Does 2015 Belong to Small Government Contractors?

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The New Year almost always brings reflection and planning. What did I do right in 2014? What did I do wrong? What should I do different this year? In the end, your success is often heavily influenced by outside factors. You can try new things and re-focus your attention in new markets, but in the end if you haven’t had your ear to the ground then you don’t know what is coming, and your planning is futile.

I have been making more of an effort to read more and stay tuned into current events. And, everything I read is saying that 2015 will be a blockbuster year for Small Businesses. So, I will focus that projection in on small business government contractors (Small GovCon’s for short).

Why They Say Small Businesses Will Prosper in 2015

The stock market seems to break record highs every month, Unemployment has dropped to a 6-year low, and the availability of credit is seemingly recovering.
There are articles everywhere talking about the expected economic growth in 2015, but what is supporting these predictions? Here are some of the big ones.

 

[box type=”shadow”][three_fourth]“The six years since the financial crisis have demanded hard work and sacrifice on everyone’s part. But as a country, we have every right to be proud of what we’ve got to show for it: more jobs, more insured, a growing economy, shrinking deficits, bustling industry, booming energy, … Pick any metric you want — America’s resurgence is real.”

– President Obama[/three_fourth][one_fourth_last]obamatalking[/one_fourth_last][/box]

Economic Upturn – Recent growth and stability in the stock market has rebuilt trust in financial institutions among Americans. We are starting to feel that our retirements are safe again, and we are psychologically ready to spend more in 2015. Time magazine reported that 81% of Americans are satisfied with their current standard of living, and that over 60% believe it’s improving. Pair this with dropping gas prices, and a growing employment rate, and America is primed for an economic comeback.

Advantageous Political Factors – Under the 115th Congress, there is some very beneficial legislation expected. The Republican-led Armed Services, Foreign Relations and Intelligence committees wield significant power over defense legislation. And, an increase in the needs of goods and services from government contractors is expected to grow in 2015 for the first time since the collapse.

Additionally, Small Businesses grow in optimism when they feel that they have a government that “has their back.” And, Republicans are seen as champions of business. One example is the potential of a political fight over ObamaCare’s negative impact on Small Business.

Polling Says Small Businesses are Optimistic – It was only a few years ago that half the small businesses in the U.S. reported concerns about going out of business. Now, 95 percent of small business owners surveyed expect to grow their revenue in 2015. Over half of Small Business owners polled expect to grow more than 20% this year. Small businesses employ 57 percent of the U.S. workforce. So, it stands to reason that the growing jobs numbers are being driven by Small Business growth.

How Small Government Contractors Should Prosper in 2015

This is all good news for Small Businesses in general, but how about those with a focus on Federal Contracting? We will now take a deeper look at the factors affecting Small GovCon’s in 2015.

Set Aside Goals Are Being Met – Federal Agencies are assigned minimum requirements when it comes to utilizing Small Businesses, and other set asides. HERE is a report of the progress in 2014, and HERE is the real-time statistics for 2015. You will see that these goals are actually – more or less – being met. This means that 23% of contracting dollars will reliably go to small businesses in 2015.

[box type=”shadow”][three_fourth]“When we hit our small business procurement target, it’s a win. Small businesses get the revenue they need to grow and create jobs, and the federal government gets the chance to work with some of the most responsive, innovative and nimble companies in the U.S. while the economy grows,”

– SBA Administrator Maria Contreras-Sweet[/three_fourth]

[one_fourth_last]mariacs[/one_fourth_last][/box]

The GSA is Supporting Small Government Contractors (kind of) – There is a re-vamped Small Business Assistance area on the GSA’s website with an abundance of resources. In 2014 the GSA started a series of Small Business Development Fairs in order to connect businesses to the products and services that GSA customers need. The first of three events will be held in March, and the next two will be held in the Summer and Fall of 2015.

Since 2014 there have been a wave of GSA Contract Cancellations due to lack of sales. This may be arguably a targeted assault on small businesses because it is the Small GovCon’s that have less sales ( for example: SAIC is not at risk of losing their contract). However, this does have a positive effect on Small (and Large) businesses, in that it will free up GSA resources to better serve the active Contractors.

Also, the consolidation of GSA Service Schedules is a win for small businesses. A Small GovCon will no longer have to stretch their budget to secure multiple service GSA Contracts, but will be able to better compete on larger integrated opportunities with Large GovCons.

What About Small Business Lending?

Growth is notorious for costing money, and many Small Government Contractor’s are still running on fumes from the recession. So, this makes lending a vital tool in the success of Small Businesses in 2015. Small Business Loan options are still lacking, but it appears that they are improving.

[box type=”shadow”][three_fourth]“While a majority of small business owners are optimistic about growth, we are seeing concerns about being able to access needed capital, …”

– Daniel DeMeo, CEO of CAN Capital[/three_fourth]

[one_fourth_last]dandemeo[/one_fourth_last][/box]

[box type=”shadow”][three_fourth]“Loan demand is certainly increasing as the economy improves. Across the board, bankers are seeing a rebound in credit applications for small-business loans. But the paradox is that banks are not in the position to fill that need to the extent they have been in the past.”

– Ted Zoller, director of the Center for Entrepreneurial Studies at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill (WSJ Interview 11/3/14)[/three_fourth]

[one_fourth_last]TedZoller[/one_fourth_last][/box]

However, there are some reports that access to credit is improving. Recently, the Small Business Administration (SBA) reported that 2014 loan volume was up approximately 15 percent in comparison to the previous year. The large number of Small businesses, whose growth is due to a supplier relationship with Large Businesses, has driven this uptick in loan volume.

What Does This All Mean?

Taking all these projections into account, I have made a projection of my own. Small Businesses in the federal market will succeed in 2015 overall, but those with (1) established relationships and (2) a storage of resources will have a banner year.

The Contractors who succeed will have a healthy supply of human capital and cash for strategic expansion. There is so much to federal revenue growth: contract management, business development, and of course the fulfillment of contracts.

Contractors with an established network of government buyers, along with IDIQ’s like a GSA Contract, stand to gain the most because they are already a trusted source for Government Buyers. These companies set their course long ago, and their planning and perseverance will pay off. Many Small Business in 2015 will likely be considered Large Businesses in 2016.

This is not to say that Small Government Contractors cannot emerge into the Federal Market. They will just need to be agile and smart with their time and resources. I have recently partnered with an industry giant to develop the FedFocus Marketing Plan, which allows a Small Business to gain years of experience in only a matter of weeks. GSA Focus is also available to GSA Contract Holders that desperately need to update their GSA offerings. To learn more about this Schedule an Appointment to talk to me directly.

Sources

http://web.governmentcontractors.org/content/news/Contracting_outlook_brighter_under_114th_congress.aspx
http://www.inc.com/jeremy-quittner/small-business-scorecard-results-2014.html
http://time.com/3677789/america-economy-optimistic/

 

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