In January, the Department of Defense rolled out their annual small business strategy and its contents were nothing that most of us didn’t already know. We live in an unstable and volatile world where dangers and challenges are commonplace. The DOD recognizes that the efforts to secure our nation and tackle economic challenges relies a lot on small business interaction with their mission. They also continue to recognize the significant decline in small business participation, which notably has decreased by 40% in the past 10 years. As the cost of doing business rises and multiple barriers to entry restrict the engagement of new and growing government contractors, recognition of the problem isn’t enough. How are things going to change and when can we expect to see changes in effect?
In the executive summary for this strategy, it is noted that, “Without small businesses, the vital engines of growth for the United States industrial base would cease to exist.” Your small business is “vital” to our security and a stabilizer to our economy. Notwithstanding, you employ the majority of the workforce in our country. The least that can happen is to allow for a diversity in contract awards instead of the more robust and cash positive, not-so-small, small businesses winning every time. It is hard to make headway against a company that has a longer past performance record. So what can the “new guy” do to take it to the next level? Better yet, what will the DOD do to take steps towards a solution?
New businesses that bring new technologies not only are vital to the mission but spawn the necessary competition within their niche to stimulate the development of newer and more effective solutions across the board.
There are far more barriers than what is addressed in the plan and not enough viable remedies. Though the United States Air Force’s Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer are great introductory interactions that provide past performance, they don’t usually come with adequate funding or payment. A lot of the financial burden is on the business.
Access to capital in early stage development is hard to come by both in traditional and alternative lending options, which further weakens the small business’ capability to make it to the next stage which is at the least a subcontract opportunity. It is imperative to include a strategy early on that explores funding options available to you from day one all the way through your business’ lifecycle.
One of the most crippling barriers to entry for small businesses is the ability to fund the work they win. Your capabilities only make up part of the solution, but the other part is reliant on operating funds and the ability to hire and keep quality employees which is your biggest expense.
We will continue to share our insights pertinent to DOD and all federal contractors as it pertains to accessing opportunities and identifying key resources necessary to perform!