Government Contracts: The Ultimate Guide for Beginners

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Government Contracts: The Ultimate Guide for Beginners

If you’re struggling to make money in your business, there are many options out there for you to bring in more cash. Even if you’re making good money

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If you’re struggling to make money in your business, there are many options out there for you to bring in more cash. Even if you’re making good money in your business, there are ways for you to continue to level up your income

One great option is using grants to grow your business. Grants can really help you pay your employees, pay for operational expenses and invest in your business growth. However, grants aren’t the only way to grow your business.

In addition to grants, government contracts are a great way to scale your business and make more money. While many entrepreneurs haven’t considered utilizing government contracts, it’s not too late. 

Why You Need Government Contracts

The government is a great customer or client to have. Did you know that the US government is the single largest procurer of goods and services in the world? They spend over $500 billion annually. Chances are the government will need your goods and services. If you use it, then the government buys it. 

Right now is actually a great time to provide a product or service to the government. According to the White House, the federal government intends to grow federal contracting with small disadvantaged businesses by 50 percent. That means the federal government will be spending over $100 billion over a five-year period. 

So what does this mean for you? You can get greater access to government contracts, particularly if you’re a small and disadvantaged business. These contracts can really keep your business afloat and catapult it into a more profitable one. 

What You Need to Get Government Contracts

The government is looking for your goods and services, but you can’t offer them if you’re unprepared. There are two ways to start preparing for government contracts. Here are some simple steps to follow:

1. Make sure your business is registered

It goes without saying, but the government won’t want to work with a business operating illegally. Register your business officially and make sure you’re on top of your taxes.

Before registering your business, ensure you’re clear on the business name and structure you want. 

According to the SBA, the business structure you decide will determine:

  • how much you pay in taxes
  • your ability to raise money
  • the paperwork you need to file
  • your personal liability

After registering your business, it’s time to apply for your Employer Identification Number (EIN). Your EIN is your federal tax ID. You can apply for it for free using the IRS assistance tool

If you have to pay state tax, you’ll need a state tax ID. The requirements vary by state, so check with your state. 

government contract picture- people are sitting down using their computer

2. Certify Your Business

Get certified if your business is Black-owned, veteran-owned, women-owned, or otherwise minority-owned. You can get certified at the state level and the federal level. The certification proves that your business is verified and you’re owned by who you say you’re owned by. The government appreciates having this information verified, and you will have access to many massive contracts. There are specific contracts set aside for minority-owned or women-owned businesses.

You can get certified by the Small Business Administration or by a third-party service.

3. Get a DUNS Number

You’ll need a Dun & Bradstreet Duns Number for each physical location of your business. Your Duns number, also called a D&B number, is like your business’s social security number. 

Your Duns number is great for getting your business’s credit report to apply for funding. However, they’re also required for government federal contractors. 

You’ll be able to get the number for free online using the DUNS request service

For a list of requirements before you apply, check out the SBA’s list. 

4. Look Up Your North American Industry Classification System (NAICS) Code

The NAICS code will show your business’s industry, country, and economic sector. This is important if you want to register your business for government contracts. You can look up the number here. 

If you sell various products and services, you may have multiple NAICS codes. 

5. Figure Out Your Business Size

If you’re a small business and you want to be certified as such, you’ll have to meet size requirements by the SBA. If you want to see if your business qualifies, you can check that out using the SBA’s Size Standard Tool. 

According to the SBA, “Most manufacturing companies with 500 employees or fewer, and most non-manufacturing businesses with average annual receipts under $7.5 million, will qualify as a small business.”

It’s worth noting there are some exceptions to that. 

woman using a tablet with handbags behind her on a shelf

6. Register in the System for Award Management (SAM)

If you want government contracts, you’ll need to register in SAM.

SAM is just a database with businesses that the US government maintains. To become visible to the government and get contracts, you must register as a government vendor in their system.

According to Fundera, when registering you’ll need to:

  • Complete your profile
  • Write your capability statement 

You should really sell your business on your profile. Make sure you accurately represent what you offer and why it’s awesome. 

The good news is that SAM is absolutely free to use. The SBA has a great guide to help you register that you can access here. 

In addition to all that we’ve just mentioned, you can also apply for a General Services Administration (GSA) Schedule contract. As the US Chambers of Commerce puts it, “Schedules are long-term, government-wide contracts between commercial suppliers and the government that allow you to sell to any federal agency.”

Getting a GSA Schedule means you’re eligible to sell to government agencies, so it’s worth investigating. 

Types of Certifications 

There are many certifications you can apply for to boost your chances of getting a government contract. We’ve already covered the 8(a) certification, however, for this post, we’ll be covering:

  • Minority Business Certification
  • Women-Owned Business Certification 
  • Small Business Certification 

Minority Business Certification

To get the minority business certification, you’ll need to contact the regional affiliate closest to you. 

To qualify for the Minority Business Certification, you’ll need to be:

  • US citizens
  • At least 51% minority-owned, managed, and controlled. To be considered minority-owned, the individual has to be at least 25% Asian-Indian, Asian-Pacific, Black, Hispanic or Native American.
  • Operating a for-profit business.
  • Operating a business physically located in the U. S. or its trust territories.

