Government Contracting as a Small Business: Not for the faint of heart

We have all seen the stories from the media regarding a government shutdown, sequestration and amazing amounts of government debt. Putting the doom and gloom aside, one soon realizes that the U.S. federal government represents, for all intents and purposes, Fortune 1 in the marketplace. Having spent more than 25 years in and around this space, President Paul Karch has gained not only a great appreciation for the value of and the potential in government contracting but a deep understanding of what it takes for a small business to succeed.

Small businesses are the lifeblood of government contracting. Whether in construction, technology, healthcare or any other discipline of business, government buys and buys often.

Small business owners need not shy away. Quite the contrary, they should flock to the government as the opportunity for business growth exists. As they flock, there are several elements that CEOs must address. Here are some of the most important ones.

1)      Patience. It is sometimes difficult for entrepreneurs to be patient while generating revenue. Government contracting teaches us to be patient in all aspects of the business. But also be diligent in modifying your company offerings so they fit government needs. With technology think about security, construction think about scale, and healthcare think about process. These modifications to your offerings can take time, but adding security to your technology is a good thing for all of your clients, adding additional labor to your construction business is growth and discovering the elements of HIPAA will pay off in your commercial healthcare practice.

2)      Commitment. Government contracting requires a commitment of capital and spirit for a small business. Capital does not need to be an exorbitant number, just a committed amount. Establishing accounting systems modifications, adding proposal development expertise and adding government contracting delivery expertise cost money. The reward is usually much greater than the expense, but the return on the initial investment is usually measured in quarters and years, not weeks and months.

3)      Securing expertise. Like any new industry to a small or even a large business, securing the right expertise is paramount for success. Too often small businesses look inside and try to restructure finance, sales, marketing and delivery personnel into a model they think will succeed in government contracting. Government contracting is filled with nuances, acronyms, procedures and regulations that require expertise. This expertise is not only evidenced by the need for a Rolodex in the sales and business development disciplines but also in familiarity with things like opportunity capture,  proposal management, DCAA certified financials and more.

4)      No real “greenfields.” Small business people are by nature entrepreneurs. Government by nature exists to support the people and is not tasked with innovation and not measured by the lack of providing it. Small business owners entering the government market should customize or modify their offerings to benefit government initiatives and realize that government operations, product purchasing and day-to-day initiatives do not offer many greenfields for new “stuff.” Sure the occasional new technology may create a wave, but for the most part government contracting is about giving the government what it wants, needs and can afford when it wants it. If the government likes your offering and you deliver it in a cost-effective manner, regardless of whether it’s the newest thing your business will be guaranteed growth and success. Driven in today’s market by the concept of lowest-price technically acceptable solutions, the government buys from small business based on their past performance/capability, their socioeconomic classification and how it may best suit the agency and most importantly their overall total cost.

As a CEO, look to set aside a year to create this new business, utilize experienced experts, whether as employees or contractors, and sell what you know how to sell. If you are in technology create a niche, in construction create a unique value proposition or in healthcare create a unique benefit to the overall wellness of the end user.

For me small business and government are a natural fit. Yes, there are many pitfalls and areas of concern, but for a small business to succeed and receive a five-year contract with little financial risk (the government pays!) it is not only a great path for growth but in many cases a game-changer.

This guest post is courtesy of Paul Karch. He is the president of, a Gardant Global initiative. 



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