Establishing a plan for sales to the government may be the business opportunity a company needs to turn around lagging sales or expand the scope of its marketing footprint. In the most recent Journal for Corporate Renewal (The official magazine of the Turnaround Management Association), there is an interesting article on looking to government sales to pull your company out of a sales doldrums.
As someone who funded many minority and women-owned companies selling to the government when I owned a factoring company, selling to government entities can be both profitable and fraught with peril. First, figure out what you want to sell. Second, compute your dead costs FOB where the government entity wants the product or service. Third, do a budget with a great deal of “fudge factor” included to know your total monies out of pocket before you get paid. Fourth, even if you don’t need working capital, find a funder who has government experience to act as your partner for the first six to twelve months of transactions. Lastly, make sure you have enough gross margin after all costs (including the cost of funds) to make it worth your while.
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