specific: Focus on the specific product or service that you offer and show how it can adequately address the needs of the agency.
Transparency: "You need to show them your products and be able to prove what you do," Firestone says. "Be transparent about what you do and how you do it, especially in a proposal."
Surrounding yourself with advisors—accountants, lawyers—who understand government contracting can be a major advantage in navigating federal requirements over the long haul. "This was probably the biggest surprise, that I really needed to have advisors that understood the government," Firestone says. "But it's made a world of difference."