October 21 2005 Copyright 2005 Business Research Services Inc. 301-229-5561 All rights reserved.
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By Tom Basile The federal government is lucrative, no doubt. Federal IT spending is at it highest level in years. Spending for fiscal year 2005 exceeded $60 billion and spending in 2006 is expected to be higher. However, just because the federal government is spending considerable tax dollars on IT initiatives is not a good reason for entering the federal market. Nothing happens quickly in Washington or for that matter anywhere else across the national federal landscape. If you believe you will reap the benefits quickly, you are mistaken and you may want to reconsider. There are many considerations for deciding to “invest” in the federal market. The federal market offers companies many of the right reasons for pursuing business. There are significant numbers of large-scale contracts being competed on a regular basis. Some are open to companies of all sizes while others are restricted to small businesses only. This category is further restricted by type of small business, for example, service-disabled veteran-owned companies. One thing is certain or at least close to certain: revenue is consistent and recurring. This means stability for companies that have experienced the ups and downs of the commercial marketplace. And yes, federal business is profitable just like commercial business. One other important reason for companies to consider selling in the federal market is diversification. The federal market is less volatile than the commercial market. The federal market offers companies an opportunity to spread their risk and lessen the impact of changes in the market. As a bonus for doing government business, successful contractors are significantly more attractive acquisition targets for larger companies wishing to gain a foothold in technology different from their own. With all this said, take the time to fully understand the federal market. It does require a different business model. Build a plan, follow the plan, focus and be patient. Success is measured in nine to 18 months, not 30-60-90 days. So these markets are not for the faint-of-heart. (Tom can be reached at www.senecacreekconsulting.com.) |