Why Government Contractors are failing in attempts to enter the commercial market

Government Contractors pursuing the Commercial Market in a sloppy manner

Contemplating a move into the commercial market?  Make sure you do it right, learn from these mistakes.  Sadly we’re seeing them over and over with wildly successful government contractors looking to counter the inevitable drop in government projects due to sequestration by entering the commercial market targeting large financials, pharma, healthcare, etc.  The issue is they just aren’t approaching the market correctly and here’s why –

Government contractors attempting to move into the commercial market expecting to have companies drop multi-million dollar projects in their laps due to their past government performance and attempting to manage the pipeline, presentation and proposal the same as they did with agency clients.  It’s not uncommon for these contractors to expect to have a thriving commercial practice within a year to 18 months and yet they are failing and can’t understand why.  Sadly the reason is arrogance.

Attempting to put an entire industry into your way of doing business and expecting them as your prospect to allow you to run the process as you see fit versus what works best for them is arrogant.  Expecting that your past performance in an environment that functions practically polar opposite of the commercial functionality of procurement and purchasing is arrogant.  Believing that you know how they work and what works best for them without due diligence and without analysis is arrogant.  Not accepting the trial programs the commercial prospects offer you to assess your capabilities because their too small and beneath you is arrogant.

Here’s the deal – the government market and the commercial market are two very different animals and if you don’t respect the nuances of business in both markets you will fail.  For the vast majority of businesses, you aren’t anything special; I know that’s hard to hear and it’s not meant as an insult.  There are hundreds if not thousands of companies who do what you do, really well and some are already in your desired target market winning and managing successful engagements.  You are the newbie and yet you act like you know it all.  The answer is to be humble, to understand you need to build trust the same as you did in the agencies so many years ago.  Be grateful when offered a pilot or trial program regardless of how small as it’s a win with that company and a chance to build performance in the new market.  Treat the market as it needs to be treated – it’s different than agencies – understand the process, respect the process and learn what’s important to each new buyer.  It’s best to have separate teams as it’s tough to transfer from one market to the other.  Most importantly expect a minimum of 3 years to gain consistent traction.  Treat this as an investment.  This market is a far cry from the market you entered in the government space 10 years ago, it’s not a free for all and you need to show your value and your expertise.  Arrogance will kill you in this market, if you plan to enter be strategic, be willing to learn, expect to fail and understand it’s an investment in amazing future growth – bring in experts who know the industry, who can talk the language and most importantly can bridge the gap that you’ve created by ignoring this market for so long.

Entering the market unprepared is like the business developer who claims his company’s people are smarter than those employed by the competition and their service is better.  You’ve done nothing to differentiate yourself and in fact you’ve told your prospect that you really don’t respect them.  I know it wasn’t your intention in face I’m sure it’s the exact opposite of your intention.  If you’re a software developer know why your clients use you and here’s a hint, it’s not service or smart people.  There are thousands of software developers in this country so what makes you special – is it the extensive knowledge of the industry you represent and the types of challenges you’ve been asked to tackle when others failed?  Is it how you hold your people accountable so jobs are finished on time and within budget?  Is it how you collaborate with the client to ensure ultimate business efficiency, effectiveness and results – results being the key here.  Maybe it’s that your practice is to proactively keep the client up to speed on the status of the project so you can address concerns in real time so as not to create unnecessary billable hours after the fact.  Do you think a prospect might find that appealing?

The fastest way to ensure you are viewed as a commodity and get into a cheapest price wins kind of deal is to associate yourself as the same as everyone else.  If you don’t know the answer to what makes you special this is your first task and I highly suggest you ask your current clients why they love you and if their answer is your price point – you have definite problems.  Before you enter a new market you need to know what is success to my new prospect, what makes them look like a hero so you can be their hero?  This is your business development angle, not that you’ve managed large successful programs for the feds because in the commercial market things get done faster, their systems are more up to date, they don’t look for butts in seats for an unlimited amount of time – this costs them shareholder value.  A company, nonprofit, hospital, regardless of size can’t just print money – you need to know what makes them tick before you enter the market.

We’d love to hear what you’ve done to differentiate yourself in the market and how it helped you to increase market share.