February 19, 2019
Author: Melissa Stanley
Organization: PunchOut Catalog SGT
Landing a contract with a large corporation or a government can be very rewarding for a business, especially a small and medium-sized enterprise. However, getting and maintaining that contract requires lots of preparation since the process can be very complex. There are usually several layers of bureaucracy involved in getting your product or service on the desk of the ultimate decision maker. Your business also needs to have met all its obligations and have a clean reputation. If you want to do business in the big leagues, you need to get your house in order first.
Getting Your Company Ready to Do Business with Governments
Government contracts are not easy to get. Many successful businesses have become accustomed to efficiency and reducing the number of steps in seemingly routine processes. When doing business with governments, it can seem like stumbling blocks are created unnecessarily. Requests for proposals require overwhelming amounts of information and contract documents can be extraordinarily wordy. However, the process is not impossible to navigate once you have patience, perseverance and the necessary advice.
Before you can even consider bidding for a government contract, you need to lay the groundwork. This includes meeting a number of basic regulatory requirements. In the USA, you need to know your North American Industry Classification System code. NAICS is a Federal standard which allows for the uniform classification of business establishments. You will need this code to register with Dun & Bradstreet (D&B) and the System for Award Management (SAM). D&B D-U-N-S will be used by the government to evaluate the credit profile and financial stability of your business while SAM is a registry for all businesses looking to provide goods and services to the government.
How to Land Contracts with the Big Players
Beyond the legal requirements, many of the criteria for doing business with government are less specific. In many cases, they also apply to bids for contracts with corporations. For example, your business needs to have a good track record. Many requests for proposals will look at the business’ revenue over the years and the number of years the company has been in operation. The types of projects the company has handled will also be examined. If you want to do business with governments or corporations, you, therefore, need to have a record of working on similar projects, positive cash flow and revenue growth year-on-year. Exceptions may be made but the bidding process is likely to be competitive. You will be coming up against companies which have been awarded government contracts before.
Ensuring you have access to capital is also important. The more access your business has, the more ready it is to begin bidding for big contracts. There will be costs attached to any project and the initial financial outlay may be significant. Depending on the nature of the project, you may need to hire staff, rent a space, hire subcontractors or purchase inputs or finished products. You need to have access to equity, debt or specialty capital. Explore all available options for financing to ensure you have the financial backing to deliver on contracts.
Strong strategic partnerships also go a long way. You will likely need other businesses in the same or complementary fields to support you in seeking a large contract or delivering on it. They should bring more financial stability, technical skills, geographical reach or manpower to the table. The more of these relationships you have, the more prepared you are for doing business with government and big business. If you don’t have solid partnerships, you should begin reaching out to reputable firms before you start looking for new contracts.
Don’t underestimate the importance of proper in-office support and organization. No one sees your administrative and operational activities but they do see their effects. Your office, file management, and accounting all need to be in order. If you can’t keep your employee files, financial statements, and other documents organized, you should ask yourself whether you can handle a major contract. Chances are, your disorganization will filter into your proposal and your work.
Pitching and Responding to Requests for Proposals Appropriately
As a smaller company or a firm unused to large contracts, you may feel bogged down by your weaknesses even though you want to play in the big leagues. However, you should focus on your strengths and the advantages you have as a nimbler organization. Since pitching takes a lot of time and resources, choose projects carefully.
When you really believe you can provide the product or service that is required, set out to prove it. Show that you are qualified, experienced and financially sound. If you’re required to implement certain type of technology, say enable Punchout Catalogs, demonstrate that you are willing to do so. A well-managed, flexible small company with a proven history stands a better chance than a large company which is a financial wreck. That being said, the smaller you are, the more important strategic partnerships become.
RFPs will usually give you details of the decision criteria. At the very least, they will tell you the entity is under no obligation to accept the lowest bid. You need to ensure your pitch matches the criteria as closely as possible. Don’t just send the same pitch you sent to another potential client. Show the government department or corporation that you really read the document and you want to meet their specific needs.
You may even want to go beyond the document and read the entity’s most recent annual report. This will typically include some mention of the challenges of the previous year and the strategic direction which is coming. Comments made in the press can also give you valuable information about the entity’s future. Try to link your product or service to their pain points. If you’re used to doing business more informally and making verbal agreements, covering everything in a written document may be difficult but it’s worth the effort. Governments and big firms are strict about doing things in the prescribed way.
Don’t think you need to submit a very low bid because you are small or inexperienced with large projects. Even if an unrealistically low bid secures the project, you will likely have to raise the price during the project if you don’t want to end up in the red. While projects can and do often go over budget, try not to let it be your fault since this can be damaging to your reputation.
Also, keep in mind that government and some corporations set aside opportunities for businesses owned by women, youth and minority groups or businesses in certain geographical locations. If your business is solid, you may have advantages you haven’t even thought about, regardless of your size.
If you want to start getting bigger contracts, get your business processes right and meet the regulatory requirements. Learn to read RFPs carefully, tailor your pitches accordingly, and focus on offering solutions to entities’ problems. While landing contracts with governments and corporations can take a lot of time and effort, it is often lucrative and a boost for your business’ reputation. With patience and persistence, you can strengthen your business gradually in preparation for making pitches for bigger projects.
Melissa Stanley is a veteran tech writer and editor who has worked in several eCommerce companies so far. She has been covering technology online for over five years. She is Client Service Manager of PCGT - PunchOut Catalogs.