Advantages of Securing a Government Contract

 Government contracting can be financially lucrative, and can provide an additional revenue stream for your small business.

Introduction

The largest client in the world is the American government. However, the world of government contracting is constantly changing, not only because government officials come and go, but also because of the changes in our economic landscape. 

While you may believe that government contracts are only for industries such as manufacturing and information technology, a diverse range of industries are required to keep the federal government working across the country. From consulting to financial services and furniture supply to office management, the federal system needs dependable and skilled contractors.

Government contracting is a tremendous opportunity for small businesses. It can be financially lucrative and can also provide the chance to work on projects that are meaningful to you. 

Despite the vast number of companies in the federal database, each falls under one of two categories: contractor and subcontractor. These two work in different ways, but for this article, we will be focusing on the advantages of being a government contractor.

But first, let’s explore what government contracting entails.

Why a government contract?

Individuals or firms entering into a contract with a government department or agency to perform a specific task such as, providing  labor and materials, or selling  goods and services, are known as federal or government contractors. 

Many businesses consider the federal government to be an ideal source of revenue. Government contracting can provide a stable stream of income and if the contractor’s performance meets or exceeds expectations, there is often the opportunity to extend the duration  of the contract.. 

What are the advantages of securing a government contract?

Government contracts can open up incredible opportunities for your business. Here are some of the short term and long term advantages of becoming a government contractor.

More opportunities for small businesses

 As the demand for the products and services provided by government contractors increases, the industry is becoming more welcoming to small company owners.

 The federal government implements policies and reforms focused on small businesses to help them access government contracting opportunities. The Small Business Administration (SBA) is a prime example, as their objective is to provide every small business owner a fighting opportunity to make it big in the government contracting industry.

On top of that, the SBA is a driving force behind the 8(a) Business Development Program. Through this federal program, the SBA provides businesses with special aid and government contracting support  for those with particular socio-economic situations. So, if you are an entrepreneur who falls within the eligible socio-economic groups, this government program may be a great resource for you.

Earning Potential

 

One of the most appealing aspects of this multibillion-dollar sector is the potential for massive profits. However, the earning potential varies depending on your projects, as well as the government agency you'll be working with.

In 2020, during the height of the COVID-19 pandemic, the federal government reported a record-breaking $682 billion worth of awarded government contracts. This significant jump from 2019's $599 billion was fueled by the federal government's efforts to mitigate the effects of the pandemic on the nation.

Cash Flow

Late payments by clients are usually an issue for contractors and even freelance employees in the industry. Fortunately, the federal government has a strong reputation of paying its contractors as per the payment terms. The payment terms and conditions are specified in the government contract, and the federal government will abide by them, allowing businesses to forecast their cash inflows as per the agreement.

As a public organization, the government is bound by a number of laws and policies that ensure transparency and the proper use of taxpayer dollars.

Diverse projects to bid for

The number of goods and services that federal agencies require to ensure efficiency is endless. From purchasing toiletries to supply the agency's office, to acquiring cutting-edge military technology to bolster nation's defense, there is a continuous demand for various goods and services.

However, the United States government has specific criteria in order to continue functioning properly. If you wish to succeed in this market, you must determine whether your products and services meet the current federal government expectations.

Long contract periods

The industry has a challenging process for those seeking to become government contractors, but once you have sealed a deal, you won’t be worrying about a steady stream of income for a significant period of time. 

On average, most government contracts last between one and three years. In addition, your contract might be extended if you surpass the government's expectations.

Transparency

The government follows strict rules and regulations for each and every transaction with a government contractor.  The government values transparency in all activities since federal contracts are paid for with taxpayer dollars.

Final Thoughts

Many businesses, regardless of size, are venturing into this industry to elevate their business. While winning a federal contract requires considerable effort, it is extremely rewarding in the end. Do not allow the challenges and obstacles stop you from seizing your first opportunity in the contracting industry.

However, one should be knowledgeable in the industry before starting a career in government contracting. If you’re unsure of where or how to begin pursuing government contracts, reach out to Black Swan Consulting, Inc.! We offer invaluable guidance and technical support to assist minority-owned and women-owned firms in navigating the complicated process of becoming government contractors. 

Moreover, Black Swan Consulting, Inc. assists small businesses in obtaining certificates, registering as vendors, and promoting their services to government agencies and prime contractors looking to do business with a specific socioeconomic group. Regardless of your industry of operation, Black Swan Consulting, Inc. can maximize your organization's efficiency, scalability, and profitability!

Join GovCon CollaboratHER HUB:

This powerful hub is a place for women in government contracting to connect, contribute, collaborate, and WIN Contracts together! GovCon CollaboratHER is a dynamic community and a strong subgroup of the Strategic Women Alliance Network (SWAN). The mission of this group is to empower and connect women across the spectrum of government contracting. Whether you're a seasoned professional, an aspiring entrepreneur, or finding your path in the GovCon industry, this is your dedicated space to thrive.

To learn more about government contracting, visit our website for a webinar on this topic, presented by the Nevada Small Business Development Center.