Regardless of the type of manufacturing business you work for or own, chances are that the U.S. government has a use for your goods or services. And for a manufacturing business, that could mean significant growth opportunities with a new customer base. If you’re wondering how significant of a growth opportunity selling to the government can be for your manufacturing business, consider this: according to the latest Trends in Federal Contracting for Small Businesses report by American Express OPEN, 57 percent of small companies say their revenue has grown as a direct result of federal contracting.
Here are a few tips and best practices to help your manufacturing business get started and find success in the federal contracting landscape.
Where to Start
Selling to the government requires some know-how, so if you’re just getting started, seek out expert advice to get to know your target audience.
One great resource for businesses in the manufacturing industry is the network of Procurement Technical Assistance Centers (PTACs) throughout the country. They can provide in-person counseling and advise you on the many resources available. Another resource you should know is the Small Business Administration (SBA). The SBA provides free access to both general small business federal contracting advice and resources tailored to the manufacturing industry. These organizations also host a wealth of events around the country for business owners looking to learn more or find counseling and training.
Another vital step for those looking to enter the contracting space is to register on the System for Award Management (SAM), the database the government uses to find qualified contractors, and where large contract holders — known as primes — seek qualified subcontractors. Remember to create a SBA profile in the Dynamic Small Business Search (DSBS) section of SAM. This section of the database is where most contracting officials search for small businesses within certain socioeconomic categories and particular geographic areas.
Also, be sure to identify your manufacturing NAIC (North American Industry Classification) codes. Some of the largest small business government contractors are those in the IT manufacturing industry, which have small business size standard determinations measured by number of employees as opposed to revenue. For example, these IT manufacturing firms are still eligible for consideration as a small business within SBA standards because they have identified their NAIC codes. It is important to understand the value of business classification as it will determine your ability to gain a competitive edge in contracting as a small business.
Team Up for Increased Success
While selling to the U.S. government is a worthwhile investment, it does require both time and money to get started. The Trends in Federal Contracting for Small Businesses report found that goods producing, such as those in the manufacturing field, businesses invested $165,700 in time and money while pursuing federal contacting opportunities in 2015.
One way to ease into the procurement process is to explore subcontracting or “teaming” with an experienced federal contractor or another business. In fact, the American Express OPEN survey found that over the past three years, two-thirds of subcontracting bids have yielded contracts.
When asked about the effects of subcontracting on their prospects for landing new contracts, 38 percent of survey respondents said that it was “getting easier to win contracts” because of established teaming and subcontracting partnerships.
Know How to Stand Out
With many manufacturing companies vying for government contracts, it is important to know how to differentiate yourself from the competition. Special set-asides exist for various types of certified businesses, such as service disabled-veterans, small disadvantaged and women-owned small businesses, and even businesses located within Historically Underutilized Business zones (HUB-Zone). While many small business owners imagine that federal contracts only go to large businesses, there are many certifications available specifically for small to midsize companies. In fact, in fiscal year 2015, the U.S. government awarded approximately $90 billion in contracts solely to small businesses. Additionally, fiscal year 2015 was the first time that the federal government was able to meet its goal of awarding 5 percent of federal contractors to women-owned small businesses.
While you can learn more on the SBA’s website, below are some examples of government contracting certifications:
- Women-Owned Small Business Federal Contract Program: The program helps women-owned businesses enter the federal marketplace and utilize all available resources.
- Women-owned small businesses can also find help in navigating the ins and outs of the WOSB Federal Contract Program through ChallengeHER, a joint initiative from the SBA, Women Impacting Public Policy (WIPP) and American Express OPEN.
- The Service-Disabled Veteran-Owned Small Business Concern Procurement Program (SDVOSB): This government program aims to award a minimum of 3 percent of federal contracts to qualifying veterans.
- Historically Underutilized Business Zone Program (HUBZone): Businesses in designated urban and rural areas can gain preferential access to certain federal procurement opportunities.
- 8(a) Business Development Program: This program offers special assistance to qualifying disadvantaged small businesses within certain socioeconomic categories.
Like all great business opportunities, federal contracting requires thoughtfulness and persistence. Success will not come overnight, so continued effort is the key to success. Explore the numerous resources available specifically to manufacturing companies, take the time to look into areas of government contracting that could open up new and profitable revenue streams for your manufacturing business and take the time to identify and research your customer.
Lourdes Martin-Rosa is an Advisor for Government Contracting at American Express OPEN.