If you are a successful, growing Government subcontractor, and you are thinking about becoming a Government prime contractor, you have a lot to consider. You need to understand the regulations, responsibilities, and the increasingly competitive Government contracting marketplace before making the leap from subcontractor to prime contractor. While there are numerous opportunities for you if you do become a prime contractor, there are also potentially costly mistakes that can be damaging to any uninformed new prime contractor.
This article is intended to provide valuable insider knowledge for subcontractors pursuing prime contractor status. We address a number of questions and issues such as how to determine if your company is ready for prime contractor status; which steps to take to become a prime contractor; and what are the industry best practices for structuring your company and making strategic decisions necessary to ensure success.
Numerous motivations drive small business owners into business and to succeed. An innovative product or capability, a desire to ‘try something different’, an unexpected change in employment status – all of these can be motivating factors for a potential business entrepreneur. But once you’ve established your company, you need to ask yourself: Am I in it for the long haul to maintain a lifestyle? Or, do I want to grow-and-sell the business?
A lifestyle owner views his/her business as a means to maintain and, hopefully, improve their current way of life. Accordingly, a lifestyle owner will need to invest in establishing their company’s business systems early on to help ensure viability. Conversely, a grow-and-sell owner views his/her businesses as a profit-making asset to be managed with an eye toward maximizing the short-term value. The key motivation is the ultimate sale of the company. The grow-and-sell owner should not be investing in internal business systems for the long haul.
A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching those goals. This living document generally projects 3-5 years ahead and outlines what your company intends to do to achieve its desired level of growth and success. Spend significant quality time developing a formal business plan. The time spent upfront on the business plan will pay dividends later by helping you and your team stay focused on your strategic business goals.
While there is no hard and fast business plan format, it should address certain key aspects of your company and strategy, including:
- Vision and Mission: What will your business look like in three years? Five years? What is your company’s mission? Its purpose?
- Success: How do you define success? How will you measure it?
- Strategy: What are you selling and who are you selling it to? What is your unique value proposition?
- Finances: How much capital will you need to grow? How will your expenses change in three years? Five years? How will you meet those expenses (income)?
- Plan of Action: Who will you hire and when? Who will you market to and when?
The CohnReznick Government Contracting Industry Practice provides a wide variety of services that help Government contractors comply with Federal regulations. We also provide a range of audit, tax, and business advisory services. We help numerous prime contractors, and others, employ best practices in many different areas of Government contracting as they seek to establish mutually beneficial relationships with the agencies they serve.
If you need more information, please contact Kristen Soles, Partner (email@example.com or 703.847.4411).
For over 40 years, CohnReznick has provided comprehensive services to assist government contractors with a full life cycle approach to winning and managing contracts. We ensure your financial and procurement processes are compliant, efficient and effective - so you can focus on what matters most, profitable growth.
InsightInvestors: Are your portfolio companies ready to compete for federal infrastructure opportunities?Now is the time for private equity firms to assess portfolio companies’ readiness to win and execute on government projects. Read more.
InsightFederal contractors should prepare now for a government shutdownRebecca Kehoe, Richard MeeneWith the current political climate, anything is possible; including a government shutdown. Federal contractors should be preparing for a shutdown now. Learn more.
Insight2021 GAUGE Report: Creating a winning proposalWith new federal infrastructure funding and contracts coming, it’s more important than ever to know where the market is going. Download the 2021 GAUGE Report now.
InsightFinal rule regarding the limitations on subcontracting: What contractors need to knowJeff ShapiroFinal ruling and amending of the Federal Acquisition Regulation (FAR) regarding the standardized limitations on subcontracting will be effective Sept. 10. This article addresses key points to be aware of as a government contractor. Learn more.
InsightWhat to know about the good faith in small business subcontracting final ruleKaty BarkerThe Federal Acquisition Regulation (FAR) will start providing examples of good faith efforts, as well as failures to make a good faith effort, to comply with a small business subcontracting plan starting in September. Learn more.