Jul 26, 2022

Can Your Small Business Really Compete with “Big Businesses” for Government Business? Absolutely.

Some say big businesses will always try to squeeze out smaller competitors in a bid to take over a particular market segment. You may just be concerned that a few big businesses seem to be winning every government bid in your target market, which reduces your potential revenue stream and shrinks your bottom line (and growth potential). But, we’re here to tell you that this perception of big business dominance in the government contracting world is not reality. Yes, there are certainly some larger defense contractors that are repeatedly short-listed for multi-million and multi-billion-dollar Department of Defense (DoD) contracts. But the DoD, just like every other federal, state and local agency, has set aside contracts for small businesses along with small business contracting goals, which they consistently meet.   


Plus,there are more than 100,000 public sector agencies in North America. (Can you see your sales pipeline and potential revenue stream growing already?) That means there are at least 99,999 other agencies that rely on a diverse mix of suppliers – such as your business – to fulfill their many internal customer requests for goods, services, construction, and more. 


In fact, many public sector agencies are vocalizing their continued priority to source from small-to-medium businesses (SMB) whenever possible. At the end of the day, public sector customers are no different than private sector customers: they just want the best quality solution at the best price. Business size does not matter. What does matter is your ability to meet their specific requirements (including delivery times, quality, quantity, etc.) and your ability to provide the technical expertise required (for services, systems and construction). In fact, some agencies are recognizing – off the record – that smaller businesses and startups that are hungry for their business will often provide better customer service. They want a foot in the door and will do what it takes to deliver top quality goods and services to secure repeat business. 


Even better, many municipalities want to protect their local economies. That means that they will continue to give preference to local businesses, startups, small businesses, and disadvantaged business entities (DBEs) when making certain types of purchases. That revenue stays in their communities, driving business growth, jobs and the overall strength of their economies. Higher education and nonprofit entities also appreciate the value that woman-, minority-, veteran- and locally-owned businesses bring to their programs. That is why many have expressed plans to maintain special buying programs that encourage procurement teams to source first from DBEs across many contract categories and prioritize DBEs for contracts below certain dollar thresholds when possible. 


However, many agencies, including those at the federal level, are indicating a lack of competition in solicitations set-aside for small businesses and other DBEs.In other words, there are plenty of big opportunities for small and disadvantaged businesses in government contracting, even if “big business” takes a sizeable chunk of the market. That is why it is so important you consistently leverage the following best practices to mine the government marketplace, find your niche and successfully compete against businesses of all sizes:   


  • Educate public sector buyers – They buy everything from pencils to parking lots on any given day. While procurement officials conduct a lot of market research, they are rarely subject matter experts on every good, service, construction, or technology system they purchase. They value businesses like yours and appreciate your ability to help identify emerging solutions, explain technical specs, and justify certain purchases to their customers and bosses based on proven use cases. We explain how your willingness to educate buyers can payoff and make purchasing from your business even more valuable than larger competitors in this blog post. 


  • Offer a better option –Just as you would build your brand and build relationships with buyers in a B2B or B2C model, it is important to sell yourself to B2G (or rather S2G) customers. Prove why it would be smarter, and just as easy, to source from you. Part of this is tied to the education effort we described above. However, this is a best practice that also carries over to industry or agency networking events and even your RFP or bid response. Help influencers and decision-makers, including procurement officials, understand why it would be a smarter choice to source from you or companies like yours via open solicitations versus going with a pre-negotiated, multi-use contract that relies on the same big businesses to (hopefully) fulfill all requirements. Can you deliver a better-quality product? Offer a lower price? Guarantee faster delivery or better customer service? If you can convince procurement officials that it would be in their best interest to issue a new solicitation or use other contract vehicles to meet their requirements, then at least you will have an opportunity to submit a proposal in the open market or secure a direct buy in an online marketplace. Just be sure that your efforts to encourage a different sourcing model are not perceived as unethical. 


  • Play up your strengths – Don’t discount the power of being a small, local, or disadvantaged business entity. Women, veterans, and minorities all receive priority preference for many state and municipality solicitations. We don’t see any indication that this will change on a large scale any time soon, either. In fact, there are a number of solicitations in the Periscope Supplier to Government (S2G) database right now aimed solely at small businesses. Periscope, powered my mdf, is a government contracting and eprocurement software for buyers and suppliers. 


  • Most importantly, be resourceful and optimistic – Yes, there are tens of thousands of public sector agencies that tap into co-op contracts for certain types of purchases or defer to bigger contractors when soliciting for more innovative projects. But both scenarios present equal opportunities for small businesses. Many agencies are trying to level-set right now, and recent data indicates that there is a sustained uptick in new solicitations and/or spend for certain categories such as janitorial and cleaning services, computers, network equipment, communications devices and other technology equipment due to the ongoing pandemic.    


The Takeaway   

Do not assume that big businesses dominate government contracting, or that changing acquisition models will take away your potential public sector revenue. There are plenty of solicitations still being posted every single day for businesses like yours and even more opportunities to proactively market your business via growing online marketplaces used exclusively by the public sector. In fact, many federal, state and local agencies want more businesses like yours to respond to solicitations; they want to expand beyond the same one or two vendors bidding on the same contracts over and over. Increased competition is good for them, just as a current lack of competition is good for you. Use tools such asS2Gto keep a close eye on the many thousands of RFPs/IFBs posted every day by the more than 100,000 North American agencies that can and should be in your sales pipeline.