Using Government Contracts to Scale Your Small Business
Scaling your business means more than simply growing your business. Scaling your business is something altogether different. It transcends the chase that keeps revenue just one precarious step ahead of costs. When you scale your business, you strategically propel your profits while effectively tethering your costs to keep them as low as possible. The result is expansion that isn’t weighed down by financing concerns. One of the most effective ways to achieve the fiscal nirvana that scaling provides is through contracts with the world’s largest purchaser of services and goods: The United States government.
Securing a federal government contract is no easy feat. The process is competitive and fraught with bureaucracy. Government contracts tend to be awarded to companies that focus on quality and efficiency while keeping costs down. All these are qualities you will master when you create a strategy to scale your business. The following five steps will get you started.
1. Focus on the Big Picture
If you’re like most small business owners, you like to have a hand in nearly every aspect of your company. You probably credit your involvement to your success and rightfully so. But if you’re going to scale your business and procure government contracts, you need to remove yourself from mundane, daily operations and focus on your strategic vision. You need to identify three or four key areas for growth and focus your attention on cultivating these areas.
2. Create Processes for Everything
As you spend less and less time in the trenches of your company, you need to be able to count on your employees to execute business consistently and flawlessly. This means you need to have a written process for the tasks that touch your customers, especially hiring, production and record-keeping. These processes should also have a system of checks and balances written into them to protect against inevitable human errors.
The key to a good process is both efficiency and redundancy. Efficiency saves money; redundancy saves time by preventing the need to cope with and correct errors.
Government contracts usually have audits written into them. Having a set process for everything that happens in your company is an excellent way to help insure the auditors won’t find mistakes.
When you create your processes, factor in the goals you set forth in your strategic vision. If your goal is to increase your company’s revenue tenfold, ask yourself how your production will change when you reach that goal. How many employees will you have? How will departments communicate with each other? How will project managers track the increased material orders? Think about the details of your future and create processes that will make the road to success smoother.
3. Evaluate Your Capital and Financing Options
While the very nature of scaling a company means that revenue outpaces costs, very few businesses are self-funded. If you’re unable to cover the costs of extra employees or buy materials in sufficient quantities, your company’s future may be in jeopardy.
Ensure that financing is in place so that when the contract comes in, you can hit the ground running.
Also don’t underestimate the investment in both time and money required to secure a government contract. From travel expenses to meetings to man-hours, chasing a government contract can itself be a costly endeavor. Successful businesses often spend between $112,000 and $137,000 to secure their government contracts. Be prepared to absorb these costs.
4. Build a Public Profile
It’s true that the government is a large entity and will place an onerous emphasis on numbers and processes. All the same, purchasing decisions will still boil down to the same factor as it does with all your other clients. When you get past the red tape, you will invariably find people. You’ll want to make these people feel good about doing business with you by building a likable, trustworthy public profile.
5. Find and Establish Key Relationships and Networks
Strengthen your public profile with a strong network of contacts. Look for mentors and advocates. Who you know will be important as you work to secure a government contract.
This tip isn’t about advocating backroom deals. Rather, it’s a reflection of our hyper-connected, modern world. Just as networking is important to connect with your traditional clients, networking in government circles is likewise important.
Government contracts are effective tools to scale your business. Leveraging government contracts to achieve sustainable growth is very much like any other scaling strategy. By focusing on the big picture, creating sound processes, establishing trust through personable relationships and securing financing early, you can secure government contracts and propel your company to new heights.