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Small Businesses Should Start With Smaller Government Contracts

How to Get Government Contracts

Small Businesses Should Start With Smaller Government Contracts

Many small businesses have become big businesses by learning how to get government contracts. A study by American Express OPEN suggests that starting with small federal contracts can put you on the path to getting large federal contracts.

The US government is the world's largest single purchaser of goods and services, spending $500 billion or more each year.

Many small businesses have cracked the code on obtaining federal contracts and have used federal dollars to fuel their business growth.

What advice and tips do successful small business government contractors have for those who are just getting started?

Fortunately, American Express OPEN has spent some time looking into the issue, and their research suggests that the key to success in government contracting is to start small and grow over time.

Get Small Government Contracts First

Starting out with small contracts and growing over time was the top government contracting tip offered by successful small business contractors surveyed by American Express OPEN.

This tip was mentioned by 26% of the surveyed small business contractors. It's mentioned even more frequently by the most successful small business contractors: fully 34% of those who have won $5 million or more in prime contracts since they entered the Federal procurement marketplace say that starting small is the key, compared to only 19% who have won less than $500,000 in Federal contracts.

Be a Subcontractor on Government Contracts

Starting small often means taking on subcontracting opportunities for government contracts.

In addition to their prime contract successes, three-quarters (76%) of active small business contractors have also pursued being a subcontractor to a larger prime contractor (participating in an average of 7.9 bids over the past three years), and 54% have actually provided goods or services as a subcontractor at some point in the past three years.

In fact, the research suggests that businesses that are not getting contracts have, in many cases, not pursued subcontracting opportunities. That's a mistake you shouldn't make. You should always be willing to take on a subcontractor role for a government contract.

Use the Power of Numbers to Get Federal Contracts

Teaming up with other contractors is another good way to start small and win government contracts.

Indeed, according to the study, 62% of active small business contractors have pursued teaming arrangements with other small firms, compared to only 36% of surveyed companies that have not yet gotten federal contracts.

Advice on Getting Federal Contracts If You Own a Small Business

The bottomline on getting federal contracts is that you have to be realistic. If you are new to government contracting, it's most important to get your foot in the door.

The main takeaway from the American Express OPEN survey on government contracting is that small government contracts are the key to getting larger contracts.

Trying to get a huge government contract on your own on day one is a long shot. As discussed above, your best bet is to pursue teaming and subcontracting, two invaluable entry points into the federal procurement marketplace.