Benefits of Becoming a Government Contractor for Start-Ups

There are several buzzes about becoming a government contractor and entering the government contracting market. And for a good reason: in 2020, the government spent $665 billion on contracts. 

When you consider that 2020 was an unprecedented year because of the COVID-19 pandemic, it’s clear that government contractors are a vital part of the very structure of the American economy.

As a start-up, getting a slice of that pie can be overwhelming. There are so many processes, regulations, and certifications that you’ll need to navigate.

The return on investment for your rising business can be a game-changer if you overcome all these challenges. 

Here are four benefits of becoming a government contractor for start-ups:

1. Access to New Markets

When you become a government contractor, you can access new markets otherwise unavailable to start-ups. Government contracting is a great way to expand your business and networking opportunities. 

In addition, government contractors often have the opportunity to work on high-profile projects that can give their business invaluable exposure.

When just getting off the ground, the proper exposure can accelerate your business to the size you want to reach in a shorter time.

2. Guaranteed Payments

As a start-up, you may not have the cash flow to fund yourself through slower seasons or cover unexpected costs. 

But government contracts guarantee payment, so you don’t have to worry about going without a paycheck during the most austerity-prone times in your career.

Your business will get on a solid financial footing sooner if you do this.

And whenever that payment from the government is unavailable, you can factor the money into your business. By factoring government contracts, you can get working capital when you need it most without offering personal collateral or pledging personal assets such as your home to secure the funding.  

That frees up your time and helps you focus on what matters: growing your company and creating more opportunities for your team.  

3. Guaranteed Work

Knowing that you don’t have to look for new clients weekly goes a long way toward making your business less stressful and more productive. A government contract is an asset for a start-up because they come with certain guarantees. 

One of those guarantees is access to work. As long as you meet the required qualifications, the government will hire you for term-time contracts, so you never need to worry about being out of work.  

The guaranteed work that comes with government contracts also makes it much easier to manage your cash flow and plan your strategy for growth because they are typically longer-term (1-3 years) contracts that make budgeting more stable and predictable. 

Also, If you continue to meet and surpass expectations, you will get a contract renewal, which also gives your business more stability.

4. Potential for Growth

Government contracts lend themselves to growth, and scaling your business is easier than you think. The processes and regulations that go along with government contracts are designed to help enterprises expand.  

When your company grows larger and needs more workers, government contracts make it easy to hire more staff because the government will reimburse you for the additional costs of a larger workforce. 

In addition, the government may require you to hire more employees in specific regions or fields your company specializes in to increase workplace diversity. In that way, government contracts help create more opportunities for growth and higher profits for your employees.  

When you become a government contractor for start-ups, the possibilities are endless. But there are some challenges to overcome along the way. Thankfully, there are resources to help you navigate the maze that is becoming a government contractor. 

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.