BD Strategies for Building the Exit

In this month's Federal Growth Report we focus on marketing strategies for small business government contractors. The small business owner/manager has limited resources and needs to balance how they utilize their networking and relationship building time, marketing dollars and bid & proposal staff. The small business may often determine that the best strategy is to focus these resources on what has been successful in the past. Frequently this means continuing to invest in a small business/preferential strategy. This can yield short-term contracts while undermining long-term sustainability.

A business must balance the near-term requirements with the long term needs, goals and objectives. If the company uses a preferential status to compete, what happens as the company reaches its graduation from that status? How will the company compete then?

The owner/manager must invest in positioning the company to be able to compete full & open when it can no longer use its preferential status. The answer seems surprisingly obvious, but frequently companies fail to invest early enough to be prepared for the transition to full & open when that time comes.

The first step is to establish how much time remains before the company must compete full & opne. The company has visibility into the end of its tenure in the set-aside program. If the company enjoys only small business, it has a three year traveling average to manage, and should have full insight into when the revenues begin to reach critical levels. And clearly, an 8(a) knows how many years it has remaining in the program.

The second step is to know what it takes to compete full & open. These include niche capabilities, experience as a prime contractor, strong relationships with key agencies, high CPARs, and performing highly valued or mission critical solutions. Additional considerations are financial or contract in nature: holding other vehicles where the KO can move monies to, building the infrastructure that complies with DCAA standards, and having the reserve capital that allows for aggressive pricing strategies.

The third step is assessing where the business is today and what are the gaps between the current and the required future structure.

A contractor must have a growth strategy that takes the business from current operations to full & open. If not, the company falls off the cliff upon graduation. This growth plan, if done correctly, will shed light on the types of contracts and opportunities the business development team should pursue.

The resulting business development plan may require pursuing opportunities outside of the comfort zone of company. Positioning the company to compete full & open will likely be a dramatic change from the current business. The changes in corporate direction can be a harsh reality for the team currently in place, both in operations and BD. Frequently it will mean that managers will have to stretch. And often, this means that owner recognizes the need to bring in additional support to augment the current team. Sometimes it means replacing the current team.

It becomes a challenge for business owners to dedicate the energy to assessing the business, the willingness to forego current year contracts that may be easier to pursue, invest bd dollars towards lower probability but necessary wins, and the emotional burden of replacing your management team. However challenging, the alternative seems worse. Reaching the end of the preferential status with capabilities and infrastructure not positioned to win new work most frequently results in laying off significant number of employees or shutting down operations all together.