Companies Shying Away from Government Work

There is currently a trend where small businesses are challenged to find enough employees to complete the current work they have. This has led to a reduction in the number of GSA Schedule firms from 19,000 firms several years ago, to around 14,000 today. This reduction is mostly due to the loss of small businesses, and has greatly increased the revenue on a per firm basis on the schedule. $1MM has grown to $1.3MM per small business with a GSA Schedule.

Some would say that if this is the trend, then why would I want to join the government marketplace when firms are leaving?  

I would like to offer a contrarian point of view as to why bucking a trend can be very valuable to a firm.

Federal Government is Everywhere

Here are the metro areas where the federal government has a very large number of employees. Any of these areas is likely a good bet to firms selling these goods or services.

Government Business is Large

The government space if classified as an industry would be one of the top 10 largest in terms of sales. It is a very large, many would say massive, sector of the economy.

Barriers to Entry

It is challenging to get your foot in the door, but once you do so, it’s a market that’s waiting and ready to be cornered. 

Small Businesses Have a Manageable Contract Grouping

The government wants to work with small businesses. As such, the government mandates that nearly all government contracts over $3,000 and under $100,000 be reserved for certified small businesses.

Consistent Business

Government spending is consistent. This is in contrast to private sector spending which has greater fluctuations during the economic cycle. The government will generally increase spending during these times.  

Fair Process

Unlike some private sector buying, the government’s purchasing system is extremely transparent. Government agencies buy many of the products and services they need from suppliers who meet certain qualifications. They apply standardized procedures to purchase those goods and services. If you are willing to spend the time required to familiarize yourself with these guidelines, government contracting can become a lucrative business.

Large Growth Opportunity

Many small companies have become larger companies by selling goods and services to government agencies.

Makes you a Safe Choice for All Customers

There is a certain amount of prestige that comes with being a federal vendor. Prospective clients see your firm as well vetted if you are currently selling to the government.  

Increases Likelihood Your Business Gets Purchased

Finally, a non-intuitive reason for doing work with the federal government is that small businesses with strong relationships within a given agency are sometimes strategically acquired for those existing relationships that a large firm might want.

If you are thinking about bucking the trend, but don’t know where to start, I always recommend contacting an industry expert such as Advance GSA and/or ez8a. Neither charge for an initial consultation.