Many companies are interested in pursuing government contracts and it’s not hard to see why. Consumer spending may be decreasing and global changes are affecting a number of industries, but one sector that continues to grow is government.
If you are a small company, there’s some good news for you. In many cases, small businesses receive preferential treatment when bidding on contracts for goods or services between $3,000 and $100,000. If you are looking for ways to grow your company, then proactively trying to secure government contracts is a step in the right direction. Securing these contracts isn’t always easy, at the federal, state or municipal level. Here are a few tips to keep in mind:
Understand how your specific sector works
There are many government agencies and sub agencies that you can target, but you need to understand how they buy the goods or services that you offer. Identify possible agencies and start researching their procurement processes and strategies. There are a few websites that you can check out to help you with this, such as the Federal Procurement Data System.
Get your administration in order
You need to enroll in the Central Contractor Registration program to do business with government agencies and sub agencies. Once you have enrolled in the Central Contractor Registration, federal agencies will be able to find your business among their listings. This registry is actively used when contracts under $100,000 need to be filled, so make sure all your business information is correct.
Plan for financing
Government contracts, be they municipal, state or federal, can bring great benefits such as strong profit margins and recurring business. Many of these entities take up to 90 days to pay for products or services delivered and few companies are able to adjust to this cash flow cycle. A factoring company can pay you immediately so you don’t have to wait for payment.
When you partner with a factoring company, they will pay you for your accounts receivable upfront. This way, you won’t be incurring debt, which would be the case if you were to opt for a traditional bank loan.