Are you qualified?
Selling to state and local government (directly or through prime contractors) can be a great source of revenue for Small Businesses but to get those contracts, you have to understand and navigate the process successfully.
- Develop or update your business plan. The very first step that a company needs to take when considering moving into a large new market is to ensure that the company’s business plan supports the initiative. This means you should analyze the corporate structure, financial status, administrative capabilities, production and distribution capabilities, and delivery methods to determine if you can sustain a long-term commitment to a marketing effort that may not produce revenue for several years and then deliver as promised when you have an opportunity.
- 2-3 years of commercial experience. Newly formed companies should not target a large specialized market, like the government, as their initial market. Government buyers are risk adverse and have no incentive to take a chance on a new company. Government contracting officers want to ensure they are dealing with a company that has a successful track record and that demonstrates they can deliver the goods or services they are seeking. They are looking for past performance and if you are new to the government market you need to show them a track record in the commercial marketplace.
- Electronically capable. Many government contracts are advertised, negotiated, and awarded electronically. Additionally, most government invoices and payments are made electronically. You are at a severe disadvantage if you are not able to conduct business online. There are also many government purchasing mechanisms that are only conducted via the Internet. A professional looking, user-friendly web-site is also often very helpful for conducting business with government. You should make doing business with you as easy as possible since the government marketplace is very competitive. Use an Internet provider that is capable of transmitting large files and provides a professional business appearance – personal Internet services such as AOL or Hotmail are generally not adequate to handle online business transactions.
- Financially stable. Similar to the issues of a start-up business, you should not attempt to enter a large specialized market if you are struggling to make payroll or have an inadequate cash flow. Contracting officers are looking to buy the best possible goods and services for the best price – we as taxpayers expect as much. Ensure that your company is able to sustain the financial obligations required to work through the procurement process before entering the government marketplace.
- Good customer mix. Large specialized markets like the government marketplace can make dramatic shifts in their focus because of events such as a war or a natural disaster. If a company is too dependent on these markets a shift of emphasis to respond to a major event can be devastating. To ensure business stability over the long term, it is recommended that the business have a well balanced mix of revenue streams.
How do you get started?
- Develop a winning strategy -What state and local agencies have bought products/services like yours in the past? Which companies have been awarded these contracts? How much have they been paid? Answers to questions like these are necessary to develop a winning strategy, guide your target marketing, and give you a competitive edge.
- Register with the State of California and local agencies.
- Obtain appropriate certifications – For the State of California, once you register your California profile, you can apply for Small Business (SB) or Disabled Veteran Business Enterprise (DVBE) certification. For local government agencies, check with each to find out which certifications may apply.
- Use the California State Contracts Register (CSCR)– It is your one-stop, central information source for state contracting opportunities. State agencies post solicitations, Request for Proposals (RFPs), etc., on this site when they go out to bid.
- Market to state and local agencies and prime contractors – With a strong capability statement at hand, attend networking and outreach events where state and local agencies on your target list are present.
- Identify and respond to opportunities – use every opportunity to actively seek out potential contracts through look-ahead lists published by many agencies. Be prepared to respond to appropriate opportunities via the agency’s bid process.
- Get bonding and financing – Obtaining financing and bonding for your business can be challenging and will take time and resources. You may need to consider a number of options. Be sure to start early and work it in parallel to your marketing efforts.
Orange County SBDC’s training and consulting services assists businesses to develop a government marketing strategy for selling to state and local agencies and prime contractors. Further, we assist with certification, marketing, and agency and prime contractor introductions, and obtaining appropriate financing for working capital or building and equipment purchase, as well as, bonding when required.
Information resources and networking opportunities help business clients stay abreast of the ever changing government and prime contractor procurement process and personnel. Orange County SBDC sponsors “matchmaking” events, providing critical opportunities to connect with agency purchasing agents, prime contractors, and other businesses that may offer teaming or subcontracting opportunities.
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