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~Selling to Our Government~
While federal and state governments may be the biggest contract
opportunities for small businesses, local city, county and town governments
can be an excellent place to begin this type of selling. Municipal agencies --
such as parking bureaus, water and sewer commissions, or even boards of
education -- regularly do business with small, local companies, and it may
pay to investigate whether this could be profitable for your firm.
It's important to understand that doing business with a government is vastly
different than typical business-to-business selling. Sales cycles can be
extremely slow, and prospective contractors often face a good deal of red
tape. Local governments rarely have the ability or desire to move quickly.
Many contracts -- particularly larger ones -- require a long bidding process
and the approval of politically appointed boards which don't always find it
easy to reach a consensus. It's not unheard of for the contracting process to
drag on for years at a time.
Local governments also tend to focus on the short term. Rarely are they able
to think past the next election. There's little incentive for them to try anything
new. This means that if you're selling "benefits", you can't look at long-term
goals, but need to focus on short-term needs. You also need to show how
your product or service is a safe choice.
Use the following five tips to assist you in reaching this potentially lucrative
market.
- Learn how each agency does business~
Spend time up-front researching the contracting methods used by each
municipality you're targeting. Each town or city does things differently; their
political personalities vary, as do their contracting methods. Contact the
people in charge of purchasing at the municipal agency you think would be
interested in using your products or services. Do they, in fact, buy products
or services like yours? What procedures do they use? What information do
they need to see before considering a purchase? How are buying decisions
made? Who is responsible for developing the appropriate RFPs? What
requirements does your company need to meet? What politics are involved
in purchases?
If you can't get this information from the agency, try speaking with
non-competing businesses who are selling to them, and ask them the same
types of questions. Network with local businesses through your chamber of
commerce. Look for the names of contractors when winning bids are posted.
Learn as much as you can before you jump into the process.
Another excellent source of background information is the local newspaper.
Go through back issues of the daily or weekly paper and search for
coverage of events like commissioner meetings. Look for information about
political issues, recent appointments, or budget changes that will give you
perspective on how decisions are made. Does the board regularly table
motions or does it act quickly? Is there any behind-the-scenes maneuvering
you need to know about? Does it favor local contractors or does it look
statewide or nationwide to fill contracts?
- Be very sensitive to price~
Municipal contracts are almost always awarded to the low bidder, so
agencies can show that they are not wasting the tax payers money. For a
small business that has positioned itself to sell on value, not on price, this can
be extremely frustrating. Remember that governments base their buying
decisions on short-term expenditures, not long-term savings. You'll need to
focus your sales pitch on what they have to spend, not on what they'll save.
Cost out any contract bid carefully. Can you get the contract and still make
money? Don't low-ball the price just to get in the door; unlike some
business-to-business contracts, you'll find it nearly impossible to renegotiate
a higher rate. Don't get yourself locked in to a money-losing contract.
- Look for influence at all levels of government~
Don't limit your sales efforts to the contracting agency. Sell across the
government spectrum to find people to champion your business. In a political
arena, there are many others who can help you get your products or
services in front of the right agency. Is there anyone else who can lobby to
help you get the contract? Are there city council members, commissioners,
or other elected officials who can represent your case?
You don't have to have been a major contributor a politician's campaign to do
this. Many politicians naturally want to support local businesses, and are
interested in the success of their constituents...especially around election
time. You can also make contact through community groups and charities
you might be active in.
- Make RFPs work for you~
At almost every level, government contracts are awarded through formal
bidding using requests for proposals, or RFPs. These RFPs are used to
ensure that the contract goes to the lowest possible bidder who can meet the
agency's specific, stated needs. Even if you offer a unique product or
service, there still may need to be an RFP. The point of this process is
simple; it avoids appearances of favoritism to a particular supplier, and allows
the government to show that tax dollars are being spent efficiently.
Shrewd small business owners can turn this process to their favor, however.
Speak regularly with the office responsible for developing the RFP and
become a resource to them. If you offer some kind of unique solution, work
with the agency to help draft the RFP. Make sure the published specs
include any proprietary features your product or service offers. If you're able
to offer a package of services (both computer systems and training, for
example), ask to have the RFP structured that way. The bottom line: the RFP
should be worded in a way that makes your company the ideal bidder.
- Build on successes~
Cities and municipalities are hesitant to try new things, even ones that will
save them time or money. The reason is simple -- old ways are safer than
new, and bureaucrats prefer to play it safe. The good news is that cities
sheep. If you're able to persuade one or two cities to go with your product or
service, more will be open to it. So focus your efforts on the one or two
municipalities that are most likely to buy your product or service. When
you're able to demonstrate that your product or service has been successful
elsewhere, other agencies will be more open to considering it.
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