Why should I diversify into government?

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At a recent business forum on business diversification and growth strategies, I spoke on the topic of why businesses should consider government as a strong growth option, and how to identify and create business opportunities. This is a written version of the first half of my presentation: Why should I diversify into government? The second half (How do I diversify into government?) will follow in another post.

Today on the subject of business diversification I will talk about what you might consider a ‘new’ market: government.

Many businesses already have government on their radar as a growth option, but hold back because they are perhaps not sure the government would be interested in them. Or maybe they don’t believe they are big enough to support government. Or perhaps they’re not certain what it is government actually does. Sound familiar?

Let me say this, though. Your business can be successful with government as a client. But you need to be ready to take on this next level of growth. For instance, even if you win a tender or quote, to be successful long-term you must have the time, resources and focus to capitalise on that success and create new opportunities.

To give you an example based on my own experience, let’s wind the clock back six years.

I left my Victorian Government job in 2010 to start Mia Consulting Services. Since Mia primarily supports businesses to engage with government, I knew it was important I maintained strong ties with government and stayed relevant. So I looked for opportunities to continue to work with them.

In talking to clients, I learned that the Winning Government Business workshops being delivered by government at that time were very policy and process-focused. Having recently developed my ’10 Tips for Winning Government Business’ e-book, I recognised there was a host of practical knowledge about tendering processes and how government evaluates tenders that could be added to the syllabus.

So, armed with my 10 Tips, I decided I would take this on! I had already identified the problem statement; now I needed to build a solution, find the correct decision-maker to approach (target market), then engage with my target (emails, phone calls, meetings). Once I had successfully identified the problem and communicated my solution, I was invited to quote for the work, which led to the development of a pilot program and has ultimately resulted in an annual contract with Business Victoria for the delivery of Winning Government Business workshops across the state.

An important factor in my success here was understanding the government need. Or, to put it another way, I created a business opportunity based on understanding government policy and direction.

This is an example of why you must have the time and energy to research everything about your target government market. Also, you need to be prepared for it to take time. The process may look streamlined, but in reality it took more than 12 months from my sending the first email to delivering the pilot Winning Government Business workshop. Then, following this success, I had to capitalise on this work and add new offerings to create ‘stickiness’ with that government client.

So why should you look at government as a business diversification option?

There are many benefits of working with government. Firstly – surprise! – government does not always select the cheapest option. Despite what you may have seen or heard, government will pay for value, and in fact can find risk in costs that are too low.

Government also pays well. Unlike in the commercial sector, where payment terms can stretch out, you can always be assured that your invoice to government will be paid within 30 days. Additionally, government often awards longer term contracts, sometimes up to two and three years. This represents a steady flow of work and removes some pressure for constantly quoting for other jobs.

Working with government creates stickiness: once you are in, you are in. The hardest government contract to win is the first. After that, they are more likely to re-engage you for further or similar work – especially if you do a good job. Moreover, opportunities can multiply, particularly if you have a focus on customer service and value-adds.

Government work can be varied and interesting. Often government contracts can offer opportunities that a business wouldn’t experience with private sector clients.

Finally, government is an attractive reference client for both potential clients and investors in your business – be they investment partners, grant applications, or insurance companies, commercial or private. Right at this moment, I have a client whose asking price for the sale of their business has increased, just by having federal and state government clients.

Change your mindset

Despite these benefits, I know a lot of businesses have negative thoughts about diversifying into the government sector. I’ve heard government described as a ‘black hole’. Many businesses don’t know where to start, or believe they are too small to work with government.

However, the principles of learning how to be successful in the government sector are no different to any other industry sector: you need to engage with a different group of people, learn a different ‘language’ and understand a different set of priorities.

And you know what? For me to be successful, I had to do this in reverse. I had to meet you and hang out in places where you hang out. I had to learn your language, and your priorities. Exactly the same process for whichever market sector you are moving into.

I’m here to tell you that government wants to work with industry. Many government people have said to me, “we don’t know what we don’t know”. You are the experts they need to hear from to be able to better shape their programs and activities.

So, instead of thinking “government doesn’t want to hear from me”, change your mindset to “government needs to hear from me”. And I guarantee that if you find the right person, 90% of the time they will want to meet you.

We’ve talked about why government is a strong business diversification option and the mindset you need to be successful. Now I guess you want to know how to do all this…?

Read part 2 of this presentation: How do I diversify into government?

1 comments in this article

  1. Thanks, great article.

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