Welcome Back folks!!! Today, we are going to have a talk about being prepared for government contracting. I have been getting a lot of calls and emails from businesses that are wanting to become government contractors. However, these businesses (in most cases), I believe are not ready to enter into government contracting. Let’s discuss why I feel this way.
Preparation
Everyone knows that the better prepared you are the better your chances of succeeding. This is true in life and government contracting. The first step is preparation is to ensure that you have the resources available. What resources are we talking about? Read on to find out.
Employee Experienced in Government Contracting
To jump start your government contracting business you need to hire an employee. Not just any employee but one that is experienced in Government contracting. You need to be prepared to cover his or her salary for a minimum of one year. This employee will be worth the weight in gold to you. How? They can help you find opportunities to bid on. They can walk you through the process of selecting a solicitation, writing the proposal and submitting the proposal. Once you receive your first contract they can help you navigate the process.
Working Capital
Next you also must have enough working capital set aside so that once you win a contract you can purchases supplies and services. On average most experienced government contractors will have a win ratio of 1:10. This mean that for every 10 bids they submit they will win one. As a result most businesses will be writing a minimum of 1 to 5 bids per month. Now an inexperienced contractor will have a much higher ratio. The ratio could be as high as 1:30. Meaning that they will win 1 out of every 30 bids they submit. What will your ratio be? There are way too many variables to say at this time.
Patience and Dedication
You also have to have patience and dedication to become a government contractor. Why? Because you will be submitting multiple bids and waiting months for the results. It can take years for a new government contractor to win their first contract. Also, you will need to be diligent on improving your processes for government contracting? What processes? The bidding process!!! Your new employee will be instrumental in helping you navigate the government contracting language and bidding processes.
In the Construction Industry?
For those in the construction industry the number one limiting factor is bonding. In order to increase your bonding you will need to increase the cash you have available to the business. The more cash the higher your bonding can be!!! This is the most limiting factor for construction companies. It is best to get your bonding as high as possible before you start bidding on government contracts.
Do I Need a Partner?
No. You do not need a partner when starting out in government contracting. However a partner does offer additional benefits as they can help you through the process. But they also have risks associated with them. In my opinion, it is best to do a few contracts by yourself before expanding into any partnership.
Conclusion
In conclusion, if you do not have the resources to support the steps in this article then I would suggest waiting before you bid on a government contracting project. The government is not going anywhere. Get a nest egg together and the employees in place before you even think about bidding on your first project.
For more articles. Until next time be safe.