Is Business-to-Government Right For You?

This is a guest post from Mark Amtower, the #1 Guru of Government Marketing from www.FederalDirect.net. 

Depending on how it is defined, business-to-government (B2G) can account for 30-45% of the GDP- at least a third of all spending in the United States. 

Here is the breakdown:

• 3,034 counties
• 19,429 municipalities
• 16,504 townships
• 35,052 special district governments
• 13,506 school districts
• 512 Native American nations
• 50 states
• District of Columbia
• 6 U.S. territories
• 1 federal government
• Total 88,095

And there are approximately 20,000,000 FTEs (full-time employees) – more than 1 out of 8 of all adults with full-time jobs.

If you add in healthcare, which many companies and researchers consider as an adjunct to the B2G market, the potential is enormous.

All levels of government buy every imaginable business product and service, and many consumer-type products as well.

But is this market for you? Here are just a few things you must consider before targeting B2G.

• The sales cycle is longer than B2B. You must be prepared to spend at least 12 months pursuing your initial sale;
• If you are targeting business you have to bid for, you need to get some top-notch training on the bid and proposal side of the equation. Bidding on government contracts without proper training is literally a no-win situation;
• If you want a GSA Schedule (aka, a GSA “number”), be advised that you rebate the GSA .75% on all sales – and they can come audit you without warning to ascertain that proper reimbursement is being made;
• Your sales team will need training in the nuances of selling to the government. There are a variety of nuances that make B2G sales different.

I don’t want to scare you away from the government market with the above items, but these are things you must be aware of on the front end.

If you want to get an idea of the potential for government sales, you need go no further than your last 6 months of your credit card sales. The three banks that issue federal SmartPay cards (government small purchase credit cards) have unique Bank Identification Numbers (BINs). The BIN is the first 4 digits of the credit card number. For Mastercard these are 5568 and 5565; for VISA 4716, 4614 and 4486.  These card prefixes are unique to government credit cards.

Any sales using these numbers are official federal purchases. If you run a report on these you can get an idea of what you are already doing regarding selling to the Feds. That still leaves state, local, education and healthcare. 

One other thing to check when you run the BIN report: historically federal credit card sales run 10-20% larger than B2B sales using credit cards. See if this holds true for you.

You can be selling to the government with knowing it, without a contract, because “micropurchases” (sales under $3,000) do not require a contract. {Note from Amy: Mark has promised he will write more on credit card sales in a future blog post.}

If all of the above has increased your desire to look further into the government market, here is one more thing to consider: Top management must devote both time and resources to market entry. Often this means bringing in senior staff and or a consulting firm to help start your B2G program.

In a recent study by American Express Open™, AmEx research showed that companies that were successful coming into the B2G market spent on average slightly over $80,000 in the first two years on various types of outside assistance.

The potential payoff is huge, and well worth the investment.

Amtower can be reached at http://www.governmentmarketmaster.com/.  If you want to know anything (and I mean ANYTHING) about how to best work with the government, he’s the ONLY guy to ask.   Period.  (Little known secret about Amtower — he’s also flipping brilliant at all things LinkedIn.)