Getting in the Game: Government Contracting and Small Business

In the small business world, honing differentiators and finding the right niche usually dictates an enterprise’s success or failure. In 2023, the Biden-Harris administration invested $178.6 billion (28.4%) of federal funding into the small business economy, a significant and historic increase from previous years, and “exceed[ed] their small business contracting  goal of 23%” (Small Business Administration, 2024). This helped entrepreneurs grow their businesses and boost the economy. It is still unknown how the newly elected Trump administration will allocate the $6.1 trillion in federal funding each year and how that allocation will impact federal contractors. Federal contracting remains a significant revenue source for many US small businesses, but with any venture, there are both perks and pitfalls when chasing government contracts.

The Perks: Revenue and Support

The US government is one of the largest purchasers of goods and services in the world. For companies in niche industries or with specialized products, federal contracts can be a steady source of revenue. Federal contracts’ allow “access to a large, stable market with significant spending power, allowing for substantial revenue growth, job creation, and the opportunity to develop new technologies and capabilities” (Government Contracting Academy, n.d.).

In addition to these advantages of contracting with the US Federal Government, small businesses can also benefit from understanding and utilizing resources offered through the Small Business Administration (SBA), such as 8(a). These programs are designed to help small businesses navigate the complexity of government procurement and promote economic growth. Once a contract is awarded, small businesses can leverage their status to show successful past performance and tap into government resources better.

The Catch: Brutal Competition & Bureaucracy

However, these perks sometimes have drawbacks. Working with the government requires dedicated effort allocated towards compliance. The competition is fierce as other small businesses gain experience in government procurement and/or large suppliers have more buying power. A final drawback is the likelihood of delayed payments due to bureaucratic processes, which can put undue strain on a small business’s profit margin and added stress on its owner(s).

The Plan:

So, are federal contracts worth the work? Absolutely. The benefits of government contracting outweigh the drawbacks, and there are ways to steer through the process efficiently and effectively. First, small businesses interested in government contracting should always be aware of shifting political priorities. Contracts that seemed promising might not be funded, or new regulations might pave the way for growth. Staying on top of policy changes is crucial. Second, working with programs and other small businesses, such as JetCo Solutions, can make the process much easier. JetCo has a wealth of information regarding federal contracting and can help small business owners research and choose viable opportunities. We also have decades of experience and knowledgeable staff who can help small business owners navigate a request for proposal (RFP) and draft a competitive, persuasive response.

Interested in getting into the government space? Contact JetCo Solutions today!