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Government contractors strategize less about how to expand to support commercial clients than their counterparts in the private sector strategize about breaking into the government market. This is strange. Setting aside weapons systems, the government buys many of essentially the same products and services as businesses in commercial industries. So, opportunities for growth abound for the smart government contractor looking to grow.

Few federal sector small businesses successfully expand to support commercial clients simply because they do not set up properly to realize the value of growing this way. Going commercial can be a challenge and it’s reasonable to wonder if it’s worth the trouble. Let’s talk about the major benefits of expansion and how to increase your odds of success.

Major Benefits of Expansion Into the Private Sector

It isn’t hard to see why many government contractors hesitate to go after commercial markets. After all, focusing on RFPs, monitoring legislation, and keep track of all the other relevant information put out by the government regarding procurement is enough to keep any business busy. Besides, no savvy business leader wants to expand into a new market at the expense of current operations.

There are three reasons why going commercial can be a smart use of resources under the right circumstances:

1. Commercial buyers move faster than the Federal ones.

The procurement process for government contracting is comprehensive and the cyclical nature of government work can leave you in limbo waiting until the next big opportunity gets green-lighted. By comparison, commercial buyers move lightning quick. As long as you are prepared to deliver in line with commercial expectations, you will likely find the private sector pace to be invigorating.

2. There are fewer barriers to entry in the private sector.

There is less of a learning curve when it comes to selling to the private sector. Whereas with government contracts, you must wrap your mind around complying with strict government regulations, procurement, and thousands of acronyms, there is less to learn in the commercial space.

While the federal government customers will tell you exactly what they need and expect you to explain exactly how you will deliver, commercial clients flip the pitch. If you expand to support commercial clients, they will expect you to figure out what they need, develop the product or service to solve the problem, and convince them that your solution is best.

3. You have more negotiating power with commercial customers.

Whereas the supporting federal customers require that you maintain accounting records in a particular way, can penalize you for offering discounted rates to other customers, limit your profits, and terminate your contract for convenience, with commercial customers, you can negotiate terms that are more favorable. Overall, working with commercial customers gives you more leverage and flexibility when it comes to pricing, delivery, and negotiating terms of your contract.

How to Expand to Support Commercial Clients

When we discuss lateral growth with clients, one big hurdle seems to be an unwritten rule that once your business heads down the government contracting road, there’s no turning back. But as long as your corporate structure doesn’t make expanding into the commercial space prohibitive, there are few reasons not to grow this way.

So, let’s look at the actionable steps you can take to expand into the commercial market.

1. Determine What the Impact on Your Business Will Be

It’s important to realize that growing your business does not mean abandoning your current operations. The first step to successfully expanding into any new market, then, is knowing that your business can survive the demands of the new market. To ensure this, you will want to assess the full impact of expansion on all aspects of your business.

Ask your team the following questions:

• In what ways will expanding to support the commercial market affect our government contract work? Map it all out.
• Will team members need to split their time between supporting the current market and the new market?
• Will you need to hire additional team members? In what capacity?
• Will you need additional resources to support your new commercial clients?
• Will you need to raise the bar on your business processes and systems?

2. Choose Your Route to Expansion

The move from government contracting to the commercial sector is easier the closer you stay to your current strengths. One common area where we see a lot of movement between the two markets is in the area of cybersecurity. Many security firms move easily between supporting government agencies and supporting IT departments in large corporations. This makes sense since cyber security pain points are basically the same regardless of what type of work you’re trying to protect.

There are opportunities in small and mid-size companies too. For example, one of our clients, Nathan Associates, Inc., has successfully expanded, with our help, from working with the federal government to working with commercial clients. Nathan Associates is a leader in providing diversity training, among other offerings. Working together to successfully adapt their diversity training program from a focus on government agencies, such as USAID, instead for commercial clients, including Capital One Bank and Leadership Greater Washington, was fairly straightforward and has been very successful.

Which brings us to the next point:

3. Align Your Current Business Model with the New One

It helps to think of expanding into the commercial market as if you’re developing a new business, not simply launching into a new market. Many government sector businesses choose to create an independent subsidiary or LLC to build out commercial offerings, for instance. This also can help you surmount pricing issues that may arise if you want to vary your prices based on your client focus.

However, while it may help you to think of the commercial side as separate from the public sector side of the business, if expansion requires an overhaul of the core of your business, it’s probably time to pump the brakes. Playing up the overlap between your current business and the newly expanded business will always result in a more seamless transition.

