3 common mistakes small businesses make when going after government contracts

  • Federal, state, and local governments spend more than a trillion dollars on contracts each year.
  • Insider spoke with Reena Bhatia, who has over 20 years’ experience writing and consulting on bids.
  • She highlighted three areas where she sees small businesses stumble when getting started.
  • Visit the Business section of Insider for more stories.

The US government spent more than $600 billion on its regular contracting last year, and that amount is set to increase under the Biden administration.

Once you add in state and local purchasing, the world of government contracting presents more than a trillion dollars worth of opportunities for businesses.

Insider spoke with Reena Bhatia, who has been writing contract proposals for more than 20 years, first with companies like CACI International and L3 Technologies, and for the past decade with her consulting business Proposal Helper. Last year she founded BidExecs to expand the services across the US.

Government agencies rely on contractors for everything from landscaping to application development to cyber security, and Bhatia says the profit margins are particularly lucrative for highly specialized products and services.

Bhatia also said that the contractors she works with tend to focus almost exclusively on their government revenue stream and that there is little to no overlap with selling to consumers or other businesses.

However, that appears to be gradually changing.

On the government side, agency purchasing reps are behaving more like their industrial counterparts and shortening the timeline and simplifying the process of making a deal. And in the private sector, having a government contract in your portfolio could make your startup more attractive to investors.

Here are three things Bhatia says small businesses often get wrong when trying to start out in government contracting.

They have technical founders who aren’t comfortable with selling

The biggest problem Bhatia sees among small businesses is that the founder is passionate about solving technical problems, but not enthusiastic about pitching the company’s solutions.

“They believe that they can stay technical forever, that they can hire sales,” she said. “No one else can sell the company as well as the owner can.”

Bidding on a government contract may be a highly technical affair, but it still has a lot in common with selling to consumers or other businesses.

“Your role is not to work in the company, your role is to sell its capability,” Bhatia said.

Setting aside some time to identify your company’s narrative – or find your “why” – can help sharpen your pitch and forge a stronger human connection with the people you need to persuade. 

They pitch to the wrong agency — or the wrong person

A key part of any marketing research involves identifying the right customer for your business. Successful contractors are selective about targeting their efforts to relevant departments and individuals at a the right government agency.

“Don’t sell to the wrong agency,” Bhatia says. “Know which agency needs your services and sell in the right place, and then sell to the right person.”

Some of these insights come with experience, but turning to someone in your network or to consultancy like Bhatia’s could help you along.

They’re generalists who fail to differentiate their product or service

Another error Bhatia sees is when small companies cast too wide of a net in an attempt to capture a wider variety of opportunities.

“There is such a fear of missing out that they want to sell themselves as generalists,” she said.

Instead, successful companies carve out a highly specific niche and establish themselves as leaders in that specialty.

Highlighting what makes you special won’t preclude you from bidding on other projects, but it could help you stand out from your competitors whose messaging isn’t as sharp.

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