This post, written by James Rutherford, originally appeared on Public Spend Forum.
Acquiring federal contracts through the government is a great way to increase business revenue. In 2009, the government spent a cumulative $96.8 billion in federal contracts for small businesses. That was a record in 2009 and remains the record today. Since then, our economy has gone through some financial hardships. In response, the government has been tightening its belt, so less money is being spent on contracting with small businesses.
There are still plenty of opportunities to do business with the government through contracts; they are just fewer and more difficult to win. As such, many small businesses are spending a good deal of money and resources in an attempt to win the government contracting bids. In 2012, small businesses spent an annual average of $128,628, according to a study by American Express, on efforts to secure government contracts.
In 2009—the year of the record setting government spending on small business contracting—small business spent $86,124 on securing government contracts. That’s a significant increase between 2009 and 2012.
The costs that go into acquiring government contracts include: time spent by employees to prepare the bids, cost of traveling to bid conferences, costs of shipping documents and other materials, time/money spent networking with government agencies, and spending done at matchmaking events. It all adds up.
Once all the money is spent on acquiring a government contract, a small business can find itself in a pickle: It’s important to win the contract, but if the money spent acquiring the contract restricts a small business from being able to fulfill the contract, that can cause problems.
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