Government entities at all levels – federal, state, and municipal – purchase a broad number of products and services from private businesses. Adding government customers to your business can provide a good, steady stream of ongoing sales. Despite the potential benefits, it is important for any business to understand the official procurement process. There are regulations, laws, and procedures involved with government contracting making it a somewhat more complex business process than what is usually found in the private sector.
Reviewing the following questions may help to determine whether you are ready for government contracting or to identify items you will need to develop to ensure your success in the government marketplace.
- Do you have a business license? Furthermore, most government contracts require businesses to have liability insurance. Checking to see if you have appropriate insurance coverage is important.
- If you are in a business requiring a professional license, do you have one and is it up-to-date?
- If you are in a business needing surety bonding, such as construction, this should be in place before you start pursuing government contracts.
If you are trying to do business with the government, nearly all contracts require a business to provide references showing experience supplying the product/service required in the contract opportunity. However, this can be based solely on the owner’s experience prior to forming the business, based on the experience of on-staff employees, or based on sales the business completed in the past.
A business plan is a road map to ensure you have appropriately identified the resources necessary to expand, understand the demands of pursuing new customers – including the research and marketing necessary to find and acquire those customers, and are you ready to assume the additional responsibilities associated with expanding your business.
It can take longer to receive payment for services provided to the government. Usually, payment is received 30 to 45 days after an invoice is submitted, but it can take longer. There may be multiple systems used for bidding, tracking, and paying invoices and small businesses will need to follow the necessary procedures closely to make sure invoice payments can be made.
Since government entities do not prepay for materials, supplies, and services, businesses need to have good cash flow and be able to pay for materials upfront.
Understanding which agencies need your services or product is important and will help determine whether it is feasible to pursue government customers. Using various websites such as SAM.gov, USASpending.gov, and caleprocure.ca.gov can help businesses determine which agencies have used the business’s goods or services, how often, and the value of the contracts. Careful market research will help businesses make informed decisions about entering the government marketplace.
Selling to government agencies is time and computer-work intensive. It includes registering in required government databases, navigating similar but different government websites, submitting bid proposals, and filing invoices and progress reports. As supply chains have evolved you may find it difficult to work in a more impersonal, centralized environment.
One of the most important aspects of selling to the government is to work closely with your APEX Accelerator counselor to learn what you need to learn and to execute the strategies that are proven best practices for selling to the government.
Per the Terms and Conditions of our Cooperative Agreement with the Department of Defense, we are instructed to work with businesses that are seeking to sell their products/services to the government. We do not assist not-for-profit organizations in finding grant opportunities or submitting grant proposals.
If a business has the capability, skills, and experience to provide products and services to government agencies, it can be a long-term, positive, and rewarding relationship and has the potential to be an important additional source of revenue.