Prepare For A Recession By Selling To The Government
Post Written By Maurice Harary, F
With the complexity of navigating many of the compliance requirements associated with today’s business environment, many small business owners can barely think beyond their next payroll cycle. Long-term thinking is not only crucial for small businesses to compete with their larger counterparts, but it can also prove to be a competitive advantage.
Larger companies are required to think about shareholders and future earnings reports, and typically have a larger group of stakeholders that are scrutinizing business decisions and risk-taking. On the other hand, small businesses can be more nimble in their decision-making, reacting quickly to changes in the market and customer preferences.
So, why is this important now? Well, with many economists and banks preparing for a recession, it seems like Main Street needs to get the memo from Wall Street; this is the longest economic expansion in history, and capitalist markets always have ups and downs. While we never know precisely when the next recession will take place, we can be prepared for that day by having a contingency plan in place.
Bidding As An Alternative Business Development Channel
A lot of businesses, especially smaller businesses, ignore a major revenue stream and business expansion model of selling to the government through RFP and bid responses. This is a huge mistake. The U.S. government spends over $4.5 trillion per year, and this is projected to increase. And more importantly, governments typically increase their spending even further during times of recession in an effort to stimulate the economy.
So when your clients and prospects start tightening their purse strings during a recession or economic slowdown, you have two options: decrease the size of your own business, leaving room for your competitors to gobble up market share down the road, or find new and creative ways of diversifying your client base with a consistent buyer.
At this point, you may be wondering what the government is buying that you are selling. This is especially true if you have a very niche product or service. But you’d be surprised to learn just how much the government really does buy. If you are curious to find out on your own how many opportunities are actually out there, check out FBO.gov, and type in your product or service in the search bar. Here, you will see all the different opportunities available and open right now that are applicable to your business.
You will also see that each opportunity has a set of solicitation requirements, typically referred to as a request for proposal (or RFP), where you need to provide exact responses, documentation and other collateral to the governmental evaluators to ensure you are meeting all the requirements as set forth in various legislation to procure the types of products or services in scope.
At first glance, these may seem quite difficult. Depending on your appetite for the volume of bids to make, you can either hire an internal employee who is dedicated to completing these bid responses, or you can hire an outside firm dedicated to RFP consulting.
Either way, the best part about completing your first RFP is that you can reuse a lot of your response content over and over again for different bids while updating specific sections depending on the solicitation.
Bidding Even Better During Recessions
The benefits of selling to the government are even more applicable during a recession. First and foremost, the government’s credibility is pretty unbeatable. You can rest assured knowing that when you perform the services or deliver your product, you will be paid.
Second, the government is a great reference you can publicize. The government publicizes all of their solicitations to ensure there is transparency to taxpayers, so you can publicly share this information that demonstrates your abilities. This often makes private companies buy your products and services too.
Third, contract times are typically longer than private-sector sales. Governments often purchase goods and services in one, three, five and 10-year increments. This way, you can plan your production accordingly.
Fourth, governments have a mandate to purchase a certain percentage of their needs from small, minority-owned, women-owned and veteran-owned businesses. This is unlike the private sector, which typically goes with the easiest or cheapest firm to work with — typically the company with the largest market share.
Taken alone, each of the above reasons may not be enough to overcome hundreds of pages of work to win a bid. But together, and coupled with the fact that there is outside help available to small firms, there is no reason not to take advantage of selling to the government.
Forbes Article Link: Prepare For A Recession By Selling To The Government