Landing a government contract can offer numerous benefits for companies and can be a catalyst for growth for small businesses. However, not all businesses are eligible for all government contracts, so researching what contracts your company is suitable for is the essential first step.
Government contracts can range in value from a few thousand dollars to billions of dollars, so the contractors that bid on them range in size from small businesses to major corporations. There is a lot of paperwork involved, and it can take a long time to win a bid, so making sure your business is well-suited for the work described is extremely important.
Since there are many advantages to lucrative government contracts, there is a lot of competition out there. The sensible thing is to understand your competition and to clearly state why your business can do the job better than other companies. Having strong products and a great marketing plan can make you stand out from the rest of the bidders.
Small and Minority Owned Businesses
While bidding on government contracts can be a difficult process, a lot of government agencies have contracts reserved for small and minority owned businesses. Currently, about 25% of all government contracts go to small business, of which 10% are minority owned.
The government buys everything that any ordinary person would buy, except in massive quantities. However, there may be important stipulations concerning the products government departments can buy, such as only wanting paper that is recycled or exclusively wanting environmentally-friendly cars.
Foundation and Future Stability
Business relationships with the right clients can be an asset for any company. Government contracts make a lot of sense because compliance with terms can ensure a foundation for a business and build stability for up to 20 years.
For example, if the contract includes developing patents or copyrighted material, there is a distinct advantage to the contractor, as the contractor will probably retain intellectual property rights. Since the government tends to encourage technological innovation, it may turn out to be the best consumer of a product, especially if that product is new.
If you get your start with a government contract, you can be in good company with brands like IBM, Tang, and Teflon, who also built their businesses the same way.
Fair Competition Regulations
Governments are bound by laws and business ethics much more than the average private sector consumer. All contracts have to be open to all qualified bidders, and there are clear prohibitions against favoritism. The government is required to choose their suppliers fairly, honestly, and professionally.
Steady Monthly Income
If you land a government contract, comply with all terms, and continue to deliver, you can have steady, assured income. Government contracts pay within 30 days, in line with the agreed terms, and are less likely to be subject to fluctuations.
Steady income is especially important for businesses that tend to have slow periods. It can enable them to develop marketing budgets, grow, and hire employees. You may need to bid low, but the volume of continuous work can make up for the initial price.
Increasing Company Value
Maintaining strong relationships with clients and increasing overall value of your business is an essential part of company growth. A good reputation, such as showing a successful compliance with all government standards, can make a difference to the value of your business when it comes time to apply for a loan or sell your business.
You are also likely to be contributing to the growth of the local economy where your business is located. This is a great benefit of government contracts, as the value of your organization can rise when you pump money into your local community.
Strengthening Your Client Portfolio
One of the more important benefits of government contracts is the potential boost of your business to other clients. Listing government agencies in your client portfolio adds a lot of credibility and can be a good way to bring in new business. For example, using them for testimonials may catch the attention of law firms and insurance companies who may be looking for volume services.
It is clear to see how advantageous government contracts can be to organizations of any size. Serving both the public and private sector adds diversity, which can make you stand out from the crowd. In addition, the process of qualifying for a government contract increases your chances for growth and financial success. All of these factors help develop a good business strategy and can be a reliable road to financial security.