If you have heard me speak anywhere in the past 20 years, you’ve heard me singing the praises of doing business with the government. Business-to-government has been my focus for going on 30 years: There are products to be sold to and money to be made from this market.
The government buys every legitimate business product and service imaginable. But not every merchant should be in the government market.
In my new book Selling to the Government, I outline a theory that has evolved over the years I have been doing B-to-G. It is my 95-4-1 theory, sort of a variation on the Pareto Principle (better known as the 80-20 rule).
95% of the people out there are happy with who they are and what they currently know. They assume that by some form of osmosis, proximity to thought and action, they will learn whatever else they might need. Possible, but not likely.
4% of the people out there take some action on a regular basis to become better at what they do. They attend seminars, buy books, get the trade publications, go to events and join associations. Proactive and good, but maybe not quite enough.
1% of the people out there take more aggressive action frequently. They go to seminars and perhaps speak at them as well. They not only buy books, they read them. When they join associations, it is to participate and share with peers.
Where does your company fit in? Are you really ready to tap the government market?
TIME AND MONEY REQUIRED
More than 90% of the companies that enter the government market will be gone within the first year. Why? Poor planning, unrealistic expectations, lack of a plan or lack of execution on the plan, or perhaps not devoting sufficient resources to the effort.
I have seen a few that simply would not adapt to the way that government does business. These companies seemed to think government might change for them. Regardless of why they leave, they will blame just about anything but themselves.
A three-part research report from American Express OPEN last year found that it took an average of 19 months for a company to win any business when entering the government market. The study also found that the average business spent $89,000 per year to enter the government market successfully. The $89,000 is a combination of internal and external resources.
There are not many businesses willing to put in that kind of time and money to try to enter a new market. But those companies that have successfully entered new markets know that this is a necessary investment.
So where does that leave you? If you are serious about doing business with the government, you should know that, like any other market, it requires upfront research.
Does the government buy what you sell? If so, what kinds of contracts are required and who are the major competitors?
You may not be surprised to see a few of the “usual suspects” as competitors, but you’ll find some companies that only do B-to-G — and do it quite well.
What resources would it take to make you successful in the government market? There are legal and accounting differences that will require management attention, and there will be other issues as well.
You also have to consider the scale of the market. There are 89,000 governments in the U.S., including all the counties, municipalities, townships, states, special districts, school districts and more. The size alone can be intimidating, until you narrow it down to your niche.
If you have the staying power, if you do the research, develop a realistic plan and intelligently execute it, you have a real chance. And the federal, state and local governments, plus education market, according to research firm Onvia, represent more than 40% of the GDP. It’s the biggest market out there, it has the most money, and it pays its bills.
TRAINING VS. HIRING A GOVERNMENT SALES TEAM
So you’ve decided to sell your products to the government. Among the many considerations, you have to determine who is actually going to do the selling to this market for your company.
Do your train your salespeople on the nuances of selling to the government, or do you hire some experienced government salespeople and train them on your product line? Often it is easier for merchants to hire talented salespeople than to train the folks you already have on staff.
Part of the decision process here is that if you are targeting specific government agencies, you may be able to hire an experienced salesperson with relationships in place in that targeted agency. This significantly shortens the sales cycle. — MA
Mark Amtower is senior partner at Amtower & Co. and author of Selling to the Government. You can find him at www.FederalDirect.net.