There are several reasons companies are attracted to the Business-to-Government (B2G) market. First, government at all levels (federal, state, local, education) buy every type of legitimate business product or service imaginable. Second, the government pays its bills. Third, the Feds always have more money and they never spend less of your money.
It’s time to get some back!
Business-to-government spending is over 33% of the U.S. economy. The attraction of the B2G market for any company continues to grow, especially in a bad economy. While most companies testing the B2G market experience little success, some have tremendous growth, even without those hard-to-come-by big government contracts. The two keys are education and perseverance.
Actual Number of Governments
Whenever I use this statistic, the first reaction is doubt. There are over 88,000 governments in the United States, counting the Federal government as one and each state as one:
- 3,034 counties
- 19,429 municipalities
- 16,504 townships
- 35,052 special district governments
- 13,506 school districts
- 512 Native American nations
- 50 states
- District of Columbia
- 6 U.S. territories
- 1 Federal government
- Total: 88,095
According to the U.S. Bureau of Census (www.census.gov), as of the end of 2006 there were 151,000,000 full-time employed adults in the United States. Of these, over 20,000,000 were government employees, not including uniformed military personnel.
Better than one in eight of full-time employed people in the Untied States works for some level of government. Watch out where you tell those government jokes!
Federal Credit Card
The Federal SmartPay credit card (formerly IMPAC card) is simply a MasterCard or Visa carried by about 290,000 Federal employees and managers. It is used primarily for purchases under $3,000 (micro-purchases, purchases that require no contract). The SmartPay card accounted for $19 billion and 25 million purchases in Federal FY 2008. Many state and local governments also use credit cards for “small” purchases.
The opportunity on the B2G market is real, it is big, and it is everywhere. If you are not bothering to understand what this could mean to your business, you could be missing a major client opportunity.
So, Does the Government Market Have Your Attention Yet?
Probably, but what are the pitfalls? What is the real scoop on doing business with the government? Here are some start-up tips:
- Focus on your strength – don’t be a company that does everything. Be known as a company that does one thing exceptionally well. Too many companies think this limits them, when actually it opens the door. Once inside, when asked if you can do something else, say “yes” if you can do it.
- Hire experts – Training your in-house sales people to sell to the government may seem like a good idea, but the process is slow and it will be hard to grow your government business. Hire salespeople who speak the lingo, know when a deal is wired to a competitor, and know when to go for it. Several companies with great potential enter this market and insist on using the sales model that made them strong in B2B, and it does not translate. Hire people who have done nothing but government sales and who have proven track records.
- Do not enter the market without understanding the financial record-keeping necessary. If you have a GSA contract, you must rebate .75% of your sales to GSA on a quarterly basis. GSA can come audit you any time they like to make certain you are doing this properly. Accounting issues for government contractors are different. Regardless of what your accountant says, seek some outside expert assistance in this area.
- Your legal advisor will not have the experience necessary to make certain your government contracts are properly done to your maximum advantage. Seek outside legal counsel that does nothing but government contracts.
- It's a unique market – Your advertising and marketing must address the issues and vernacular of this market. Unlike commercial (B2B) issues, the government is not concerned with profit, so your marketing materials (including your web site) must address this market differently. The government market is unique and requires messaging that is different from traditional B2B. Again, seek outside help from someone who does nothing but B2G.
- Focus on 1-2 agencies to get started. This market, any market, is all about relationships and trust. Build the relationships first in one or two agencies.
Understand that if you do not give this market the time and resources necessary, you are setting yourself up to fail regardless of the potential your product or service has in this market. So be sure to follow the steps outlined above and start earning your share of the B2G market.