Government Contracts: 5 Steps for Starting Out

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( — April 11, 2023) —

It’s not uncommon for small businesses to successfully bid on and land government contracts. The first important thing to think about is how much of a workload your company can handle given its current capacity. Therefore, you should zero in on prospects that fit your business’s strengths well.

Government Contracts: Similar to Commercial Contracts

The Statement of Work or SOW for a government contract is similar to that of a commercial contract. It lays out the specifics of the work to be performed, including deadlines and other requirements. Also, given that this is the government, you can expect a thick coating of regulations on top of these expectations.

Government organizations typically anticipate that businesses will receive about 15 percent profit on their work. This number should serve as a guide if you want to submit a competitive bid. 

Government contracts can be a significant opportunity for small businesses, but they often require upfront capital. Fortunately, there are several financing options available that make it both possible and beneficial for businesses to take advantage of these opportunities. From bank loans and lines of credit to SBA loans and equipment financing, businesses have a range of options to choose from. In addition, alternative loans, accounts receivable financing or government invoice factoring, and the government contractor cash advance are all options that businesses can explore to fund their government contracts.

Here are 4 steps that will put you on the path to landing a government contract.

  1. Do Your Homework 

First, you must prepare thoroughly before preparing your bid for a contract. A large area of the Small Business Association’s website is devoted to educating business owners on how to qualify for government contracts. It gives valuable information on improving competitiveness in this market and fulfilling the SBA’s many requirements once they have been awarded a contract.

  1. Build Relationships

Relationships are important in business, as they are in any endeavor. Identifying the key decision-makers in your area of interest can help you build relationships and demonstrate your company’s worth. It’s recommended that you contact the contracting officer to discuss any issues you have while preparing your bid. This is because he or she has to be as open as possible with information on the contract’s criteria. You may also use this opportunity to let them get familiar with your business.

  1. Learn the Importance of Subcontractors

One great way to learn the ropes of government contracts is to get employment as a subcontractor for an experienced government contractor. Many experienced business owners recommend this method. In fact, subcontracting is a common practice among multinational corporations.

  1. Build a Strategy

Remember that the SBA has a whole section of its website devoted to teaching people about contracting. Here you may find information on everything from registering your business and receiving assistance when seeking contracts to determining whether or not your company qualifies as “small” (hint: it depends on your industry).

The local or regional Chamber of Commerce is a good place to start if you want to find out more about the contracting process. Classes and lectures can also be found in several community colleges.

The Federal Procurement Data System is another useful tool for beginners. Data on all government contracts above $25,000 are available on this site. By sifting through this data, you may find out which organizations have contracts and with whom. This will give you a general idea of the kind of contracts for which different government bodies accept bids. Once you have decided on the type of contracts to bid on, you can look at the government contractor lending options available for your contract. is a comparable website that focuses on federal procurement spending.

To aid small businesses in the federal procurement process, the Federal Office of Small and Disadvantaged Business Utilization Directors Interagency Council organizes outreach events and other initiatives. This group’s website offers access to a wealth of information, such as a schedule of community outreach activities.