Making your way in government contracting requires more than just having a good idea, a great connection or even a successful business. The opportunities are evergreen when engaging the federal government, but the process to becoming a thriving contractor has a learning curve to consider. As we venture into the end of FY’21 and into FY’22, let’s discuss some areas of interest for the emerging SMB.
Why is scaling your business important?
Being an expert at scaling your business will create the ability and support the growth of your company. Planning is key. Funding is also essential. You must also establish a strong team guided by shared values and stable processes and procedures. Proper technology and training for the workforce will create a stable working environment for success as well.
The biggest challenge to all small businesses, both in the commercial space and in government contracting, continues to be access to flexible and affordable capital. As you choose to enter into the federal realm, part of your initial processes should be educating yourself on the types of funding in each stage of growth, requirements and fees for each option, and who to seek for access. If you understand the importance of scaling your business and have a plan of how to do this, your life will be easier when it comes to doing what you do best.
Secure funding: Know your options
Startups and businesses with zero past performance history or financial reporting (regardless of any work in the commercial space) will have to either have to scale their business on their own(self-fund), or give up some of their profit in equity share or exorbitant fees with the options available in this stage. Getting a credit card to fund initial contract work is sometimes the best option available. Especially for business owners with good credit standing.
Investing in a bookkeeping software like Quickbooks will enable you in the initial stages to track your finances so you have proof of the work you have done and be able to provide a balance sheet. Connecting early on with a CPA with knowledge in DCAA and FAR will be essential to obtain funding in the next round you seek. After successfully satisfying your initial contract obligations, you can move on to more adept options that provide a partnership for financing your next award, such as ABL (asset-based lending) and further along, traditional financing offered through your bank.
Build a team of internal and external support
Engaging with industry experts and partners early and often is the best thing you can do for your success. Knowing an experienced GovCon CPA, attorney and having connections in a contracting office can get the ball rolling on finding opportunities that need your expertise, and creating a competitive offering to differentiate your business from the rest. Your partners are equally as important as the employees you hire because they need to share all of the same qualities you look for in your teammates, but they don’t actually work for you all the time. Finding loyal support from an industry partner could give you a competitive edge.
Certifications and regulation compliance
Getting certified with a program of the Small Business Administration (SBA) can open a lot of doors to bigger and better opportunities. Whether your business qualifies as 8(a), Woman-owned, Minority-owned, Service Disable Veteran-Owned, etc. will require an extensive application process but can reward you with access to more contract awards.
Also, keeping compliant with standards to participate within federal contracting is a differentiator, too. But you will have to constantly be educating yourself on what is necessary and when you need to update your compliance for both your certifications with the SBA and regulatory compliance such as, NIST 800-171 and CMMC. You won’t be given any grace because you didn’t know it applied to you.
Government contracting can be very lucrative, but the monetary reward is not without a lot of preparation and planning to achieve it. What are you doing now to plan ahead for your new fiscal year? Do you have partners in place? Do you have access to working capital? If you answered “no” to any of the above, what will you do to regroup?