4. Do Your Research

So far so good. Are you ready to pull the trigger? Not quite. Expanding to serve the commercial market takes time, energy, a diversified sales plan and staff, new collateral and branding, and financial resources. You have to look at the data and make sure it confirms your instinct that this is the right next step for your company.

Step #1: Clearly define the commercial market for your product or service you’re entering.

Think hard about what the new market looks like. Hire a market research team if you aren’t 100% sure you can do this work yourself.

State in definite terms:

• The demographics of your target market (age, gender, occupation, etc.)
• The psychological profile of your target market (attitudes, aspirations, values, etc.)
• Location (actual physical location or geographic data for an online audience)
• Problem (what problem are you solving?)
• Solution (the complete details of the products or services you provide)

Step #2: Validate the new market

Validate that there is a place for your offering in the new market. There are four factors to consider:

• Make sure the problem you’re solving is a big enough pain point for your customer.
• Test your product with a few target users and listen to their feedback.
• Make sure the target market is large enough to justify expanding to fill this need.
• A problem, a product, and a market do not necessarily get you to profitability. You also need to be pretty sure your target audience will pay you for your solution.

5. Decide How to Position Yourself in the New Market

The last step is to figure out how to position yourself. There are likely competitors in your space that will be entrenched within an existing customer base. So the best edge you have is to differentiate yourself in a way that helps you capture their attention. The good news is that since you’ve been selling to the public sector, you already know a lot about how to pitch a successful value proposition to customers. Ask yourself what specific value you can add to a commercial customer and how to adapt your pitch to resonate with them.

When we worked with Calibre Systems, an employee-owned consulting and information technology solutions company supporting the federal government, we helped them continue to diversify their customer base into the commercial sector. They had been successfully leveraging their network of veterans with automotive mechanic skills with commercial auto companies and have been highly successful working with Ford and Range Rover, among other companies. Having a focused approach to the market with a target market for your offerings, like they have, is also essential for success.

At the end of the day, if the benefits of expanding to support commercial clients are enough to entice you to enter this new market, following the above actionable steps will help you position properly for success.

And of course, it always helps to have the experience of a team who has guided other government contractors down this path. The experts at growth[period] are ready to deliver smart growth for you. If you’re ready to talk about diversifying your business growth into the commercial sector, connect with us today!  

Summer can seem like a dead zone when it comes to networking. The swirl of galas, conferences, tradeshows, and business dinners that overwhelm our calendars during the other seasons, slow to a trickle in June and do not start back up again in force until September. But, don’t let this dearth of organized events lull you into inaction. Summer is a great time to tap your existing networks and create growth. How can you use summer to your advantage?

Revisit your contact list - Even the most organized networkers have prospects or potential partners with whom they have lost touch. Perhaps the timing wasn’t right when you last spoke and then they fell off your radar. The summer is a great time to look through your contact software or LinkedIn connections to see who you haven’t been in touch with for a while. Create a list and call a few people a week.

Baseball is the perfect sport for networking - Sure, you can take a potential client or partner to any sporting event, but none of the others are as good as baseball for creating an opportunity to really talk and connect. The slower pace of the game, the summer evening out (and even the readily available beer) mean that you will have a chance to really get to know your client as a friend and colleague. No hometown team? Find a waterfront restaurant or patio bar to take your client on a slower summer afternoon.

Vacation connections - Are you traveling this summer? Do you have clients or prospects near your planned travel destination? You might be thinking, “but wait, I travel to get away from work!” Of course, I am not suggesting cluttering your vacation with work meetings. Instead, ask your contact to join you for at your vacation destination. Bonus, since your connection is local to the area, he or she will likely have great recommendations for places to go!

Successful summertime networking only deepen your relationships to your existing clients and prospects but can create new opportunities from old relationships. The experts at growth[period] can create help your company 2019 strong. Contact us to learn more about how we can help you develop a plan for strategic and sustainable growth.

The end of the federal government’s fiscal year is upon us. Fiscal year 2019 ends on September 30th. If you’re a government contractor, this is likely not news to you. But what might be news is how your company can prepare for the end of the federal fiscal year and take advantage of opportunities to increase revenue.

Many government agencies increase spending in August and September, so if you were thinking you could wait until October to get those proposals ready, you might want to reconfigure your schedule. With this in mind, let’s dig into the reasons for the increase in contracting opportunities as well as some of the ways you can position your company to reap the benefits.

