Government contracts may be plentiful for larger companies. For many small businesses, they’re not. Only 22.5 percent of federal contracts go to small businesses. Only 4 percent are awarded to firms owned by women, according to statistics from the U.S. Small Business Administration (SBA) from 2012.
However, government contracts can be lucrative. Winning such contracts, for women entrepreneurs, is an important way to create a high-growth business, according to research by American Express OPEN, which found that 42 percent of women-owned small business contractors generate annual revenue greater than $1 million.
Forbes Contributor Elaine Pofeldt spoke with Julie Weeks, president and CEO of Womenable, a research advisor to American Express OPEN. Here are some tips for would-be contractors.
Prepare to invest
“Winning a government contract takes more prep work than you may think. Women-owned firms that succeed in winning contracts devote an average of $112,000 in time and money preparing to go after them, according to Weeks.”
If successful, the investment can be more than worth it, paying for itself several times over. The old adage that it “takes money to make money” is especially true here. Keep in mind that you are assuming a very real risk for this possible opportunity.
Tailor your services
“Federal agencies don’t limit their purchases to things like airplane parts. However, it’s not always easy to sell what you offer, whether that is meeting planning services or a book you published. Successful contractors adapt what they sell to federal requirements.”
Make sure that your service or product is offering what the government needs.
Find a mentor
“Try attending networking events and information sessions for contractors that government agencies hold, so you don’t have to wade through all of the fine print on your own.”
Potential resource: The SBA offers a program called ChallengeHER that is designed to promote opportunities for small businesses owned by women.
Diversify your clients
“Among small businesses that are active federal contractors, 19 percent of revenue comes from federal government contracts, on average, while 14 percent comes from state and local contracts. One reason to vary your clients is it insulates you against cutbacks in any one agency.”
You don’t want to have all your “eggs” in the federal government’s “basket.” The federal budget is fickle. It changes as the priorities of the elected officials change. If the federal government decides it doesn’t want what you’re offering, you want to have other options.
“When asked how frequently they had bid on a prime contract or subcontract over the last three years, women business owners who had won active contracts had put in five prime contract bids and three subcontract bids.”
Don’t just try once and then walk away. If you believe that your product or service is ideal for the federal government, it may take a few attempts to convince an agency. Learn from your missteps and try again.