5 critical mistakes small business contractors should avoid

Jim McCarthy, chairman of the board of directors of Novume Solutions, Inc., suggests ways small businesses can be successful federal contractors.

Ready to jump into the $450 billion government contracting space? Don’t make these key mistakes.

It’s no secret that the U.S. government is one of the largest buyers and sellers of goods and services in the world, leading to tremendous opportunity for companies that earn federal contracts. If you are a small business or startup you are in luck as the government sets aside contract requirements in favor of small and socio-economic enterprises. For example, in 2017 the government awarded 24 percent of federal contract dollars to small businesses totaling $105.7 billion.

With the right amount of planning, preparation and effective networking, small businesses can thrive in the federal contracting space, but there are some major mistakes or red flags to avoid.

Red flag No. 1: Sitting back and waiting for opportunity to come to you

As is the case with any major business deal, it is essential to be proactive in the government contracting process or your small business will get left behind. Often times, those looking to respond to a government contract will wait until it posts on a site like FedBizOpps, but by that time it is already too late. If you have to plan and react last minute your response will reflect this rush.

There are a few ways to overcome this hurdle and get information on these requests before they go live to thousands of companies. For one, there are sufficient database services available, such as GovWin by Deltek, that you can utilize to find appropriate partners with requisite expertise and the right network you can tap. However, as many small business owners know, this option doesn’t come cheap, so it has to be weighed carefully before pursuing.

Another way to have a proactive and more targeted approach is to pick a specific agency (i.e. Homeland Security) whose needs are aligned with your products/services and are best suited to meet those needs. Once you’ve identified your target, begin networking and reaching contacts to form relationships. Having key players recognize your company and your efforts to get involved in the industry can go a long way to positioning you for success.

Lastly, recognize the value of asking for help. Consider being involved in a mentor/protégé relationship. The Small Business Administration, and other agencies, sponsor programs allow small businesses to partner with those who have gone through the government contracting process. Your mentor can share valuable insight on topics such as business development, proposal management and managing internal business operations. They are great sources for advice on navigating the federal contract bidding process. Recently, the administration has put forth policy changes (i.e. less rigid eligibility requirements and reduction in red tape) that make it easier than ever for companies to form mentor/protégé relationships.

Red flag No. 2: Relying on existing material to pitch new business

As a small business, time is an invaluable resource and it can be tempting to rush the process. It is possible to work quickly and efficiently without sacrificing quality content. A proposal that you wrote a few months ago may have some elements that you can reuse (i.e. a boilerplate about your company), but overall each unique RFP calls for a unique response. In order to be competitive in this space you must go above and beyond the competition to set forth your unique value proposition. This begins with knowing the customer and the program and continues with a customer call plan and a rigorous business development process.

Red flag No. 3: Neglecting to adequately protect your company in the teaming process

There is no doubt about it- teaming up with other contractors is a great way for small businesses to succeed. Teaming allows multiple firms to pool together resources and talent to increase the chances of your proposal standing out. While it’s always a good idea to team up, it is ill advised to do so without taking the necessary precautions.

Unfortunately, it is not unheard of for the prime contractor to go silent — even after you help with winning a bid. This can often result in leaving your small business with little or no scope of work or level of effort for the awarded contract. Protect your company and ensure a positive collaboration by having everything signed and in writing, i.e. what your scope of work will be and fee sharing among the parties. There are law firms and other specialty consultants that can help here. Also, some agencies have internal small business advocates willing to assist.

Red flag No. 4: Not offering the government something of value

When you’re looking to win a federal contract, you need to offer a product/service that the government agency explicitly requests. This may seem obvious, but this isn’t frequently the time to make the case for a new innovation or out-of-the-box idea that you think they should consider—especially if the procurement is highly price-sensitive. Be self-aware and understand what your company offers that truly sets you apart and addresses the agency’s request for proposal (RFP). This goes back to once again taking the time to do your research to understand the agency and its key players and what they look for in a partner. Remember to offer what the customer is looking to buy, not what your firm is trying to sell.

Red flag No. 5: Asking all the wrong questions

Ultimately many small businesses will ask themselves, can we do this? Can we perform? Can we actually fulfill the requirements? Too often the answer is yes. But often the question is not can we perform, but can we win? There are more than enough resources and companies available that can help you work through the complexities of the process.

What a small business truly has to consider is if they have a reasonable chance to win the business at all. You do not want to waste precious time, money and resources chasing every RFP that comes out. Before deciding to bid, conduct a detailed “bid/no-bid review.” Look objectively at the competition. Consider how well you know the customer. Make sure you can muster the right past performance and ensure that you have adequate personnel resources. Finally, determine if you know how to price the job competitively.

Be strategic and selective in what you bid on. Preposition yourself for success by doing your homework, networking with potential industry partners and understanding agency needs and wants. Follow this prescription and you’ll be ready to tackle this process successfully.

Jim McCarthy is the chairman of the board of directors of Novume Solutions, Inc., a company that provides end-to-end assistance to the private sector to help win and perform government contracts.  


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