Misconceptions About the Government Procurement Process
There are a few things I want to discuss regarding the government sales process. There are many misconceptions out there about selling to the government. The biggest one is that you have to go through the bid and RFP process to win a government contract. You might want to sit down for this because, if you’re new in this world, this is going to blow your mind. Ready?
80% of government spending does NOT go through the bid and RFP process.
The government spends $7 trillion a year, which is roughly $20 billion a day. Only 20% of that is spent following the bid/RFP protocols. With the Coronavirus pandemic, they have spent an additional $2 trillion recently.
Something else government buyers won’t tell you? No one likes the bid and RFP process. The agencies don’t love the long delay, all the paperwork — they just want to do their job, just like you do. As sales people, we dislike it too. It’s less profitable, it’s more competitive and it can take months to close a single sale. We’d much rather find a way for the government to buy directly from us, not wade through a lengthy process.
Agencies agree: 80% of their spending happens outside of bids/RFPs. Remember that as you develop your government sales team.
This brings me to another inquiry about the government sales world. Why aren’t more companies selling to the government? What keeps them from reaching out to the largest prospect in the world? The conclusion we came to is super simple: most companies have it all wrong.
The truth is, there are dozens of stereotypes about doing business with the government. As with most stereotypes, they are totally false. We hear entrepreneurs say, “I don’t have 6–9 months to wait for a deal,” or “I have to go through this RFP process,” or “I have to register with the agency because only certain companies will win that business.” In reality, none of that is true.
While some government deals do take 6–9 months to complete in the RFP process, 80% of government business never goes out to bid — that means only a tiny sliver of deals take that long to close and those are the big ones, too. Would you be willing to wait for 6–9 months if you knew the contract was for $100,000? $200,000? That’s what you’ll see with most of the opportunities that require that lengthy process. But it’s not the only way you win a government contract.
While government buyers tend to be risk-averse and will often turn to familiar businesses when making a purchase, there are specific marketing techniques that you can use to remove the risk from working for a new company, like yours.
The inequity in this whole process is, once you know the game, there could be huge contracts waiting out there for you. Believe it or not, there are folks out there making a ton of money winning government sales. That’s why I encourage you, from the bottom of my heart, to learn this market. The money, the revenue, and the income can be enormous.
During this pandemic government agencies have been looking for a vast amount of products and services of different varieties that they may not have been utilizing before. Now would be a terrific time to break into government sales. We have many customers with GovSpend that are flourishing despite the uncertainty of the economy’s stability. We would love to help you and your company through these precarious times.