I have owned DynaGrace Enterprises, a Woman-owned Small Business (WOSB) and 8(a) firm for almost a decade. So why did I start a government contracting business? The answer is quite simple. I was younger and dumber and wanted to see if I could. I did not know what I should have known when I started. Maybe this article can give you some insight and help you determine if it was the good idea you thought it was.
There are several types of government contractors, and the one I am most familiar with provides services to the federal government. The manufacturing part and being able to offer a product to the government might be better for you, but I am not as familiar with that type.
Federal government contracting can be a way to start a small business. The market is worth over $100 billion in sales to small businesses each year. Providing services or products to the government is quite different than selling to the commercial sector.
Government contracts can guarantee ongoing revenue to your business. A stable cash flow enables a business to develop marketing budgets, hire staff and grow their business intelligently. Reoccurring monthly business generated from government contracts can also hedge against months that are slow. In fact, many contracts have 3-5 continuous year contract terms. Keep in mind though it can take 30 to 90 days to get paid. But once the payments start you are usually fine.
The procurement process for a government contract is extensive. You can speed up this process by marketing to government customers that have a budget. That can be like finding a needle in the haystack. The government goes through cycles for services. Sometimes they ramp up contractors and some years they ramp up on civilian employees.
You should be prepared for long hours when responding to solicitations. The last couple I have lost to very low bidders. I am not sure how they expect to give any benefits to their employees, but the government will get what they bid for, hence the term, “low bidder”. It is like buying the cheapest vehicle and realizing the plastic cracks in the sun after a month of owning it. I refuse to win a bid on the backs of my employees so the contract goes to a company that will.
The good part is I have some fantastic employees, and I have met some wonderful business people who are involved in government contracting. I started out as a civilian employee way back when and then worked for about four contractors before starting my own small contracting business. Having a small budget or lack of budget is a huge problem. The government employees in charge of budgets are usually friendly and appreciate the services we have to offer.
I would never even have thought about having my own business, and this opportunity has given me the experience and the pleasure of being an entrepreneur. It is an excellent way to get started and the SBA offers some training but expect to learn a lot on your own and with the help of mentors.