In addition, the management and daily operations must be done by minority members.

To apply, you’ll need to complete an application form, pay a fee, and submit the required documents. You’ll have to submit various documents when applying for the certification. However, the documents depend on your business structure. 

Afterward, an NMSDC Certification Specialist will come to your site, and eventually, you’ll be informed of the decision. You might have to wait about 90 days before you get a response. 

black woman smiling

Women-Owned Business Certification 

According to the US Chamber, the government aims to award at least 5% of its contracts to women-owned businesses. Contracts are also set aside for economically disadvantaged women in business. 

There are two different certifications you can get:

  1. Woman-owned small business (WOSB)
  2. Economically disadvantaged woman-owned small business (EDWOSB)

Woman-owned small business (WOSB)

You can get certified if you’re a woman with a small business. 

To be eligible for this certification, your business has to be:

  • For-profit
  • Meet the requirements of a small business outlined by the Code of Federal Regulations (CFR)
  • 51% unconditionally and directly owned by women who are U.S. citizens. The women have to be involved in the day-to-day operations of the business. They also have to be involved in long-term decision-making. The US Chamber says that women have to also work full-time during regular business hours. If you’re the only person working in your business, this applies to you, too. 

Economically disadvantaged woman-owned small business (EDWOSB)

In order to be eligible for this certification, you’ll have to satisfy all of the requirements for the WOSB. 

In addition to that, the US Chamber says the additional requirements are:

  • Your personal net worth be less than $750,000
  • Your adjusted gross income averaged over three years be less than or equal to $350,000
  • The fair market value of all assets must be $6 million or less

Remember, the following financial requirements are not considered:

  • Equity in business
  • Primary personal residence
  • Income reinvested or used to pay business taxes
  • Money invested in official retirement accounts as long as you can’t access them until retirement. 

Small Business Certification 

The small business certification was designed for small business owners who are socially or economically disadvantaged. 

According to the US Chamber of Commerce, in order to be eligible for the small business certification your business must:

  • Be at least 51% owned and controlled by U.S. citizens who are economically and socially disadvantaged.
  • Have the owners be involved with the day-to-day activities and long-term decision-making. 
  • Owners whose three-year average adjusted gross income is $350,000 or less.
  • Owners whose personal net worth is less than $750,000.

If you fit the criteria, then you can apply here

Where to Find Government Contracts 

Now that you’re certified and have all your affairs in order, you must be wondering where to find government contracts. You can either do this yourself or hire a bid service if you’re strapped for time. 

Here is a list of places you can find government contracts:

The SBA also suggests checking databases such as USASpending.gov and Federal Procurement Data System – Next Generation to get information. You can find out about federal contracts, who got the contracts, and procurement trends. 

government contracts

How To Bid On Government Contracts

Once you’ve identified the government contracts you want to bid on, here is what you do:

  1. Make sure that you can provide the goods and services required. 
  2. Research the closed bid information. This helps you see what other vendors may have charged for their products and services. You can also get valuable insight into what contractors are looking for. Here’s how you do that. 
  3. Prepare your proposal carefully. Ensure you provide what is asked of you and watch the deadline! Double-check all of the information because silly mistakes can cost you the contract. Don’t overcharge, but don’t sell yourself short. Finally, please don’t lie in your proposal because they’ll expect you to deliver what you say you will. 
  4. Submit and hope for the best. It can take months before you hear back from them, so don’t start worrying if a week goes by without a word. 

How To Use Government Contracts to Scale Your Business

First of all, scaling your business means preparing it for growth. Your business can grow so much from having access to government contracts.

Building Wealth

Having access to government contracts can help you build wealth. The first step of building wealth is making enough money. After, you let that money work for you. Besides reinvesting in your business, you can venture into investments, start other businesses and do so much more. 

Making a Legacy

You can do so much more for your community once you have the means to do it. You can start programs, have scholarships and really build a legacy that others would want to be a part of. How will you be a changemaker? 

We chatted with Karwanna about using government contracts to scale your business, you can check out the video here

Are You Ready for Next Steps?

There is no better time than right now to get government contracts. Your business is not too new to access these opportunities. There are teenagers getting government contracts and therefore so can you.

Even though there are many steps to follow, just carve out some time and do them. It will be totally worth it.

If you want to take your business to the next level with government contracts, check out MBE Certification Bundle: Stand Out, Access Contracts and Scale. In this certification bundle, you will learn how to get certified as a minority business owner and win contracts you bid on. In addition to that, you’ll learn just how to scale your business with those contracts. 

When you get your government contracts, don’t forget to let us know, we love to hear about your wins!

Share this with a business owner so they can start getting government contracts ASAP.

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COMMENTS

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  • comment-avatar
    Daphane 3 years ago

    Very professional blog thank you🙂

  • comment-avatar

    In 30+ years of self-employment/small business ownership, this is the easiest to follow step-by-step guide to getting started in government contracts. Thank you!

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