Government Contracting: Guide to Starting a Small Business

When starting a small business, the very first things you will have to think about is your target market. Who will your customers be? What will be their demographics? What is their buying behavior? Asking these questions will help you understand your target market so you can make effective marketing efforts. However, one customer is often discounted because it is too big of a client to get. That customer is the government.

In most countries, governments are required by law to purchase goods and services from small businesses. You don’t have to be a big-shot company to be able to go into business with the government. This is what you call government contracting.

Government contracting is the process of producing goods and services for the government once you are chosen as their supplier. Your client can range from the local authorities to the state itself. Because the government is like any other company that consumes utilities, technology, fast-moving consumer goods, and other things, you shouldn’t get intimidated in making a proposal to the government.

How does government contracting work?

Depending on your state, the processes can be slightly different in terms of technicalities. But in general, purchases that go beyond $25,000 should be published and the government then opens a public auction for those who want to bid.

Unlike an auction for rare and antique items, a public auction put up by the government is looking for companies who can give the lowest bid for their needs. After all, the government should always try to be prudent when it comes to spending people’s money.

What You Should Do As A Small Business

Even if you are just starting out, you can always keep an eye open for public auctions posted by the government. This would be helpful for you because what if the government needs your company’s expertise? You might just get one of the biggest opportunities your company will ever have.

There are contracts that are only offered to small businesses. If you are on the prowl, watching out for these types of contracts should be your focus. Also, there’s what you call a sole-source contract where the contract is only reserved for a specific type of small business.

Your First Steps

Once you’ve seen a public bid which falls under your expertise, then what are the first steps you should take in order to give a good bid?

  1. Survey the market

In every bid, you have to be familiar with your competitors. How much are their prices? What is their competitive advantage? In knowing these things you’ll be sure to find an edge that will help you be a much desirable choice. Also, your goal is to give the lowest bid so you might want to check up on the prices of your competitors.

  1. Look at your resources and value chain

It may sound very business-minded, but in order for you to give the lowest possible price, you have to have a streamlined value chain. Your operating costs should be much lower than your sales. Also, you have to show that you have the resources to serve whatever the government is needing in the contract.