How to Get Government Contracts for Women, Minorities, and Small Businesses

Many entrepreneurs such as myself create businesses out of a need. Some people are just tired of working at their jobs. Some people are really great at something and decide to be an accountant or a management consultant. But the problem that many entrepreneurs face is that they don’t necessarily know all of the other challenges they’re going to encounter.

The government provides a number of resources to help entrepreneurs make the decision as to whether or not having a business is for them. It teaches them, free of charge, what they should be looking at, how they should scale up, and those types of things.

I think about the Small Business Administration (SBA) as an example. Right on their website, they have a number of online courses that a potential business owner can take to see if starting and launching a business is right for them. It covers everything from finance to marketing and those types of things.

Using the government as a resource, since it’s a service that’s provided free of charge, is a really important first step. You just don’t know what you don’t know when you’re starting a business.

Free Money For Small Business?

It’s a common myth, and I just want to put it out there, that there’s all this free money out there for small businesses. That’s not necessarily true. Various different types of government agencies offer grants to small, minority- and women-owned businesses. Some of those grants are in the form of education. One of the clients I work with is a women’s business development center, and they offer grants for startups in which you have to participate in a business plan program.

Other government agencies offer grants in an area that might be economically depressed, or they offer grants for training. It’s not about “Let me start a business and then find money to operate a business.” That’s not how it necessarily works. When you start the business, it’s using the government as a resource to say, “Okay, what does the landscape look like? What’s out there? What kinds of programs can I take advantage of?” Getting the grants could be in the form of free training.

For example, I’m part of a program right now that’s largely funded by grants. I’m working with an organization called the Harlem Commonwealth Council, and I’m participating in a program called the StreetWise MBA™ program, which is a growth strategy program for entrepreneurs — it helps them scale up their businesses. The entrepreneurs participating in the program are not paying for it. There’s a cohort of about 20 people in the program. The course is sponsored by private entities — and the government — to support small business growth.

Certifications and Why You Need Them

In various different aspects of government contracting, there are certifications designed to increase opportunities for different types of groups. One in particular is women-owned businesses. The federal government has this certification for women-owned businesses called the SBA 8(m) Women-Owned Small Business Program, which is a self-certification for women who own and control their businesses. In order to qualify, the business needs to be 51 percent owned and controlled by women (along with other criteria).

I want to focus on why the certification is important. Typically the federal government has awarded a little less than 5% of all government contracts to grants for women-owned businesses. The purpose of the certification is to create an environment where women-owned businesses are more visible and have greater access to government contracts. That’s one aspect.

City and state governments have similar programs. Look at the landscape. I use New York LLC as an example. Look at the number of government contracts that are awarded. Studies have shown that contracts have not been equally dispersed to minority- and women-owned businesses. Having the certification makes us visible to these agencies so that we can compete for government contracts.

A lot of minority- and women-owned businesses are small businesses. Governments tend to buy in bulk; they buy things at a larger scale. Smaller businesses have a more difficult time competing for the business. When you get certified, it helps you to compete so that you can be visible. New York state, for example, has a 30% goal — and so does the city — to award contracts to minority- and women-owned businesses. So the fact that you’re certified opens the door to opportunity. It’s worth exploring your local government.

How Local Government Can Help You with Your Business

Local government sometimes doesn’t have to be the big federal agencies. Local government is also your libraries, your schools.

Then look at where you are right now. Boston has goals for minority- and women-owned businesses, so if you want to pay in those programs that have goals for minorities, then yes, you need to be certified. But there is no requirement in any government agency to be certified in order to bid.

Knowing that so many businesses fail in the first five years, it’s important for people to start thinking about what resources are available to them. The reason that the businesses fail is because of lack of access to capital, which all of these government programs are talking about creating a solution for. They have community-based lending programs, education programs, and credit repair programs so that you’re not out there on your own trying to figure this out.

Government Training Programs for Small Business Owners

In my opinion, this is just a really important step one. Government agencies also provide training. The other reason a lot of businesses fail is because of lack of expertise. Even if you’re a really good accountant, there’s is a very strong possibility that you might not be a good operational person or a good marketing person.

Having access to information about what you need to do and where you can get access to people who can help you with this is important. You don’t want to have the mindset when you’re about to start a business that you’re great at accounting yet you keep yourself in a bubble, especially when all of these resources are available to people free of charge.

Working with government simply means taking advantage of programs that are in place right in our own backyard. Let’s start with the Small Business Administration. That’s an entity whose entire focus is helping small businesses grow. You don’t have to be a nonprofit. You can be a regular citizen looking for opportunities to grow your business.

The one thing I can tell you from personal experience in working with the government is that getting a government contract helps a business to scale. It’s part of a strategy people can use to increase their revenue.

Transparency in Government Contracting

The thing about government contracting that I absolutely love is that it’s designed to be fully transparent. As a regular citizen in Boston or New York or anywhere, you could go onto your local website and you could figure out when projects are coming up, whom products have been awarded to, and — through accessing resources like the SBA, the Procurement Technical Assistance Centers (PTACs), and agencies like the Women’s Business Development Centers (WBDC) — you could develop a strategy to identify what projects are going be a good fit for you and strategically go after them.

