Why Small Businesses Love Government Contracts

As a fledgling company focused on growing small business sales, your immediate goal is to target prospective buyers, be it other businesses or individuals. But did you ever stop to think that one of your biggest buyers might be the government?

The U.S. government awards millions in federal contracts to small businesses to ensure they remain viable in a competitive economy.

The U.S. government is the largest consumer of products and services in the world. As such, a number of small businesses are increasingly casting an eye toward government contracting. Each year, the federal government awards hundreds of billions of dollars in contracts; for the 2013 fiscal year, for instance, the total was $460 billion, and in January 2014, the House approved a $1.1 trillion spending bill for the current fiscal year, as reported by the New York Times.


Simply put, government contracting means selling your small business services directly to the government. There are a number of benefits that come with such contracting, namely the fact that it opens up new revenue streams and can diversify your buyer base. Let’s take a look at some other chief advantages of government contracting for small businesses:

  1. Government Favors Small Business: Federal law dictates that the U.S. government try to award 23% of federal contracts to small businesses, according to the Small Business Administration. In other words, a chief goal of the government is to ensure that businesses like yours remain viable in this competitive economy and that you get your chance to work with the federal government.
  2. You Know Where it Spends its Money: While the private sector can be inconsistent when it comes to purchasing patterns, government spending tends to be fairly predictable each year. By visiting websites such as the Federal Procurement Data System, you can get a feel for the top areas receiving government funding each year (for example, construction, technical services, and manufacturing).
  3. You Can Expose Your Business to Additional Customers: By selling to the government, you put your new company on the radar of the federal government. As a contractor, you’re exposed to a swath of new individuals, many of whom have power and other connections. Being a contractor can be just your ticket to seeing small business sales surge.

Getting started as a government contractor is easier than you may think. To begin, you need to register as a government contractor to see if you qualify to sell to the government as a small business. You’ll need to apply for a D-U-N-S® number and register in the System for Award Management (SAM) database. You will also need to find the appropriate NAICS classification for your industry to pinpoint relevant contracting opportunities.

Once you are registered, it’s time to get a job. Search for current federal government opportunities through a variety of websites; investigate whether your products and services are eligible for listing on the GSA schedules, and familiarize your company with the budget forecasts for the government.