Mia Consulting | 7 March 2019
Many businesses have government on their radar, either as a growth option or an opportunity to build a sustainable revenue base. However, a large number hold back because they are not sure the government will engage with them.
Maybe they don’t believe they are big enough to support government. Perhaps they’re not certain what government actually does.
Here’s the thing. Your business can be successful with government as a client. But you need to be ready to invest your time in building this market. Even if you win a tender or quote, to be successful long-term you must have the time, resources and focus to capitalise on that success and create new opportunities.
There are many benefits of working with government.
Firstly, and I think most importantly, government contracts can offer opportunities that a business wouldn’t experience with private sector clients.
I hear many businesses say that government wouldn’t be interested in their products or services, but often this is not true. Government is huge and diverse, and a massive consumer of all types of products and services.
Surprise! Despite what you may have seen or heard, government will pay for value, and in fact can find risk in costs that are too low. Government also has a focus on sustainable business partners: it doesn’t want to drive your costs down too low, because that might impact your business model and affect your delivery to them.
Unlike in the commercial sector, where payment terms can stretch out, government has a policy that your invoice must be paid within 30 days. Additionally, government often awards longer-term contracts, sometimes up to two and three years. This represents a steady flow of work, removing some pressure for constantly quoting for other jobs, and providing the sustainable base small business operators often search for.
The hardest government contract to win is your first. After that, if you do a good job and stay relevant, they are very likely to re-engage you for further or similar work. Moreover, opportunities can multiply, particularly if you have a focus on delivering to their needs, customer service and value-adds.
You can become the incumbent!
Having government as a client looks great to both potential clients and investors in your business – be they investment partners, grant assessors or insurance companies, commercial or private. Right at this moment, I have a client whose asking price for the sale of their business has increased, just by having federal and state government clients. The reason is not just the existence of a secure income stream, but that working with government further proves your experience and capacity to support a client with (often) high standards.
Despite these benefits, I know a lot of businesses have negative thoughts about diversifying into the government sector. I’ve heard government described as a ‘black hole’. Many businesses don’t know where to start, or believe they are too small to work with government.
I tell SMEs that they need to change their mindset. What a small business may perceive as a weakness in many instances could be viewed as a positive by government. You may be interested to know that 80 per cent of suppliers to government are SMEs, and this is because SMEs represent expertise, agility and of course great value for money.
Government wants to work with industry, and in fact increasingly needs to work with industry. Many government people have said to me, “we don’t know what we don’t know”. You are the experts they need to hear from to be able to better shape their programs and activities.
Furthermore, government is interested in working with a diverse industry base, one that includes not only SMEs, but also representation from social enterprises, Aboriginal businesses or Australian Disability Enterprises. The recognition that successful delivery of government’s agenda relies upon a diverse and expert business community has been encapsulated in government social procurement policies – such as the Victorian Government’s Social Procurement Framework.
So, instead of thinking “government doesn’t want to hear from me”, change your mindset to “government needs to hear from me”. And I guarantee that if you find the right person, more often than not they will want to meet you, leading to opportunities for your business.