Winning business in government: 1. Forget it
If you’re used to winning contracts in a corporate environment, but you’ve never sold to government, you might be thinking along these lines:
“The UK government spends around £22.6bn on goods and services. I must be a fool if I can’t find some business from a sector that is worth that much.”
There is some merit to that thought, but it bears closer inspection.If you’re a small or medium business, the market size is probably less than 10% of that work, so in one swoop, we’re talking about £2.26bn.
By the way, that definition of small and medium businesses covers businesses with less than 250 employees, so we’re not talking about bootstrapped start-ups.
If you’re a micro business (less than 5 employees), your market size will shrink by the same factor again, that’s still £226m, but if you think about how many micro businesses are striving for that business across all of government, well you’d better not plan on being a millionaire tomorrow.
Then there’s the fact that there isn’t really a single ‘government market’, its made up of five smaller markets, there’s central government, local government, health, education and justice to consider. They don’t really buy the same things and each area of government will expect you to have understood the challenges they face in their particular sector.
If you manage to build a specialisation in local government, don’t assume you will have any credit in the health market, to the protagonists in each, they are as different from each other as catering and legal services.
So, with a specialisation in one sector, e.g. local government, that means you’ve got £45m distributed between all the micro businesses in that sector.
Let’s add another problem, every part of government is trying to save huge amounts of money. So it is also a shrinking market.
And we haven’t even got to the point where you discover how painful it is to tender for business.
So, unless you really need to sell to government, I would forget it. That doesn’t mean don’t do it, it means only do it if you’ve got a high pain threshold.