Ask any small-business chief executive competing in the federal market, and he or she will tell you that finding a niche within the competitive spectrum has become increasingly difficult.
Some small businesses find themselves competing against larger businesses that have ventured into smaller contracts. With the Small Business Administration’s changes to business size standards in 2012, some small businesses also find themselves competing against much larger — but now small, by definition — businesses for set-asides.
Despite these challenges, the current government contracting environment encourages small-business participation. More than $51 billion in 2013 contract obligations went to small business via set-aside contracts, and although the total dollar figure is declining, the percentage of total obligations is increasing.
Small-business contracting continues to be a priority for contracting offices, which are under increasing scrutiny regarding small-business utilization. These offices have the burden of proof and must justify not using a set-aside for certain requirements. The Obama administration and Congress are also helping shape the path with policies that address small-business competition.
While policies and mandates help level the playing field, it’s up to small businesses themselves to sharpen their business development skills to win contracts in a constrained market.
Focusing on short-term tactics can be both tempting and necessary to stay afloat. But market conditions will increasingly require small businesses to develop a more strategic mind-set to facilitate long-term growth.
Three key areas to consider are pipeline management, teaming and due diligence.
High win rates and a well-structured pipeline management system go hand in hand. Small businesses may not need the same tools and formality as a larger business, but they do need structured processes in place to prioritize opportunities and determine the health of their pipeline.
Resources needed to vet opportunities and respond to solicitations are limited, so trading in that Excel spreadsheet for an entry-level customer relationship or capture management system may help increase efficiency.
In a world of shrinking budgets and contract consolidations, teaming is critical for all businesses, especially small businesses. Agencies will continue to funnel significant spending to preferred contract vehicles, making teaming the only way some small businesses can get access to those customers.
Successful teaming requires two important ingredients: contribution and self-reflection.
Large businesses want small businesses that can bring niche skills, opportunities and customers to the table. It’s also critical that small businesses evaluate their own value propositions and make a clear distinction between their core competencies and capabilities.
Companies want partners capable of being excellent in an area in which they are only sufficient.
Whether evaluating an opportunity or a partner, small businesses should take advantage of the vast amount of data available to help them understand the landscape. More than once, I’ve heard government and industry executives complaining about the lack of agency or company knowledge reflected by a small business focused on delivering “the pitch.” It may be cliche, but knowledge is power.
Success for small businesses is largely about balance and developing business development sophistication without sacrificing agility.
Deniece Peterson is the director of federal industry analysis for Herndon-based Deltek, which analyzes the government contracting market and can be found at www.deltek.com.