According to research from HigherGov.com, the federal government spent a record $99.7B on small business set-aside awards in 2022. Most Prime contract awards are in the $2.7M range. These opportunities were awarded to businesses who qualify within the threshold of SBA-regulated size and revenue requirements designated to specific NAICS codes. (For example, manufacturing companies with specific NAICS assignment need to be under $7.5M in receivables to qualify for these set asides and sole source opportunities.)
These stats show there is a lot of work set aside for small businesses. Conversely, much research implies that small business engagement is declining year after year due to the lack of diversification of awardees. The same small businesses are continuously winning, and this hampers the involvement of newer businesses in the marketplace. However, the dollar amounts available for awards are growing, which means opportunity “should be” plentiful. This is yet another issue we will dive into in future discussions.
In an unsteady economic environment like we find ourselves in today, having access to recession-proof work opportunities is invaluable. So how does a business succeed in the federal marketplace at the beginning of their journey and sustain that growth through a successful lifecycle?
Understanding Funding Resources
The number one need of businesses of all sizes and in every industry is access to flexible and affordable cash infusions that allow them to perform at the highest level possible with the intent to grow and bid on new and bigger opportunities.
Most new and growing contractors in the first few stages aren’t aware of the resources accessible to them outside of what they’ve learned about how SBA programs can assist. And that’s if they actually do their own research or work with a local Apex Accelerator to build a plan. While this knowledge is beneficial to have, it doesn’t always provide the access necessary or the means with which to grow. The SBA will only be able to help certain businesses, not all businesses, and in the event they can’t help you or you outgrow what they can do for you, where do you turn to next?
Ramping Up Competition
To be competitive, there are so many factors to take into account. Pricing to win can give you a competitive edge, but without proper market research, you could be impeding your ability to grow.
Access to capital should be a top priority in your plan to engage with and win opportunities to serve in the federal marketplace. It can and will be the defining impact that sees you through or halts your process.
If you are winning contract awards of any size or simply engaging the process to win your first award, what is your funding plan and why? Having a plan is key. Be sure to have backup plans as well. With the shifting of rates and regulations to apply for access as a startup or increase capital access already established with your bank, lack of flexibility may force you to utilize resources you don’t now know exist or truly understand how they can be implemented.
Do your homework ahead of the need. Be proactive.
No quality lending provider will turn over access immediately. Read that again.
If it sounds too good to be true, it is.
Know your options. Ask questions of your peers. Seek several viable resources and interview them and request references. No need to make the same mistake twice, even if the first time it wasn’t your mistake.