The government market often is misunderstood with the preconceived notions ranging from “it’s easy” to “it’s impossible.” The “it’s easy” view typically goes like this:

Where do I go to have government agencies give me business? or My company has hit a downturn; how do I quickly switch gears to selling to government? The “it’s impossible” view includes:

• Government contracting is political and funneled to the insiders. The big guys grab all the business and the little guys get screwed. I’ll never know enough about this mysterious market to have any success in it. As you might suspect, the realistic view falls somewhere in between these extremes: government contracting is not easy but it’s not impossible either.
• Inexperienced companies can enter the government market with entry costs that are commensurate with the size of the company and the expected return on investment. Like most successful business endeavors, it first takes a full commitment from management and then requires focus, persistence, and patience.
• Commitment to the market means you’re willing to spend time and money to achieve success. But be prudent. Spend your time and money wisely. Focus intensely on finding government customers who are ready to buy your product/service. That’s really what it comes down to. Don’t waste your money in the government marketplace if you are not first willing to make that commitment.

After Commitment, Then What?

Assign yourself (if you’re the business owner) or a senior sales person the responsibility of market entry, providing yourself or him or her a realistic budget to work with.

YOU have to do the work: Don’t fall into the trap of assuming that government-employed small business advocates are going to deliver business to you. At best, they’ll point you to a general group of potential customers and, at worst, point you to reading material and conferences that are only marginally useful. (“Time-occupiers” that can lull you into thinking you’re accomplishing something.) You have to do the selling with your own sweat and blood. No one will do it for you. But you already knew that.

YOU have to find the customers: Don’t assume that end-users and buyers will find you. Seek them out and sell them directly with personal sales calls. Don’t assume that direct mailing, faxing, or emailing alone will sell your products or services. These may be valid marketing techniques but recognize them for what they are: marketing not sales.

Use Sales Focus to Keep Your Sales Costs Manageable

Sales focus has three primary elements:

• Start with a small group of agencies: The three levels of government (federal, state and local) are composed of about 85,000 agencies. That number alone should be enough to convince you of the need for intensely focusing your sales efforts on a few selected agencies. Start small and expand your focus after finding success. Focus your efforts on a small, targeted set of potential customers as a trial and learn from the experience. In general terms, this focus should be by geography for service businesses, and type of customer for products.
• Focus on buyers who actually buy your stuff: Do the research to understand agency missions and the needs of agency end-users. Find customers who actually NEED what you sell.
• Target procurements of a size your company can realistically win: As a general rule small businesses should sell in the micro purchase, small purchase and subcontracting markets. Leave the large purchases (fixed price and negotiated) to the medium- and large-sized businesses.

There are two main reasons for this: the costs of bid preparation are high, and often only medium or large businesses are capable of performing under the resulting contracts.

Let’s discuss further this third element. Not surprisingly, sales costs and barriers to market entry increase with procurement size.

Micro Purchases

Governments have issued credit cards to over 800,000 end-users. You only need to find the credit card holders close to you geographically or those who buy your product nationally (assuming you can cost- effectively ship throughout the country). Remember: once you’ve made an end-user happy, he can buy from you without seeking out competition.

Likely, your sales/close ratio will be the best of the three size-based market segments.

Your primary sales costs are in finding the cardholders, finding out what they buy, and making a personal or telephone sales call. The finding part might seem daunting but it isn’t if you (again) focus. Use the local telephone directory, procurement web sites, small business specialists, or the Fedmarket.com credit card holder CD-Rom to find cardholders. Call them and ask what they buy.

Small Purchase Market

Governments employ over 150,000 official buyers who make purchases with informal requests for quotes from three vendors. Like micro purchases, you only need to find the right official buyers (and sometimes end-users) close to you geographically or who buy your product nationally if you can cost effectively ship. Most small purchases are not publicly advertised, so your sales/close ratio should be considerably better than it would be for publicly advertised requests for quotes.

As in the micro market segment, your primary sales costs are in finding the buyers, finding out what they buy, and making a personal or telephone sales call. Find them by using the general sources mentioned above, or Fedmarket products such as FedBuying Intelligence (FBI) and our CD-Rom of Official Government Buyers.

Large Purchases

The paperwork and competition associated with large purchases make them out of reach for most small businesses. Leave these for larger businesses unless you sell in a complex product/service niche where you stand up well to the competition. Go after the subcontracts instead.

Success Story

A reader called us recently and said the following:

“I am the sole proprietor of a small business. I do about $150,000 a year providing whatever the government needs in commodities and unique parts. I find buyers however I can, by using the Internet and telephoning the agencies. I find credit card holders by digging on the Internet and using Freedom of Information Act requests. I sell by calling buyers and telling them that I will provide whatever they need quickly. I ask them to give me a try and see for themselves.

The purchases average about $10,000. I’ve been reading your installment series and like it a lot. How can I do better? What can you do to help me?”

Talk about commitment. This person is doing direct sales by himself after personally and persistently digging out buyer contact information. He is focused and going after business aggressively.

My comments back to him were as follows:

“You seem to have plenty of buyer contacts, so continue spending your limited resources making sales call. You have found your niche in the small purchase market. You’re finding buyers, calling on them, asking for their business, and serving them well. You’re doing very well! There’s probably not much we can do to help you, at least at your present size.”

Are there any lessons here for larger businesses? Yes, it’s all about focus, commitment and exceptional performance. For businesses of any size, there’s not much more to it than that.