Winning a government contract can accelerate your business’ growth and provide the reputational prestige needed to reach the next level. The number of government contracting opportunities isn’t expected to slow down in the coming years, particularly for small businesses, including women- and minority-owned enterprises. 

Small construction firms, IT companies, engineering firms, equipment manufacturers, electricians, law firms and many other types of small business will continue to be in demand by local and state governments and federal agencies. However, applying for and winning these contracts can be a daunting task. Here are some tips to help get your business on the radar screen of local, state and federal agencies — and position yourself to win a lucrative government contract. 

What Are Government Contracts for Small Businesses? 

Before applying for government contracts, it’s important to understand the general requirements for small businesses. One of the best resources for understanding the types of businesses that qualify for government contracts is the Small Business Administration. The SBA’s website can help you understand: 

 How to determine if your business meets the size requirements for small businesses seeking to apply for a government contract. 

• How to obtain the necessary government IDs, such as tax numbers, for your application. 

• Whether you further qualify as a minority-, women- or veteran-owned business or as a business that operates in an underserved community — there are contracts specifically designed for those types of small businesses. 

• Which contracts require you to have small business insurance. 

Understanding these requirements beforehand will save you a significant amount of time and effort when you apply for a government contract. 

 How Do You Find Contracts? 

If your small business plans to apply for a government contract, the first step is to register your business with the federal government’s System Awards Management (SAM) program. This system allows you to create a profile of your business and describe the goods or services you provide.  

Once registered, your business will be listed in the Dynamic Small Business Search (DSBS) database that is run by the SBA. This is the database government agencies use to find small businesses with which to contract. Small businesses can also use the DSBS to connect with other small businesses for subcontracting work if they don’t qualify as a prime (or main) contractor. Government agencies are required to use SAM to advertise all contracts over $25,000. 

You also want to secure a contract with the US General Services Administration (GSA), which connects government buyers with contractors. Take the time to learn about GSA schedules as well as the GSA’s system for awards management. Being listed on a GSA schedule means you’ve been pre-approved to do business with the government.  

Finally, stay informed about opportunities at the state and local level, especially as funding from the Infrastructure Investment and Jobs Act (also known as the Bipartisan Infrastructure Law) will go to them for contracting work.  

How do I Prepare for a Government Contract?  

Landing a government contract can be quite lucrative for your small business, but it’s important to ensure that your company is equipped to handle the work that such contracts require. This may require strong access to capital and the ability to hire additional staff with specialized skills. Fortunately, there are a number of financing tools available to help you prepare for large contracts. Here are some key steps to consider:  

 Increasing Inventory and Modernizing Equipment  

Winning a government contract may require you to increase your inventory or buy new supplies and equipment. For example, a construction firm may need to stock up on extra lumber and other materials and purchase new machinery to fulfill a large contract. Expenses can add up quickly, especially in the current climate of supply chain disruptions and inflation.  

This is where lending tools such as purchase order (PO) financing can come in handy. PO financing provides the funds to pay your suppliers upfront. The lender typically bases its borrowing decision on the creditworthiness of your customer — and who has better credit than the government? This type of financing can help stabilize your cash flow because it allows you to operate without having to take on additional debt, ensuring you can meet key project milestones.  

If you need to invest in expensive equipment — say a new bulldozer for a construction project — equipment financing can cover the upfront cost. It generally has fewer requirements than other loans. You should also carefully consider whether purchasing or leasing equipment makes more financial sense for your business. 

Hiring Specialized Workers 

If you’re going to bid for government contracts, you may need to hire staff with specialized skills. For example, if you’re a construction firm that wins a bid to build a new road or bridge, you’ll want workers experienced in doing so. A law firm contracted to perform an environmental study may need attorneys that specialize in environmental law.  

Hiring additional workers can be both difficult and expensive and requires extra operating cash. For construction firms, hiring additional workers for government contracts may be especially expensive, since you must comply with the Davis-Bacon Act, which mandates that construction workers on government contracts be paid at least the average wage of workers of a similar private project in the same state and county. 

To help manage labor costs, you may consider taking out or expanding a business line of credit or even taking out a business loan. Both options can provide flexible, cost-effective ways to fulfill your operating costs — including meeting payroll — during periods of uneven cash flow.  

How Do I Create a Marketing Plan? 

In many ways, marketing to government agencies is no different from marketing to any other client — you need to get its attention and demonstrate your value. Target specific government agencies that you want to win contracts from. Identify the decision-makers and influencers within those agencies and target them with well-crafted email, text and social media marketing campaigns. Show them that your small business is capable of performing the task they are seeking to contract out.  

The Federal Insurance Deposit Corp. (FDIC) offers a helpful presentation on marketing yourself effectively to the government. If you don’t have the time or bandwidth to market yourself, consider hiring a firm that specializes in this type of marketing.  

Don’t Miss Out! 

Securing a government contract can be a game-changer for your small business. While the application process may seem complicated, following the right steps and staying prepared financially and operationally can put you in a strong position to win. Government spending remains robust, so start preparing today so you don’t miss out on these lucrative opportunities.