Why does the government increase spending this time of year?

Like many private corporations, government agencies have a “use it or lose it” mentality when it comes to fiscal year-end. Having money left in the account at the end of the year likely means that amount will be subtracted from the budget for fiscal year 2020 because the assumption is if they don’t use it, they don’t need it. So, the looming end of the budgetary year brings a rush of purchases as departments try to spend their “emergency” or “rainy day” funds. 

The end of the fiscal year also means that new funds will be released with the start of FY 2020. So many agencies that have spent all of their funds earlier in the year can now start thinking about how to use anticipated funds when the new budget takes effect.

What can your company do to prepare for the end of the federal fiscal year?

The first step in the process to be able to compete for federal contracts is to register your business in the System for Award Management (SAM). Basically, any person who wants to do business with the federal government needs to complete the SAM registration. This includes small businesses providing services such as construction, architecture, and engineering, as well as other product vendors.

If you’re reading this, though, you’re likely registered already as a pre-approved vendor and are very familiar with SAM. So let’s talk about how you can make the next few weeks count.

1. Focus on deals that you can close fast.

Because you are dealing with a hard deadline, it’s time to focus your efforts on deals that are ripe. These might be deals you’ve had in the pipeline for a while and just need a little shove. Or perhaps you can identify products and services customers are asking for now and target agencies with similar needs.

However, before you go too far chasing down money that isn’t there, do some research at the Congressional Budget Office (CBO). Learn what appropriations have been withdrawn and think about how they might affect your bids. For example, according to the June 2019 monthly budget review, defense spending was up 8 percent, with the largest increases being in operation and maintenance, procurement, and research and development.

2. Be on the lookout for new contract opportunities.

Most federal agencies post requests for proposals on websites such as FedBizOpps.gov or the Contract Opportunity Finder on usa.gov. With these services, you can create a free account using your email address, choose basic keyword or industry-specific searches, and set up daily alerts. 

To avoid the inevitable missteps involved in DIY-ing the process of researching opportunities, however, growth[period] offers opportunity identification as a client service. We begin by matching your firm’s core competencies with market areas and identifying opportunities in each space. Next, we research lateral markets to determine performance cross-over opportunities. Our research staff will keep you updated on all forms of contract and funding opportunities.

3. Stay persistent.

If you’re used to doing business with the private sector, you may be surprised to find that no response to a bid for a government contract doesn’t necessarily mean that you are out of the running. While it does take a fair amount of time and effort to have your bids considered, it is worth it to keep submitting. 

If this is your first time applying for a government contract, this is a great time to give it a shot since there is an increase in opportunities at fiscal year-end. You’ll want to pay attention to the specifics of each Invitation for Bid (IFB), Request for Proposal (RFP), Request for Tender (RFT), or Request for Quotation (RFQ) and be sure to address them in your submission. Once you understand the terminology, requirements, and qualifications it gets easier to submit.

Will there be another government shutdown?

This is a fair question to ask, in relation to what you need to do to prepare for the end of the federal fiscal year, especially if last year’s December federal government shutdown came as a surprise and left your company scrambling. Of course, we don’t have a crystal ball, but Congress passed and the president signed into law a two-year budget deal that increases federal spending and raises the spending ceiling.

The legislation eliminates the threat of a debt default until after the 2020 election and reduces the chances of another government shutdown. This is good news because if Congress had not taken action, the Treasury Department was projected to run out of money to pay its bills as early as September, which would have resulted in a default on U.S. obligations and likely shattering of financial markets.

Still, Lawmakers will return to the Capitol after Labor Day to hammer out the North America trade deal, the outcome of which remains uncertain, and a thin legislative agenda. They will also need to pass individual spending bills to avoid a government shutdown on October 1st.

So, while disaster appears to have been averted for now, none of the above guarantees there won’t be a government shutdown in the near future, which is all the more reason to go for FY 2019 contracts in the next several weeks. At growth[period] our team is ready to help you position yourself to take advantage of these opportunities. If you’re ready to try a new growth strategy, connect with us. We’re focused on your growth.

Understanding the government contracting landscape and which trends to watch will help you position your business to take advantage of emerging services and keep up with the industry. As you work to develop a long-term strategy for business growth, staying ahead of your competition requires analyzing and predicting these trends.

In addition to keeping up with industry news, looking ahead to FY2020 and anticipating government spending will pay off down the road. This article discusses four trends in federal government spending you will want to watch closely.

