Intro to Growing Your Business with Government Contracts
Doing business with the government isn’t easy, a fact which deters a lot of small business owners from even attempting the gargantuan task. However, the U.S. government is the largest purchaser of goods and services in the world and ignoring them would mean missing out on a large source of potential revenue. Competing for federal contracts requires quite a bit of legwork, but it’s well worth it. The government is required to allot all federal purchases between $3,000 and $100,000 for small businesses. That’s a huge opportunity for any small business looking for prospective income. It’s important to note that the government typically won’t give a contract to a business that doesn’t have positive cash flow and hasn’t been in business for at least two years. Furthermore, government contracts often have far longer lead times, restrict the amount you can subcontract, limits the kinds of products you can offer, and how you work with other companies. It’s a good idea to acquaint yourself with the rules for federal contracting before you start the bidding process so you’re aware of what limitations you may face.
How to Start the Process
If you decide that government contracting is right for your business, you’ll start by registering your business on the U.S. Small Business Administration website. If you qualify, you can self-certify through the SBA with small business programs to help special or disadvantaged populations, such as businesses run by women or veterans. After you register, but before you start bidding, your business will need a Dun & Bradstreet Number, more commonly known as a D-U-N-S Number, which you can get here. This nine-digit number identifies the physical location of your business. You will also need a North American Industry Classification System code — better known as the NAICS code — which can be acquired here. The NAICS code classifies business establishments by type of economic activity, industry, and business size. It is not uncommon to have multiple NAICS codes. Once you have your D-U-N-S number and your NAICS codes, you can register with SAM– or the System for Award Management–to do business with the federal government. Bear in mind that contracting officers go to the database to look for small businesses to fulfill contracting requirements. In order to receive notices of contracts that are up for bid, sign up with a bid notification service such as BidSync. You can customize the data you receive so that you will only be notified of contracts your company is eligible to bid on. It’s always a good idea to consider subcontracting or partnering with companies in your industry.By partnering with a business who is experienced in federal contracting, you can get a feel for the process when you’re just starting out. While obtaining government contracts isn’t the simplest of tasks, it’s almost certain to help your business reach the next level.
Intrigued by government contracts? Here’s a primer to get you started. [TWEET THIS]
About Jeremy Higbee Jeremy Higbee is a freelance writer, avid snow-boarder, and energy drink junkie. When he’s not flying down snow covered mountains, he’s giving financial advice to entrepreneurs and small businesses.