Is a GSA program an investment?
Simply put, a GSA Program gives access to a market, which is the federal market. Money invested in marketing has both an immediate effect of ringing the phone and a lasting effect if the company can gain brand recognition. The world’s top brands, Google and Apple, are said to have brand values for those companies of more than $100 billion.
A GSA schedule is similar to a brand in that it creates a long-lasting revenue stream for businesses. Once a company meets the schedule, it is taking the first step in developing the government part of its business.
A GSA schedule serves as a “starting point”
Most of the people we talk to don’t work with the federal government because they don’t have a “starting point.” By this I mean they don’t know of an effective way to start doing business with the federal government. The reality is that federal buyers like to work with people they have experience with and know will do a good job. But this all fades into the background because federal buyers have to follow federal procurement regulations that require them to need a legal means to purchase a company’s products or services. Therefore, a business needs a “hiring vehicle” to have any chance of doing any significant amount of work with the federal government.
How much is a federal revenue stream worth to a business?
When my father was younger, they always said to invest in General Electric. The rationale was always that in good times GE sells jet engines, locomotives and appliances, in bad times they sell stuff to the federal government. So the theory was that they are always going to make money. In 2008-2010 many small construction companies that had deals with the federal government survived and their non-federal counterparts did not. Having a source of government revenue is important, it’s not a high-growth industry, the federal budget typically grows 1-3% per year. However, when necessary, he helps a business keep the lights on.
How much would it cost to replicate my competition’s federal marketing advantage?
The real answer is that you couldn’t. If you have a competent competitor in the federal sales space and have an unlimited budget, it just wouldn’t matter, you wouldn’t be able to take your federal market share 2 years from now. In five years it could make big strides, but federal sales are all about an ongoing methodology and it takes time. The counterpoint is that once you have established your federal sales channels, you will also enjoy this barrier to entry from your competitors.
How valuable are these federal sales channels?
65% of acquisitions in the federal contracting space occur so that the acquirer can access new/federal markets. These companies are bought for their relationship and capabilities within various federal agencies, as in many cases the only way to gain quick access to an agency is for a large company to buy their ticket.
What advantage translates into more experience in the federal market?
Firms with more than 10 years of federal contracting experience win contracts more than 53% of the time. The longer a business is part of the federal marketplace, the more its skills and relationships will grow. This gives long-term federal contractors over 10 years more than double the contract award rate of new entrants.
How effective is a GSA schedule as a starting point?
80% of active GSA Program holders earn more than $1 million per year in federal contracts and receive 47% of the revenue from federal contracting companies.
A timeline of GSA as an M&A asset
A GSA program is one of the few transferable government contracts and will follow the acquiring company in a commercial sale. A GSA Program is your first step in entering the federal marketplace.
