80% of Companies Fail – Are You Ready?

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90% of companies that try to enter the federal space fail. Most spend between 40,000 and $60,000 over the course of a year with no return. Take this free survey to determine if you are really ready to enter the federal contracting market.

Excerpt from Doing Business with the Government Handbook

The main reason that most companies fail in the federal market, and I mean most companies – over 90%, is because the federal business development success model directly conflicts with the entrepreneur success model. This causes a chain reaction of mistakes based on two fundamental issues:

1) Underfunding the strategy

2) Underestimating the time for market development

Unfortunately having 90% fail doesn’t mean that system filters the best of the best into the top 10%. Companies that succeed do so because of sheer perseverance in learning the system and a willingness to adapt. The fact is, what made you successful, your drive, your passion, your excellence, your get it done now are secondary to the market conditions in front of you. The federal market is a direct contradiction to the DNA of most entrepreneurs and how they got to be successful in the first place and most cannot accept such a revolutionary change in thought process.

Think about it… In building your business, incremental success was making smaller sales, refining your delivery, improving your processes, struggling to finance growth and manage yourself into profitability. The most important component contributing to the success of your federal strategy is a complete overhaul of your outlook of incremental success, bridling your entrepreneurial mindset, trust that the process will work and then allow it to work.

If you look your business success in hindsight, chances are success wasn’t immediate. Like the first two years of Triple Canopy, you probably had to scratch, claw, push, bleed and reinvent yourself before your business stabilized to the point where it stabilized and ran efficiently. How much did it really cost to enter the market that you now have success? Before you answer, remember the sweat equity component and the 80+ hour weeks. Be reasonable and multiply that by a fair qualified hourly rate. Now, if you had to start all over in Japan with no customers, no relationships, with your brand new company – how much would it cost to do that? Exactly.

The federal market presents such a change in environment that successful business entrepreneurs can’t get past their own thinking to look at the market as it is- virgin and foreign. Everything that applies to a new market applies here:

1) You can invest your way into new business through sales and marketing

2) You can buy your way into existing business and relationships through acquisition

3) You can sweat your way in

No matter how you skin this one, it will take time, money and dedicated effort – even for insiders. There are always a few anomalies out there but almost no companies had an ROI (profitable) of less than 24 months doing business with the government. Statistics are hard to come by but the estimate is about 5% of the successful companies (1 in 20). That means if we include all of the unsuccessful companies who try to develop federal sales only about 1 in 200 obtain profitability within two years.

in Developing Your Federal Strategy, Federal Contracting by isiFederal Leave a comment

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