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Why Small Biz Should Love Government Contracts

By Andrew Chow, Esq. | Last updated on

For small businesses, government contracts can be a lifesaver, especially in a struggling economy. What are the potential benefits and drawbacks, and how can business owners get a piece of the pie?

A wide range of government agencies -- local, state, and federal -- seek bids from private companies to handle a variety of tasks. These include construction projects, some administrative services, and the collection of fees like parking tickets.

On the "plus" side, government contracts can offer small business owners some advantages over "regular" customers. For example:

  • Government entities generally pay their bills promptly, according to Bloomberg Businessweek.
  • Government entities can often be considered more "stable" customers, since they're contracted to use your services.
  • Small-business government contracts can often result in repeat business.

But there are a few potential drawbacks, mainly in the process of winning a government contract. The process "takes a lot of due diligence, it's an uphill battle, and it will cost you money," one government-contracting adviser told Bloomberg.

So how do you land a government contract? Here are some suggestions:

  • First, look for opportunities. For the federal government, a website called offers a searchable database of available contract opportunities.
  • Get priority treatment. Certified "small, disadvantaged businesses" generally get priority, but certification costs about $3,500 and takes eight months, Bloomberg reports. Female- and minority-owned businesses often also get priority.
  • Subcontract with a larger company. This may be easier, as you reap the rewards of a small-business government contract but "without the headaches of regulatory compliance," the CEO of the U.S. Women's Chamber of Commerce told Bloomberg.

Whichever route you take, it may be wise to consult with an experienced local business attorney to make sure your small business' government contract is the best deal for you.

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