- June 24, 2019
- Posted by: Asheesh Sinha
- Category: Business plans
The government can be an ideal client given the right situation. As a small business owner just starting out, you may ask yourself, “Is it wise to start contracting with the government?” To find the answer for your business, there are multiple factors to consider. Keep reading to learn about some of the most important ones.
It Can Be Hard Meeting Quotas
The federal government is a huge client if you can land a contract. However just starting out in your new business, you may have already invested a fortune just to become operational. When becoming a government contractor, your supply must meet the demand of your product. The government also has specific rules that dictate how and if you can source additional supplies from other suppliers specific to that product. Your business also needs to be scalable, and quickly if you wish to maintain your contract, which can be adjusted at any time.
You’ll Need More Security
Even handling unclassified information is heavily regulated (under NIST 800-171 specifically), so how you handle data will likely have to change. Access control limitations will need to be established limiting only authorized users’ access to data on a need-to-know basis only. Password complexity and multi-factor authentication must also be in place to access each system. In addition to access control, the government also requires small businesses to maintain audits and produce them on demand. While commercial audits are governed at state level, government audits are governed at the federal level. Therefore, falsifying documentation or obstruction can be a federal crime and prosecuted as such.
Government vs. Commercial Contracts
Unlike commercial purchasing practices, federal government purchasing is governed by the Federal Acquisition Regulation. Distinctly in the FAR, there is a “termination for convenience clause” whereas the government can cancel your contract at any time even in the midst of delivery which can cause a huge financial loss for any small business. There is also a clause known as the “changes” clause. A commercial contract has to be unanimously approved for changes. The federal government, however, can make changes without business approval.
The federal government without question is a great client and can provide consistent revenue. However, as a small business owner, you will need to decide if your business is prepared for the many risks and standards involved in maintaining a federal contract.
If you’re going to work with the government, you’re going to need a good plan. If you are just starting your business and need help making a business plan, let us help you. Check out our affordable rates!