Let’s first take a look at a few facts of life where government spending is concerned. In the United States alone, the federal government spends over $ 500 billion annually on a wide variety of products and services. Everything from office equipment, supplies and tools to development of advanced military technology as well as staffing needs the whole year-round will be purchased. Such a spending juggernaut has, in fact, made the U.S. government the largest consumer of products, goods and services in the world.
With that being said, we can conclude several benefits to government contracting especially when it comes to pushing your small business into the big leagues. In fact, your business will grow stronger with government contracts in your portfolio. Here’s how.
Out of the annual $ 500 billion purchases of the federal government, the law mandates that at least 23 percent must be fulfilled by qualified small businesses. Getting your calculator out, this will translate to $ 115 billion share of the total pie. If you can enjoy even just.01 percent of it, you can enjoy $ 1.15 million in gross revenues in a year! And because it is mandated by law, small business owners can always look forward to doing business with the federal government year in and year out. Keep in mind that you can also tap the state and local governments for your business, which represents an added income stream to the federal side.
Even in the face of the economic recession, the U.S. government will continue to procure for goods, products and services simply because it must do so. Otherwise, the entire country can shut down in both the literal and figurative sense. This means that businesses, both big and small, have a dependable income stream when one of their clients is the U.S. government and its instrumentalities.
Well, of course, an income stream becomes useless if and when the client is unable to pay for the delivered goods, products and services. Earned revenue, after all, comes in two forms: collected and collectible. You obviously want the first form to finance your operations (i.e., pay the bills, the staff and the suppliers) and to fund your expansion plans. Plus, a steady stream of revenue from government contracts provides for a good hedge against the lean months. The U.S. government is mandated by law to pay for all its outstanding obligations so small businesses have no reason to worry about accounts receivable due and demandable from government agencies eventually becoming worthless. The assumption, of course, is that the contract was valid from the first get-go.
When you have favorable referrals from government agencies, you are more likely to secure contracts from private agencies and other public sector instrumentalities. Your client portfolio becomes stronger by leaps and bounds, which is especially useful when trying to attract high-volume purchases from law firms, insurance companies and others in the big leagues. Your company will then become a competitive player in the market, which means higher perceived and real values. You should know by now how a reputation of reliability is of great importance in any industry. So, are you thinking of becoming a competitive player in your market? Then, tap the government for its contracts for the procurement of goods, products and services.