Everything you want is on the other side of fear. ~Jack Canfield
At a conference a few months ago, a panelist used the acronym: P.O.O.R, meaning, passing over opportunities repeatedly. The more I consult with small govcons I find many of them are doing just that. The fear of whether or not they can afford to fulfill the obligation of an award prevents them from engaging to win. And because of this fear, the federal government is losing access to that business’ goods and/or services, which is the worst case scenario, and contributing further to the lack of new, small business interaction in the federal marketplace.
As I think about this conundrum, I am strategizing to uncover ways small business leaders can conquer this fear and open their business up to the opportunities they are currently passing over. At the core of it all, small and growing GovCons need the knowledge necessary to form partnerships with lenders who truly understand the government contracting industry, and can offer the cash they need in a flexible and affordable way. The ebb and flow of this industry poses risk factors to certain lending options making it difficult to obtain the funds needed. So if you know who to go to, what to ask, and steps to take once you get your answers, I believe you will open your access to winning bigger with confidence.
Let’s walk through some steps together and uncover where you can start so you end up with the answers you need to take the next steps to bidding and winning big!
Start with your bank
Truth be told, if you can go it alone and never borrow a dime and be debt free–more power to you. But the reality is that this is not possible for everyone. So the best place to start would be to have an open conversation with your bank. Ask them these questions:
- What is your direct experience with working with government contractors? Do you have references you can share?
- What criteria is necessary for me to obtain a line of credit with your bank?
- How quickly can you open a line of credit–specifically, how long does the underwriting process take? Do I have what you think looks like the financial background to obtain what I am seeking?
- If I don’t qualify for a traditional line of credit, what is the reason(s), and can you introduce me to 2 or 3 alternative lenders you know that also service the government contracting community?
Given the economic terrain, we find ourselves in these days, and with inflation doing what it does with all of our expenses, the ability to obtain, increase and keep your line of credit with your bank is more difficult than ever.
Your bank is your most heavily regulated partner. They are under the watchful eye of federal regulations that require covenants that factor out what they see as too “risky”. These factors can be determined by more than the success or failures of your business activity, but by industry, sustainable success in past performance within the industry, and personal credit score of the business owner. There are more reasons why they can say no rather than yes, so be ready to take the conversation to the next level if they can’t help you.
If your bank(er) doesn’t have an alternative lending partner that they can refer you to, and you are left to research it yourself, your best bet is to consult other GovCon business owners. The need for cash infusions to grow your business is the number one unifying issue of all businesses no matter size or industry. Anyone you talk to will understand your struggle and could possibly shed some light on what to do…or not do, to bridge the gap between where traditional lending leaves you and a viable alternative.
In order to be your best advocate you should enlist the help and advice of your financial team, i.e accountants or bookkeepers, as well as your BD and capture teams so the overall amount necessary to financially perform is accurately uncovered. Don’t lose sight of your goals because you fear the funding aspect of your work. Empower yourself with the knowledge you need and surround yourself with other leaders in your industry from whom you can ask advice. Change your perspective and your results will change as well: Face Everything And Rise!