1. The Continued Advancement of AI Technologies 

Artificial Intelligence (AI) is not a new technology at this point. AI continues to evolve as machines perform increasingly complex tasks such as driving cars and predicting global economic trends at levels equal to or better than the most skilled human beings. 

Now more than ever before, government agencies are seeing the potential applications of AI. Innovation in AI drives much of what we’re seeing in increased I.T. spending by federal agencies. The growing toolkit of AI promises to reinvent almost everything the government does from education to health care to national security and defense in 2020 and beyond.  

For government contractors specializing in the tech, cyber, digital, or telecommunications markets, it’s crucial to be plugged into this trend. When it comes to business growth, you can’t go wrong if you follow the data. In particular, these data signals are noteworthy:

• Around 1.3 billion hours could be freed up through automation in the U.S. Federal government.
• The estimated growth rate for spending on AI technologies by central governments around the world is 44%, which is faster than AI spending in consumer services.
• 84% of U.S. public sector executives cited data privacy and quality as the biggest challenge for AI adoption.
• 68% of respondents to one survey (Deloitte-NASACT) reported staff would be provided more training in AI and cognitive technologies.

2. The Rise of Data and AI Ethics

With the advancement of technology, the government will play a bigger role than ever when it comes to managing the ethical complexities of this new “industrial revolution.” In addition to being the “owner” of an enormous amount of data, citizens will continue to look to government to regulate corporate data use. 

As machines collect more and more information from us, the government and industry need to prioritize privacy, equity, and transparency. Using the Internet, Internet of Things, and sensors, machines can track an astonishing amount of data from individuals—everything from sleep habits, to location movement, to every keyboard click can be stored.

For government agencies seeking to formalize their ethical standards around the risks inherent in using algorithms, there is a growing need to contract with emerging technology consultants to help sort through these thorny issues. In many ways, the U.S. Federal government is playing catch-up to other nations here:

• 107 countries have passed legislation to protect citizens’ data and privacy.
• More than 91,500 complaints were received by the Data Protection Authorities under the EU General Data Protection Regulation (GDPR) legislation since its implementation.
• The UK Government launched a Centre for Data Ethics and Innovation with a £9 million budget.

3. Prioritizing Air and Missile Defense

In March of 2019, the U.S. Army published the Army Air and Missile Defense 2028. This document provides the Army’s vision for air and missile defense. By 2028, the AMD force aims to provide commanders with a flexible, agile, and integrated air and missile defense program. This AMD program will be capable of executing operations in multiple locations and supporting unified land operations. 

One of the biggest changes this new program calls for is the modernization of radars and radar systems. This means government contractors in this space should be on the lookout for opportunities to showcase new technologies and to build prototypes. 

4. Legislation Watch: FY 2020 National Defense Authorization Act 

With the Senate passing its version of the bill in June and the House subsequently passing its version in mid-July, Congress is getting closer to the passage of the 2020 National Defense Authorization Act (NDAA). This legislation is an annual spending authorization bill that lays out how the DoD should spend its budget. 

Although challenges remain in reconciling differences between the two bills and getting the President’s signature, potential changes relevant to government contractors include commercial items, data rights, and cost or pricing data. This article provides a detailed rundown of the provisions that could go into effect as soon as October 2019. 

Here are a few key points:

• The House bill would create a pilot program within the DoD to encourage engagement with commercial technology companies through the Small Business Innovation Research Program and the Small Business Technology Transfer Program, which are conducted under the Small Business Act, 15 U.S.C. § 638 (Sec. 878).
• The House bill would amend 10 U.S.C. § 2306a, frequently referred to as the Truth in Negotiations Act or “TINA,” in several important respects that would make it easier for the government to obtain a contractor’s cost or pricing data. 
• The Senate bill requires the DoD to review how it decides to use fixed-price contracts to support its acquisition objectives to ensure that its decisions are strategic and consistent (Sec. 806).
• The Senate and House bills would each require the DoD’s Office of Small Business to set performance goals and would expand the definition of “Disadvantaged Small Business Concern” (S 1790, Sec. 841, H.R. 2500, Sec. 881). 
• Both bills also would permanently authorize the DoD’s Mentor-Protégé Program, which is intended to increase the participation of small businesses by encouraging mentorships with DoD contractors.

How will government contracting trends affect your business?  Our world-class experts have insight into how to manage and capitalize on current and future government contracting trends. Connect with us and let’s get you on the pathway to phenomenal growth!