For New and ‘Old’ Heads: The Absolute Truth about Selling to the Federal Government

“Whether you are new to federal procurement, a ‘head-banger, or one of the lucky; you must be prepared to commit significant resources (Time + Money) to your firms’ sales program and also be prepared to wait at least one year for your first (or next) dollar of federal revenue. You are going to need a dedicated sales person and you can expect to spend between $80 to 250K for a guaranteed win. This is conservative, but a realistic management of expectations… If you’re not willing to (or can’t) make the investment, stay at home.”

OVERVIEW

While many of you are new to federal procurement, others have been banging their heads against the glass ceiling for years with no success. Still others of you lucked up and got a contract or two; but since you didn’t have a strategy in the 1st place, you’re finding it hard to replicate past successes. To compound matters; current government austerity measures will insure that competition for ever fewer contracts will increase while margins for those who do win will become smaller and smaller.

This is the ‘New Normal’ for the foreseeable future. We can help: www.aljucar.com

NO WAY AROUND ‘DIRECT SALES’

So, given these facts, let’s get a couple of thing straight right now; selling to the federal government is ‘white-collar’ warfare. If you don’t already have a federal contract, you are an ‘outsider’. If you have a federal contract, but are not using the appropriate internal selling techniques; you are an ‘insider’ who is soon to be and outsider. Long-term investment is required to become (and remain) an insider.

There are a lot of firms that purport ‘Business Development’, ‘Advertising’, and ‘Marketing’ alone as the “Revenue Solution” to both the ‘Newbie’ and the Small Contractor with some experience under their belt. The truth is; the only way to make a federal sale is to contact a buyer through a ‘Direct Sales Call’ – period. Smalls that are unwilling to make the sales calls are not going to experience success in the market.

WHAT IT COSTS

Whether you are new to federal procurement, a ‘head-banger, or one of the lucky; you must be prepared to commit significant resources (Time + Money) to your firms’ sales program and also be prepared to wait at least one year for your first (or next) dollar of federal revenue. You are going to need a dedicated sales person and you can expect to spend between $80 to 250K for a guaranteed win. This is conservative, but a realistic management of expectations.

But you ask, “Why might it take this long and cost this much?” A: Because people buy in the federal market, not agencies.

Furthermore, getting through the door of an end user’s office (not a contracting officer) to establish relationships requires patience, persistence, and focus; and when you get there you must be prepared – you must be able to deduce what the problem is because nobody’s going to tell you. There is nothing sexy about making something out of nothing; you have to conduct research, make phone calls, and knock on doors; there is no way around it. The best contracting opportunities are the ones that are hidden. Ideally, an opportunity should be identified before anyone, including the customer, knows that an opportunity exists.

WHY SMALLS FAIL

The absence of experienced salespeople is the reason that so many Smalls fail in their quest to win government business. To play the game successfully you must study the FAR, figure out the unwritten strategies, get burned a few times, and win a few times. This takes time, money, and patience. If you’re not willing to (or can’t) make the investment, stay at home. The person you task with federal sales cannot dabble part-time in the endeavor and you develop a false expectation that results will magically materialize; it ain’t gonna happen.

Although there are many pitfalls for Smalls entering or continuing to grow in the federal arena, none is more costly or prevalent than the mistake of not adequately focusing on the relationship-building aspect of the sales process. Too many Smalls focus their energies on courting the contracting officer instead of getting to the person within the federal agency who will actually be using their product or service – the end user. Business goes to the vendors the end user trusts and this means putting in the effort to establish and maintain working relationships with targeted agencies; and this takes time. The salesperson’s goal is to establish a relationship, convince the end user there is a problem, and that your Small Business has the solution – its that simple.

THE KEY IS PRE-SELLING

You see, the key is pre-selling ‘BEFORE’ a bid comes out (which is encouraged in the FAR by the way); meeting with federal end users before a purchase is publicly announced.  Furthermore, you have to find out who buys what you sell, knock on their door, be prepared for rejection if you are unknown to the federal buyers, and then find a way to get around their resistance to newcomers. Why is this necessary? Because (contrary to what the SBA states) Full and open competition (even within the various small business programs) is not cost-effective and inherently lengthens the time required to make a purchase.

Beware though; end users are people trying to do their job. They are going to be more eager to meet with people who appear to understand their problems and may have solutions. They will figure out a way to avoid meeting with vendors who appear to be on a fishing expedition. A federal buyer’s entire career (promotions, salary, future opportunities) can depend on a contractor’s performance. Avoiding or minimizing risk is the primary reason that federal buyers favor incumbent contractors and large prime contractors – - it’s a “better the devil you know” kind of mentality.

INCUMBENCY IS THE HOLY GRAIL

Further to the point of incumbency; it is easier to break into fort Knox than to steal a contract from an embedded incumbent. In order to steal a contract from an incumbent, you would need ironclad agreements that key members of the incumbent’s staff, especially the project managers, will join them and work on the contract. You would also need to have a plan to retain all of the incumbent’s staff and a foolproof plan for replacements just in case a few decide to leave; and even this might still not be enough. The reality is that the federal buyer wants to get the deal that works best for him and his superiors. From a federal buyer’s perspective, a good deal is one in which risk is minimized.

So the question each Small should ask is whether it has been aggressively pre-selling the opportunity and has personally met with the customer. If the answer to this question is “no,” then don’t waste your time and money bidding on a contract that is open to the public. It isn’t, they’re most likely wired to an incumbent or a firm that ‘did’ pre-sell. Furthermore, don’t bid on a public procurement if you haven’t done significant advance research. A bidder must have all of the background information in order to understand the nuances of the deal. There is always a back story and the vendor which eventually wins the contract will have uncovered all of the intelligence well in advance of the posting of the bid.

THE CURRENCY OF A SMALL BUSINESS SPECIALISTS IS YOUR ATTENDANCE

Finally, direct sales are, to say the least, difficult when you do not have network contacts and established relationships. This is the single biggest deterrent to businesses entering the market. And, let’s put this baby to rest: government small business specialists or Congresspersons are usually not going to be able assist you. Members of Congress are not motivated to help a particular Small win a contract unless the exercise is directly connected to more votes or money – can you handle the truth?

Contrary to what they tell you, small business specialist advocating the use of small businesses and promote the use of small businesses as a policy; they are not motivated to help a particular Small win a contract. Regarding government-sponsored vendor conferences; although the buyers are there, end users don’t usually attend. You might make good contacts, but don’t count on it.

THE EX-GENERAL IS EXPENSIVE

Regarding the practice of federal employees moving to the private sector, or the “hire the exgeneral” syndrome; the practice is perfectly legal as long as the former federal employee does not work directly with their former agency for a period of one year. However, the downsides of using former federal employees to help win contracts are (i) it can be a much more expensive way to sell, and (ii) it is inherently difficult to measure whether or not the former federal employee really helped or is just blowing smoke about the strength of their federal relationships.

So in sum, Business goes to the Small that the end user trusts and this means putting in the effort to establish and maintain working relationships with targeted agencies. This can only be accomplished through “Direct Sales Calls”, there’s no magic bullet or shortcut that makes the endeavor easier. It takes ‘Imagination’, ‘Patience’, ‘Persistence’, and ‘Focus’. If you have these, and are willing to make the investment, we can help.

www.aljucar.com

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