Earlier this week Geri Stengel posted an article called “How to Get Rich on Government Work” on Inc.com. In it she encourages female entrepreneurs to look to government contracting as a way to more easily reach at least $1 million in revenues.
I generally try to keep this blog positive, but I feel that I need to reply to this article because it is hugely misleading about the simplicity of getting federal government contracting work and therefore puts small businesses reading it at risk. Getting federal government work is a long, time consuming, and expensive process and no entrepreneur should pursue it as a growth strategy without understanding the level of commitment necessary to be successful in the government contracting world.
Let’s start with a few ways that this article is misleading:
In her opening paragraph Stengel states:
All business owners, especially women owners, know that getting to a million in revenues is a tough hurdle. But there is one way to lower the bar: government contracting. Almost half of the small businesses that are active federal contractors have business revenues in excess of $1 million, while only 5% of small businesses overall have broken the million-dollar barrier, according to soon-to-be-released American Express OPEN research for 2011.
- Firstly, if you speak to anyone with federal government contracting experience, they will laugh at the notion that getting government contracting business is easier for a small company with no past government contracting experience than getting business in the private sector.
- Secondly, the statistics that Stengel uses are largely irrelevant and therefore misleading. She states that “Almost half of the small businesses that are active federal contractors have business revenues in excess of $1 million, while only 5% of small businesses overall have broken the million-dollar barrier.” While this may be true, citing statistics about active federal contractors is meaningless to a company that is not an active contractor. Those are the winners. An equivalent statement would be that a higher percentage of NBA players are millionaires than of the general population, therefore playing basketball is an easy way to get rich. Clearly that’s not true as most people who play basketball never make it to the NBA. Similarly, most companies that would like federal government business never get a contract, so discussing the revenues of the ones that do can only tell you so much.
This same issue continues in paragraph two where she argues that there does not seem to be a performance difference between male and female or majority and minority business owners once the company succeeds at getting a government contract. However, there is no mention of whether or not there is a difference in success rates for getting that first contract.
Thankfully, she does at least mention some of these issues in the rest of her article noting that
Seasoned owners say that becoming a successful federal contractor is almost like starting your business all over again. You need an accounting system that can provide the data each agency wants (each federal agency has differing requirements); a marketing program that appeals to procurement officers and highlights your expertise and track record as a contractor; and the right paperwork, in this case accreditation.
I work in Washington, DC with small business owners and a large part of my job is to help them get federal government contracting work. I can attest that this is not an easy way to get business. I’ve been to numerous government contracting events, trainings, workshops, etc. and these are the statistics that we hear over and over again from the experts and procurement officers themselves in DC:
- The average small business will use over 100 worker hours to complete just one proposal
- The average small business will spend between 12 and 14 months of focused effort before landing a single contract
- The average small business will spend over $100,000 in order to land their first government contract
None of that sounds easy to me. Does it sound easy to you?
Federal government contracting can be a great option for many small businesses and it can provide them with the revenues that they need to grow. However, no small businesses should be under the misconception that this business is easy to get. If you’re considering pursuing federal government contracting, make sure that you utilize tools such as USASpending.gov and the tutorials and training offered by the General Services Administration and Small Business Administration to be sure that going after government contracts makes sense for your business and its growth strategy. You don’t want to be fooled into believing that you can try government contracting on a whim because it’s easy money or you will be putting your business jeopardy.