Winning a government contract is no child’s play, and that’s an indisputable fact. However, with the right knowledge and application, you can easily win a government contract and grow your business.
Luckily, in this post, we will discuss the various business models entrepreneur’s should consider when pursuing government contracts if they plan on winning.
Sounds promising, right?
Let’s get into the details.
The 3 Government Contracting Business Models
There are only 3 business models to consider when pursuing government contracts.
- The Contractors
- The Resellers
- The Consultants
Who is a Contractor?
A contractor does business directly with the government, and they typically provide services. As a contractor, your value proposition is your ability to deliver services to the government that meets their specific needs in a cost-effective manner.
How can you become a Contractor?
Becoming a contractor comes down to your value proposition. Contractors are only employed by the government after they’ve won a contract. In other words, you can’t be a government contractor until you win the contract.
So, if you can deliver the services required by the government, all that is left is submitting a compelling proposal to win the contract.
Role of a Contractor
As a contractor, you provide your services directly to the government. For example, if you provide landscaping services and the government needs landscaping service, you can offer your service to the government through a bidding process, and if you win, you can deliver your services to the government as a contractor.
The government is the wealthiest and largest purchaser of goods and services. They essentially buy everything. Some examples include IT services, Professional Services, Construction, Facility Management, and Medical Services, in addition to products and supplies. So, if you are in business, there’s a high probability that the government will buy what you sell.
Let’s add more context; there are Prime Contractors and Subcontractors.
- Prime Contractors: A prime contractor is a person or business that wins the contract and works directly with the government. They can directly provide the services or decide to hire and manage the subcontractors to ensure the completion of the work as stated in the contract.
- Subcontractors: A subcontractor is a person or business hired by prime contractors to help with the contract. Hence, they do not work directly with the government. Most small businesses work under prime contractors by acting as their sub-contractors.
As a new business, it’s sometimes ideal to start as a subcontractor to learn the ropes and build the systems required to win your own contract as a prime contractor.
One of the biggest benefits of being a subcontractor is the fact that you’re not responsible for the contract. The prime is responsible for the entire contract, even when they choose the wrong subcontractors that end up doing poor work.
Prime contractors must choose their subcontractors wisely, while the subcontractors must over-deliver if they want to build a positive track record which will lead to more opportunities for business growth.
Now that we’ve cleared the air on contractors, let’s move on to the resellers.
Who is a Reseller?
A reseller procures products from vendors or manufacturers and then facilitates the delivery to the government. Essentially, they buy and resell products to the government.
In addition, they provide additional services to ensure the products meet the government’s requirements, from product specs to timely delivery. As a reseller, your value proposition is your ability to source and deliver quality products for the government at a cost-effective rate.
How can you become a Reseller?
To become a government reseller, you must have a good understanding of what the government needs and what influences its buying decision. Sometimes they want the Lowest Prices Technically Acceptable (LPTA), other times they want the fastest delivery, and sometimes they want the best solution.
Knowing what influences the buying decision is critical to your success as a reseller. Once the requirements have been defined, the reseller contacts various vendors for quotes.
After receiving quotes, the reseller totals all the costs, including the profits, and submits the bid to the government. When the reseller wins the contracts, it’s their responsibility to procure the products and deliver them to the government as agreed.
Role of a Reseller
As a reseller, you are reselling products and supplies to the government.
For instance, if the government needs office supplies, ammunition, guns, food, etc., and you can satisfy one or more of these needs by reselling the manufactured products, then you are considered a reseller.
A reseller can also be seen as a contractor because your company wins the contract and delivers the products to the government.
But the main difference is, as a contractor, you are offering your products or services directly to the government, while as a reseller, you are selling other business products to the government.
Even though both resellers and manufacturers deal with products, a reseller is different from a manufacturer because a manufacturer is expected to carry out at least 50% of the actual manufacturing process.
However, since you are a reseller, you need not go through the stress involved in manufacturing. Simply buy and resell to the government for a profit.
Who is a Consultant?
A consultant is an expert who offers advice and consulting services to other businesses to help them win government contracts. As a consultant, your value proposition is your knowledge; you’re a subject matter expert.
How can you be a Consultant?
To become a consultant, you must be a subject matter expert in the field you’re consulting. You don’t need any accolades; you just need to know what you are talking about to be considered a subject matter expert.
Role of a Consultant
As a consultant, your role is to help other businesses do business with the government because your value proposition is your knowledge.
In other words, you’re going to use your government contracting knowledge/expertise to help other businesses become contractors.
Consulting is a phenomenal choice, especially if you’re new to contracting, because it forces you to become a subject matter expert before venturing into your own industry, especially if you’re not sure which industry to enter.
What I mean is that, being a consultant allows you to use your knowledge and leverage your clients’ resources to pursue contractors together. This forces you to learn exponentially faster because, as a new business, you’re often limited with your resources.
The hard truth is, there are a lot of businesses that want to win contracts but have no idea how to do so.
Your job is to help these businesses win government contracts by recommending them to the government as the best fit to meet a specific need.
Your knowledge as an expert in your field will help the government make the right buying decisions while helping the company you are representing make more money.
Government Contracting Tips
As a contractor, remember your value proposition is your ability to deliver great services to the government. Always lead with your value proposition. That’s what sets you apart from your competitors. Provide value, and you will always win.
Before becoming a government contracting consultant, you must understand how government contracting works since companies are trusting you to guide them through the acquisition process.
As a consultant, it’s imperative to pick an industry you are passionate about so you can go above and beyond for your client. You need to understand the industry competently to communicate with your clients. For example, if you are a consulting IT client, then you should know the basics of IT so you can keep up during conversations.
As a reseller, you need to pick a specific industry and become the go-to vendor for set products. It’s better to sell 1 product a million times than to sell a million products 1 time.
More than likely, trying to sell a million products will drive you crazy because you’ll constantly have to learn about new industries. So, to save yourself the pain and agony, pick an industry and dominate it before branching into new industries.
Here is why:
Every time you find a contract, you have to contact different manufacturers to get quotes before bidding for the contract. And after doing all of this, you might still lose the contract.
On the other hand, if you have a specific industry, like the furniture industry, you can become friends with a lot of furniture manufacturers to streamline the quote obtaining process.
With this information, you can bid on every furniture-related government contract in the United States because you have readily available vendors to give you a quote rather than making hundreds of calls for every bid you want to go after. Work smarter, not harder.
That said, if you want to know more about being a contractor, reseller, or consultant, you can reach out to us. We got you covered.
At USA Contract solutions, we do all three. We sell services directly to the government. We also sell furniture and help businesses like yours win Government contracts.
We can teach you everything about winning government contracts and can help you win your own government contracts.
Need our help?
Click here, and let’s get you started.
The truth is, to grow your business, you need more clients and revenue. And there’s no better way to go about this than winning government contracts.
You know why?
Because the US government is the biggest and wealthiest buyer in the world, there is. They literally buy everything. Hence, if you have a product or service you can sell to the government, you should seize this opportunity. You must first decide how you want to sell to the government.
You can be a reseller, consultant, or contractor. Whichever you decide, lead with your value proposition.
Also, remember, it is much better to sell one product a million times than to sell one million products one time.
So, if you decide to be a contractor, reseller, or consultant, choose a specific industry and give it your best shot.
Cheers to success in your pursuit to get a government contract!