I think a lot of people get frustrated with the process because they think that it’s rigged or the project is just awarded to someone. The bottom line is that successful government contractors spend time and resources in marketing their services to specific agencies. There’s a relationship factor that’s a part of it, as well. Government people are regular folks, so they like to do business with people they know, like, and trust. So in doing business with the government, there’s a marketing aspect to be considered.

My Entrepreneurial Journey

In probably the early ’90s, I had a security guard company with my parents. We had five security guards at the time. We bid on a contract with what is now ICE, the U.S. Department of Immigration and Customs Enforcement. We won a contract that enabled us to hire a hundred people. I thought about the company. If I was going to scale up to the degree that I would have to hire people, that’s an enormous undertaking, whereas pursuing government contracts was a strategic way that we could scale up.

The first advantage was that we were able to add employees almost immediately. When you’re dealing with federal, state, and city contracts, they also establish minimum wages for people. In the case of the federal government, they establish minimum wages and benefits. We were able to impact our community almost immediately by hiring people at good salaries with good benefits. Then we were able to duplicate that with other contracts to eventually get us to 500.

So for me, it was a way to thoughtfully scale up. Also, if you’re doing a good job, government contracts are typically multiyear contracts, so you know that you have a one-year contract with the government that has option periods — three option periods — so essentially it’s a four-year contract. That, for me, was a great way to scale up and have an immediate impact. If I had to do that a different way, it would have involved a lot more touches to different clients and prospecting and things like that.

I have a business now that offers professional services, and it’s the same thing. When I first started the professional consulting business, I was seeing individual clients one at a time. When I got the business to a certain level, when I started adding government contracts, I was able to have a broader reach. I was able to more effectively manage my factors that affect cash flow and my revenue because I got multiyear contracts. I knew when they were expiring. I knew how much cash was coming in each month. I was able to use those contracts to scale up.

How the Federal Government Can Help You Scale Up

Interestingly, on the federal side, the federal government has very specific goals for small businesses. A percentage of all the contracts that the federal government has are set aside or earmarked for small businesses. The federal government has contracts called total small business set-asides, which are exclusively set aside for small businesses. They have the Women-Owned Small Businesses (WOSB) certification, which is limited to women who are certified as WOSB.

This might be relevant to a lot of the young entrepreneurs or the startups out there that are by themselves — they have a business of one. Look at smaller projects within the government. When I got my first government contract as a professional service — not a security company but as a professional service — I had to hire somebody immediately. We scaled up immediately. It just makes you more efficient and better. At the same time, you’re putting systems in place to ensure that you’re providing high-quality service as well as adding benefits and vacations. You change from being the sole entrepreneur into a company. It’s a great thing.

The biggest takeaway is to start with the SBA. Start with SCORE (Service Corps of Retired Executives). Even if you’re a business of one, you’ll have a partner you can go to for expertise. SBA, SCORE, the PTACs (Procurement Technical Assistance Programs), even businesses like mine — we’re seeing hundreds of entrepreneurs. Not only do we have our own subject matter experts, but we’re learning from everybody around us so that we can provide clients with tangible steps to grow their business thoughtfully, like managing their credit and thoughtfully adding an employee or virtual assistant.

Tip number one is getting out of your own way. If you’re like most entrepreneurs, you’re really good at doing something and this lightbulb goes off and you start saying, “Wow, I could be a great consultant.” That’s the wrong way to approach it. You really need to think about how your products and services will be utilized by the government or another buyer. It’s not so much what you want to do; it’s what people need. What does the government need and how does your product and service fit into that environment?

The second big tip is to get control of your finances, sooner rather than later. I see many entrepreneurs trying to get government contracts, but they haven’t really thought about how to finance those contracts or what they’re going to do. Have a strategy or business plan around how much money you’re really going to need to spend in order to acquire your first government contract — or your first clients, period. Have some type of financial strategy.

The last tip is this: Don’t think about doing it alone. If you’re going to build a business for longevity, for success, that you’re going to be able to pass on to your children or you’re going to be able to sell eventually … start thinking about not creating a job for yourself but creating a real business. This does involve at least outsourcing something to someone else. When I first started, I worked with a virtual assistant because I realized that if I was going to do what I needed to do, which was consulting and sales, I did not have time to do some of the necessary things that I needed to do to run my business, like invoicing my clients, following up on phone calls, and managing my email. If I was going to take that on all by myself, nothing would ever get done. Know that out of the gate and set aside a small budget. I created a small budget for 10 hours per week for a virtual assistant who helped me grow my business.

Those are my top three tips.

Entrepreneurship is a team effort

Entrepreneurship is the way that people can change their circumstances. As an entrepreneur, you can create your own salary. You create your own reality.

Sometimes, having a job limits you. Not that there’s anything wrong with having a job, but as an entrepreneur, you have the opportunity to create something special and unique — not only for yourself but for your family and for your community.

My last bit of advice is don’t go it alone. Take the time to ask for help and explore what resources are available to you as a taxpayer so that you can live your dream if entrepreneurship is something that you really want to do.

A small business and MWBE growth specialist, advocate, executive coach, and trainer, Jean Kristensen is a woman on a mission to help others achieve their mission. Whether mentoring budding entrepreneurs, developing growth and marketing strategies for small businesses, or consulting government agencies or prime contractors on fulfilling participation goals with qualified vendors, she is uniquely skilled at supporting clients to help them reach their next level of success with measurable improvements and increases in revenue.

Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.