Have you ever lost sight into why you are doing something? That is why today’s article is about doing business with the federal government. For the last six months, we have been discussing topics related to government contracting and the steps you need to take to become a government contractor. We have been concentrating on developing our business strategy for competing in the federal marketplace. However, as we work on this business strategy it is easy to lose sight of the original reasons, we started this process in the first place. That is the goal for today’s topic is to remind you “why” we are doing this.
Top 5 reasons to Become a Government Contractor
Let’s refresh our memories on the “Why” we want to become a federal contractor, shall we?
1. Federal Government is the Largest Buyer of products and services.
The United States of America is the largest buyer of products and services in the world. The Federal Government annually spends approximately $500 Billion each year. Of that $500 Billion that the government spends, 23% or $115 Billion must be set-aside to small businesses. The Department of Defense spent over $321 Billion, and the Department of Energy spent over $28 Billion in 2017. Now It is easy to recall the top reason why we made the business decision to enter into government contracting.
2. Federal Government Spending Is Consistent
In today’s fluid environment we cannot always count on our customers staying in business or that they will continue to use our products or services. However, we do know that the Federal Government will continue to buy products and services year after year. The amount of spending may fluctuate, but it will always remain consistent in the Billions of dollars.
3. Federal Government Pays it bills on time.
In the private sector, businesses must overcome slow collections or unpaid (Bad) debts whereas the Federal Government commonly pays within 30 days. Even better the Federal Government pays electronically now, so you don’t have to deposit those checks and worry about them bouncing. Typically, if the government is late with a payment, they will pay you the amount owed with interest.
Imagine the difference a consistent cash flow could have on your business. Knowing that you will be paid regularly within thirty days can make a big difference to your business. Steady cash flow is another excellent reason to do business with the federal government.
4. Location Does Not Matter.
There is no need to travel to Washington D.C. to do business with the government. There are federal agencies in every state, and they purchase millions of dollars every year. Thus helping small businesses to be able to compete in the marketplace.
Don’t forget to investigate counties, cities and even school districts. These entities purchase more cumulative goods and services than the federal government. It is an excellent option for small businesses.
I had a client that did quite well just providing services to the local school districts. He was so busy with work from the school districts that he decided not to pursue government contracts.
5. Larger Projects Available
The federal government is moving into larger contract vehicles which have small business set-asides contain within. Thus allowing small businesses more opportunities to bid on more massive contracts than ever before.
Today we looked at the top five reasons to become a federal contractor. I hope that these reasons will spark renewed interest and make you more determined to finalize your business strategy and enter the wonderful world of government contracting.