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Small Businesses and Government Contracts – How to Succeed Against the Odds

Author: Tim Hagerty / CEO

Small businesses managed to top $145 billion in Federal Contracts in 2020, a $13 billion increase in prime contract spending from the previous fiscal year. On the surface it sounds great, but a look at the fine print reveals a more dire story when it comes to small businesses breaking into government contracting.

A June report found that the number of small businesses winning first-time federal contracts went down a whopping 79% between 2005 and 2019. Meanwhile, the overall number of small businesses winning contracts declined by 38% between 2010 and 2019. Even with the 2020 boon in spending, the federal government fell short of goals established for woman-owned small businesses and HUBZone small businesses.

The current administration recognizes there’s “much more to be done” to advance equity in federal procurement. We agree, which is why we've developed a specialized platform that enables small businesses to snowball those connections into an ever-growing revenue stream. For now, let's show you exactly how being a “disadvantaged” company can propel you ahead of all your competition.

While the end goal is getting a piece of the $145 billion prime contract spending, we recommend using this strategy to grow your business starting with subcontracts. From there, you can grow your capital and reputation until you’re ready to fry bigger fish.

How to Get Government Contracts as Small Business

The Problem

As it stands, government is increasing its spending and looking for small businesses they can rely on. In particular, they’re on the lookout for 4 types of companies:

There are other types of small business government has set procurement goals for, but these are regarded as the “big four”. The exact spending varies from year-to-year, but at the moment, they’re meant to receive no less than 23% of all federal contracting dollars – which for the 2020 number would be over $33 billion.

It gets better - the Biden administration announced an effort to increase the share of contracts going to disadvantaged businesses by 50% by 2026!

Even if your small business fits into one of these categories, there are several mistakes you could be making that would cause government agencies to pick another business over yours, even when they should, in theory, be seeking you out directly.

Here’s a solution:

Our Proven Strategy for Securing Subcontracts

Step 1. Ensure You Have a Capability Statement.

This is a 1–2-page PDF document that highlights the basics of your business – name, contact information, what you do, and your, well, capabilities. A good amount of small business owners know how to go about creating one of these, but if you don’t – no sweat. You can view several capability statement examples and templates online to write one yourself, or you can outsource its creation to somewhere like Fiverr. Keep it short, keep it clear, and keep it informational. Don’t exceed 2 pages.

This statement is the first step to connecting with the right person in the right way – be considerate of their time and make their job as simple as possible.

Step 2. Research an Agency’s Acquisition Schedule.

Every area of government has a small business office. Those offices are responsible for meeting the quotas for small, disadvantaged, and woman-owned businesses. Historically, these offices are also undermanned and overwhelmed. So help them out.

Find their website (It’s out there, but in some cases, you’ll have to put in work to find it) along with their acquisition schedule – what they’re going to award in terms of contracts within the next 6-12 months is what you want to focus on. Use that research to formulate your outreach plan.

Remember – these offices are short-staffed and receiving a lot of incoming messages. Make it as simple and quick as possible for them to understand how and why you’re the small business they want to work with.

Here's an example of what you can say when reaching out to these small business offices.

“I see you have [THIS ACQUISITION – Copy and Paste from the schedule] with these requirments. My company supports X, and we feel like we’d be a good fit for this upcoming work. By the way, we're a WOSB, 8(a) ... ”

Once again, shorter is better. Get your introduction out, attach your capability statement, and wait for two to three days for their response. If you'd don't get that email back in that time frame ...

Step 3. Follow Up

Say you haven’t gotten a response in 2-3 days. Is it time to give up and move on to your next attempt to win a contract? No. And yet, even though we’ve all experienced getting too busy to send a response to an email, only 3% of businesses follow up on initial contact.

You could follow up with an email but, most of the time it will take a phone call to get the ball rolling. This entire strategy is about standing out from the crowd.

Your follow up will ideally come from the CEO of the small business. Note: the small business officers LOVE speaking directly to the owner of small businesses. It makes them feel like they can trust you, like you’re on the ball. Be cordial and reiterate why you’re the right fit based on their acquisitions, and make sure to give them plenty of leeway for not having gotten back to you.

At this point, you’re ahead of almost every other competitor. All that’s left to do is fulfill your end of the bargain and prove yourself a reliable connection.

Step 4. Build Upon Connections

Once you’ve followed all the steps to this strategy, you’ll likely be in a position to be introduced to one of that agency’s prime contractors. These introductions are worth their weight in GOLD.

A prime contractor doesn’t want to disappoint their government contact. When they hear you’re being introduced to them, they’ll take that meeting pretty quickly.

From there, all you have to do is impress that prime. Some of the steps you’ll have followed to get to this point will be a big help here – but just remember, these are busy people. Brevity and clarity are your two best friends in the contracting business.

Attain Continued Growth of Your Small Business

With these techniques you’ll be setup to get the ball rolling when it comes to contracts with the federal government, but there are always new developments, new methods, and new technologies that could give you a competitive edge as you expand your business. If you want to be the first of your competitors to implement our strategies, make sure to follow us on LinkedIn and Facebook to stay up-to-date.

If you'd like to really put the pedal down when it comes to growing your small business in the federal space, check out what our platform can do for your business.

Until next time,
Tim Hagerty CEO / Founder

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