Profiting from the Public Sector

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Even healthy companies are shocked to find that their bankers do not simply extend that line to finance a signed government contract. Asset-based financing is your cheapest money, but takes time to arrange. Alternative financing (aka "last-minute money"), is always more expensive, and will evaporate your profits.

The fix: forge a closer relationship with your banker. If you've decided to pursue government contracts, and have revised your marketing budget to support that pursuit, review your access to working capital and financing. Then visit your banker to find out about financing options before you launch your campaign.

The third trap is what can only be called shotgun tactics. We all know the classic pattern: If you go after everything, not much will reach the target. Too often, entrepreneurs go to FedBizOpps, the Web site where the federal government publishes opportunities and includes links to stimulus opportunities—and pump out proposals for anything that appears relevant. The result is that most of their efforts are off-target.

The solution, of course, is to focus. When you want to win government contracts, you have to research and focus tightly to win. Otherwise, you'll go broke trying. Savvy companies will scope out the competition and possible partners in order to position themselves to win opportunities long before they pursue opportunities.

Do Some Research

Free Web sites offer extraordinary amounts of federal contract market intelligence. Look into usaspending.org, ccr.gov, gsaadvantage.gov, fpds.gov, and ssq.gsa.gov. These are all good sources if you're testing the waters and not ready for a big investment yet.

The federal fiscal year ended on Sept. 30. When the final stats are in on the 2009 federal fiscal year, spending will have topped $550 billion, an all-time record. Expect 2010 to look much the same. While the White House asked agencies to trim their budgets 7% over the next two years, that could simply leave room for spending on new initiatives. The federal government will keep buying. On top of that, the Obama Administration has set a goal of spending 70% of the stimulus money by this time next year. So far, almost 47% has been allocated for specific purposes; of that only 16% has been spent. That means there's a very stimulating year ahead—if you're developing opportunities long before the competition begins.

Judy Bradt is CEO of Summit Insight in Washington, D.C., which works with clients to win government contracts.

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