The United States government spends close to $500 billion per year with contractors. This includes large businesses (e.g. Raytheon and Lockheed Martin) and small businesses across the nation. States, counties and townships also spend trillions on government contractors. You can participate in this business opportunity and get your piece of the pie.
Let’s discuss the 5 items you want within your government contracting business plan.
Market Opportunity and Market Position – What are you selling? Who’s buying it? Yes, the government buys everything but not every government agency buys everything. Each agency has multiple departments and buyers. One federal agency could keep you quite busy.
Sometimes better for you to pursue state or county contracts than federal contracts. Do you research and discover the real market opportunity. Being able to quantify the opportunity is best. It’s better to tell the reader “The Department of Energy spends over $1.2 billion per year on my service. Currently, there are 2996 contracts being serviced at an average of $ 400,534 per contract.”
Once you’ve determined the market opportunity, you discuss how you’ll position your product or service within the market. What makes you unique? Remember…government agencies love reliable contractors. They are risk averse. They love rules and regulations. It’s important to position yourself based on what the buyer needs.
Finally, you want to tell the reader your goals. For example, you may want to receive your first prime contract for $200,000 within 12 months of opening your doors. You may want to increase your average contract size from $1 million to $2 million. Perhaps you may want to receive your first subcontracting opportunity with a more experienced contractor. Let the reader know where the company is headed.
Marketing and Business Development – If no one knows who you are, you’ll never make money. Therefore, it’s essential for you to have a focused marketing plan. However, it shouldn’t be complicated. In my experience as a business owner, doing 3-4 things continuously is better than spreading yourself thin. I do suggest you spend 20 hours per week marketing your business when you open your doors. Marketing tasks include completing your keyword rich website, creating your capability statement, inputting your information into SAM and other databases, applying for certifications, and networking.
As you grow, you’ll hire a full time business development person to help you maintain relationships with the right individuals.
Team – Great teams are essential to business success. Your government contracting company needs service providers as well as contract compliance officers, accountants, bonding/insurance agents, business development officers, financiers, and more.
Highlight why these individuals were chosen and how they’ll help your company achieve its goals.
Competition and Competitive Advantages – All companies have competition. It’s important to research which companies pursue the same contracts as you and how you’re different from them. Do you have an 8A? HubZone certificate? Virginia SWaM certification? Special business development officer? What is your true competitive advantage?
Financial Projections – Your financials should include your revenue and expense assumptions. How many proposals will you submit each year? How many do you expect to win? What’s your cash outlay to begin the contract? Do you have bridge capital to sustain you until you receive your first payment?
If you’re seeking funding, you’ll want to include a 5 year financial forecast. If you’re writing the business plan for internal purposes, an 18-24 month financial forecast will suffice.
There are lots of opportunities within government contracting and a solid business plan can help you focus on the best opportunities available to you. Discovering your market position, team, and financial outlays as you start and grow your company will help you reach your goals faster.
Cheree Warrick writes business plans for companies pursuing capital, immigrant visas, 8A certifications, and more. Contact us as wewritebusinessplans.com.