Getting Started in State and Local Government Contracting; A Small Business 101

While the U.S. federal government remains the largest buyer of goods and services in the world, doing business - particularly for small businesses- can be an unwieldy and regulatory-laden process. A more manageable alternative, however, might be in the state and local government marketplace.

State and local government contract opportunities are abundant and, since most states 'set-aside' a certain amount of less regulatory-burdened contracts to small business each year, the opportunities can be a better fit for small business.

Here are seven tips for getting started in the state and local government marketplace.

Do Your Due Diligence

Before you consider doing business with state and local government, you need to assess whether your business can hold its own in the contracting landscape.

Each state or local government entity has specific requirements which the businesses it contracts with must be able to comply with or address. From a proven ability to complete a job (use customer references to help you with this element of proposal writing), to tried and tested quality control procedures' i's a good idea to research what your local government requires of its contractors and develop a plan to evidence your capabilities and compliance. Your state procurement agency or city/county procurement division can help you understand these requirements.

Likewise, can your business finances tolerate the slow government payment cycle? Be sure you have the cash flow to tolerate the upfront cost of executing the contract before you get paid upon completion.

Consider Certifying Your Business

Small business certifications are like professional certifications. They document a special capability or status that will help you compete in the marketplace. If you want to take advantage of government contracts, you may need to obtain some certifications such as classifying your business as a small business.

Do you need to Hold a Government Contract Vehicle to Do Business with your State?

Small businesses do't need to hold a formal procurement contract, such as a GSA Schedule, to do business with state or local government. However, once your business has a track record of government work, holding a GSA Schedule can open more doors with certain states because it pre-authorizes you as a legitimate supplier and makes it easier for the agency to do business with you. Still, getting on the Schedule and managing and maintaining that contract may be more than you wish to take on.

It's best to talk to your state or local procurement office about their purchasing processes and whether holding procurement contracts can help you compete. Also check out this guide: How GSA Helps Small Business.

An alternative to holding a contract yourself is to team or sub-contract with another company, who either holds a contract or who can partner with you to help improve your chances of winning government business - a useful option if you can't provide all of what's required in a contract.

For more information about sub-contracting, read Selling to the Government: Five Tips for Becoming a Sub-Contractor and Getting Your Foot in the Door.

Understand the State & Local Government Market

As with all new market entry, do your research. Find out where the best opportunities are by assessing current funding, what contracts have been awarded in the past? What is the agency's budgetary cycle and procurement code? Much of this information is in the public domain on either your local city or county Web site.

Once you understand state budgetary processes and calendars, be prepared to network and plan on introducing your product or service three to nine months before the state drafts its upcoming fiscal year budget. Then be patient. It can take up to six months after funds are appropriated before an RFP hits the street!

Register your Business and Find Opportunities

To bid on state contracts you must first register with your state procurement office. They also provide useful tips on doing business with your state, as well as a list of current opportunities.

Note that while registering as a supplier does not create a contract or guarantee that the state will buy from you - it is the only way of making sure that you are notified of formal procurements. You'll still need to market and network your way in like everyone else!

Differentiate your Business Value

If you lack government contracting experience, demonstrating value is essential - especially in proposals. Take time to document what unique expertise you offer and back it up by demonstrating success with past projects.

Whether it's saving money, delivering ahead of schedule, or addressing a problem in a manner that is repeatable, your value is what will make you stand out and differentiate you from the competition more than just your product catalog alone. For more tips on communicating your value, check out this article: Stand Out from the Crowd - 7 Tips for Creating a Marketing Message that Sticks.

Marketing your Business by Getting to Know and Connecting with the Buyers

Once you have established that your company meets a state's contractual and bidder's list requirements, start identifying ways to build your profile and attract prospects.

Marketing to the government is quite different than marketing to businesses or consumers and requires a dedicated approach.

Relationships are critical, so try to meet agency decision makers by attending government conferences, joining government associations, and developing messaging and collateral that speaks to government (how is your product going to help the agency serve its mission and its constituents?).

Read Successful Government Marketing - A Primer for Small Business for tips.

About the Author

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley