Expanding into New Federal Markets: What You Need Before Entering
Have you ever wondered how well-known businesses achieve that notoriety? In business, expansion is necessary for survival. Whether that expansion involves customer acquisitions in the same market or new markets or adding or changing products or services - businesses must change to accommodate the market's needs. For those in a government contracting business development (BD) role, continual growth and company expansion are imperative, not only for the company but for job retention. Even though you may order (too many times a day) from Amazon, they still have competitors trying to infringe on their market share.
There is no secret sauce or one-dimensional approach for expanding into new federal markets. The state of the federal market is ever-changing. Having a sound framework for how you approach expansion and penetration within current, adjacent, and new markets can streamline your efforts to determine your best fit within a targeted space.
Typically, the three most common reasons a company wants to expand into new markets are:
- Increase product/service offerings to new customers
- Increase their level of competition with their competitors
- Satisfy existing customer's growing needs
Expanding into new markets is great when done the right way and for the right reasons. Without a sound framework and proper plan in place to enable strategic execution, it could end up doing more harm than good.
Questions to Consider Before Expanding Into New Federal Markets
Self-assessments are a useful tool to evaluate your readiness to expand your footprint in the federal market. Questions like, are you stable in your current addressable market, are there potentially untapped opportunities in your current market, do you have relevant and competitive past performance, are resources able to be reallocated without sacrificing current markets? Before contemplating entering into federal government contracting or growing your current business in the federal space, you should consider the following five points.
1. What Makes You Unique?
One of the most important elements of federal contracting is knowing your company's identification.
- What does your company do?
- What are your core competencies?
- What value does your company provide to your customers?
- What sets you apart from your competition?
The federal market is a complex environment. Without a strong understanding of what your business provides and how it fits into the federal marketplace, excessive struggles are inevitable. Focus on the value that you bring to your customers and teaming partners. Solely focusing on your capabilities is one-dimensional and can detract you from how potential partners and clients perceive your offerings and could impede your efforts to build desirable past performance. Just because you CAN provide lawn care services as a cybersecurity company does not mean you should. It detracts you from your core offerings and buyers will question whether you are actually capable to provide the services you proposed.
Strengthen your company's identity and develop a strategic plan around how your products/services best fit into the federal contracting market by researching targeted clients and competimates (business partners that will someones be your competition and sometimes be your proposal mates) to inform your actions and enable your business readiness to shift as needed because the market will never conform to you.
2. Who Buys What You Sell?
Currently, who are your federal customers? If the list is relatively long, you are already ahead of the curve. Building relationships is a crucial element to expanding into new markets. Utilizing relationships to broker introductions to other agencies' contracting officers, small business officers (OSDBUs), and potential partners to showcase your products/services is a great first step when thinking about expansion.
On the flip side, you need to conduct in-depth research to evaluate relevant data to gain an understanding of who else buys what you sell, when are they going to buy, and how they currently buy similar products/services. Do you have any socio-economic category certifications that you can leverage with other customers to help them meet their small business goals? Do you have teaming partners who have access to a contract vehicle used by the agencies you are targeting? The right market intelligence can make a world of difference in understanding all of these considerations and focusing your efforts. This is especially critical if you are a small business.
3. Is Your Timing Right?
The federal government's needs are constantly changing and evolving. A particular agency may need a particular product/service that is a one-time purchase that satisfies their needs for the next decade. If you missed out on submitting a response for this opportunity, influencing and meeting with this customer has the potential to have little to no return since they have already purchased what they need. Organizations that publish contracts may be satisfying a need that is long overdue. In this case, the likelihood of that opportunity coming up in the near future is few and far between.
Timing is everything. Having insight into potential recompetes and forecasts, recent awardees, opportunities for teaming/partnering, and developing relationships with contracting officers, program leads and OSDBU representatives can help make sure you are in the right place at the right time. Or at least in the right mind at the right time to be recommended, referred, or leveraged for an opportunity.
4. Are You Ready/Capable to Grow?
It is not uncommon to have big ambitions, especially in the GovCon space. However, when these ideas of grandeur blind you to the realities of your market and current status, it becomes a massive problem. As a business, you may not have the maturity to expand into new markets, let alone your current market. It also may be a lack of infrastructure- not enough employees to support goals, inexperience in certain areas, and/or lack of the appropriate qualifications to be competitive. Growth takes time and trying to jump too far too fast often results in failure.
If you are a relatively new federal contractor, expansion could still be years away. You may not have the credentials, access, or past performance needed to even get your foot in the door or speak with the right people to intimately understand the pain points of the environment you are interested in pursuing. In terms of credibility and partners who can support you, how robust is your portfolio in the federal space? Are you adequately funded to support the growth desired? In addition, depending on the agency, they may not frequently deploy acquisition strategies that are appropriate for newcomers or very small businesses; or it may take a long time to figure out how and who to engage. Can you support operations considering the potentially long acquisition cycles? In these conditions, any resources directed toward them and encroaching on their space will be for not. This is unless you smartly leverage appropriate teaming partners or adjust your growth approach to target opportunities tactically and strategically that align with your goals and competencies. It should also provide value for the government and can be procured in a way that compliments your business profile and qualifications.
5. Which Systems Are Needed to Track, Manage, and Identify Market Penetration?
Putting it all together, how do you identify when, how, and who to expand to? Short and simple. Research, data, processes, and enabling technology. Analyzing strategic insights and tailored information for your target market that supports your team's mission is the missing piece you need.
Having a standard framework with an integrated technology stack in place that can enable repeatable, robust processes allows you to effectively grow. Components of a tech stack that supports all facets of business development include a market intelligence platform, CRM, and BI platforms. Adopting these technologies provides access to data and structured information necessary to understand market, client, and competitor profiles, track marketing and sales activities, and monitor performance. If your goal is to scale, you need data that will help you identify high-quality, winnable opportunities aligned with your mission, maturity, and qualifications.
If this all sounds great, but a little overwhelming to navigate, having the right partner on your side can go a long way. A consultant with experience and knowledge can be an invaluable resource for your team to support developing your penetration and growth strategy and to implement the necessary processes needed to accomplish your goals.
Interested in learning how to put a strategic plan into place to navigate expanding or penetrating the federal market? Register for this free webinar to see how >
