The Most Common Mistakes in GovCon and How to Avoid Them
There are a lot of opportunities for mistakes in government contracting, and you wouldn’t be the first, or the 1000th, business to make them. The good news is that, with a little knowledge and preparation, you can avoid many of the more common roadblocks that take contractors from thriving to struggling.
Here’s a look at five of the most common errors in government contracting and what you can do to prevent them:
Poor Internal Control Structures
Success in the world of GovCon means having intelligent processes and procedures in place for the handling of contracts. These internal control structures should be regularly monitored and must include a compliance program to ensure that all policies are being followed. This will help you spot potential problems early on, before they become larger issues.
Having proper internal control structures is a way to safeguard both your business and the government from mistakes, mishaps, uninformed decisions, and inappropriate actions by any employees or team members.
Winning government contracts can often require business owners to beef up their operations, which means added overhead and operational expenses. Before committing to a contract, ask yourself if you can handle the workload.
While taking on and completing more projects is great for your portfolio, it can quickly become overwhelming if you don’t have the resources to manage them all. Asking yourself questions such as “do I have enough capital?”, “do I have the right personnel?” or “am I able to meet the delivery timelines?” will help you make sure that you are not taking on more than you can handle.
Remember, doing a great job now can and will lead to more contracts down the road, but taking on too much too soon is a surefire way to stop your growth dead in its tracks.
Bad Capital Structure
In order to adequately finance a contract or an expansion, you will need to have the right capital structure in place. This requires careful analysis and planning, as failing to take into account potential risks can lead to costly results.
As we mentioned above, taking on new government contracts will have a direct impact on your company’s cash flow cycle. That means that your capital structure needs to be able to both support growth and sustain an entire operation until the government pays you.
Lack of Reserve Funds
Contract awards are often accompanied by unexpected costs associated with the project. There will be times when you have to pay out of pocket unexpectedly while executing contracts, fulfilling orders and meeting demands. That means you should always expect and plan for the unexpected.
Having a reserve fund in place to cover any unanticipated expenses will help protect you from running out of capital or having to pass on potential opportunities due to lack of funds. There’s nothing that will lose your GovCon business credibility faster than failing to complete a contract, and having reserve funds available will allow you to confidently take on contracts knowing you won’t be left out in the cold if something unexpected pops up.
Underestimating the Competition
There’s a good chance that your competition has already built relationships with government agencies, prime contractors and contract specialists. Unless you have been in the game for a while, it’s likely that you will be at a disadvantage when competing for contracts.
To even the playing field and successfully compete against larger companies, it is important to research your competition, including their past successes and failures as well as their existing client relationships. You should also leverage any industry contacts or connections you have to get a better understanding of what it takes to win contracts.
Remember that nobody wins a government contract just on the merit of their charm. Contracts are earned. If you’re not willing to take the time to learn about customers and potential partners, you can be assured that your competition will.
BOOST Can Help You Prepare for and Overcome Common Mistakes
At BOOST, we have the experience and knowledge to help you navigate the government contracting process. We’ll work with you to identify potential risks and develop strategies to minimize their effect on your business.
Our mission is to help small to midsize government contractors with their back office needs so they can focus on the more pressing and rewarding aspects of the business. Whether you’re looking for help with accounting, human resources, or contract negotiation, we can help you get back in the game, and our team is here to answer any questions you may have.
Contact us today to find out how we can help your business grow. When it comes to government contracts, mistakes don’t have to limit your growth – they just need to be managed properly. With the right resources, and maybe a little help from our experts, you can ensure that your GovCon business will thrive for years to come.