You've probably heard about the wealth of opportunities available to you as a government contractor. I'm talking state and local government, with your cities, the school districts, all of these different places, even the private sector, with corporations too.
There's a lot of opportunities out there available for you as a small contractor. Yet, you have a question. The question I get asked all the time, so it's probably your question too, is where do I start? Do I bid as a prime? Or do I bid as a subcontractor?
It got you stuck in indecision and not doing anything. I want to change that for you today because there is so much that you can learn as you venture into government contracting that you don't want this one little thing holding you up.
If that's you, you're in the right place. Today, here's what I'm sharing with you. Lean in for this one, because you need to know this. How you can decide whether you should be bidding as a prime contractor or a subcontractor. Here's why I want you to make this decision because once you make the decision, you'll realize which is your fastest path to cash.
I have some questions I want you to ask yourself. What I’m about to share is important. I don't want you to forget any of the questions. They all encompass you being able to make an educated decision.
Here are the questions you need to ask yourself:
How long have you been in business?
What experience do you have in the area that you're going to be offering, whether it's a product or service?
What's your experience?
Think about the size of projects you've done in the past if you've done any. If you haven't done any, then, of course, that's zero.
If you've done projects in the past, what is the size of those projects? Think about it in the form of square feet and dollar value.
Do you have any government experience? State, local, federal, whatever area you have it in, look at your experience and see how much experience you have in each one of those different areas.
Specifically to the government, can you, or do you, meet the government's requirements? On the federal level, there are some basic requirements that you need to meet in order for them to even consider you for a contract.
Do you have a team to help you once you're awarded a contract?
How are you going to deliver the project?
Will you be able to do it by yourself?
Do you need help?
Who's going to help you in your back office with the paperwork?
How much do you really know about government contracting?
If you're going to venture off into government contracting:
How much do you really know about government contracting?
Do you know how things work?
What about the terminology that’s used in the government?
How to get paid because they have their own different payment system?
Paperwork flow that they will require?
Do you have the answers to those questions?
And then the last question is, what's your financial stability? Can you cash flow a project until it starts cash flowing itself?
Those are the questions I want you to ask yourself. As you're answering the questions, here's the answers that'll help you and determine whether to go prime or subcontractor (sub).
If you've been in business for less than two years, and especially if you've only been doing commercial work, venturing into government, you’re going to be a sub, unless it's a small project. Ideally, in most cases, you're going to be a subcontractor. Especially if there are bonding and insurance requirements.
The larger the project, you're going to approach it as being a sub. You may find some crumbs, and if you do, pick them up! They work too.
If you have no experience in your business, you're definitely going to be a sub, in most cases.
If you have government experience, say you've been doing sub work on government projects for some time, then you can go prime because you have some government contracting experience. You can also still do sub work. Don't leave money on the table.
Unless you have commercial experience to compensate, you're still going to be a sub on government projects. That commercial experience needs to compensate. I'm talking you need to have some years, you need to show financial stability, you have to have the full package on the commercial side to make the jump to the federal side.
What does your capacity to perform look like? If you don't have the capacity to be a prime, then you're going to be a sub. If you can't meet the requirements of the project on your own, if it requires bonding or a type of insurance or number of employees, whatever that looks like, if you don't have the capacity for that, then you would be a sub.
Will you run the project? Will you do the work? Will you manage the paperwork? Can you do all of those things? If you don't have the support for that, then again, you're going to have to start out as a sub and build up from there.
Do you know the government systems, how they pay, how to do progress payments, the paperwork? If you don't, being a sub is a great place to start and learn. Learn while you're making money.
How do you manage your income and expenses? Now I have a lot of clients, when they start out with me, they're doing ... the envelope system, or they're doing a spreadsheet, and that's not enough to quickly give you a financial picture of your business. You definitely can't job cost that way. You could, but ideally most people they are not. If you're a contractor and especially construction, a trade contractor, or janitorial you need to be job costing.
How's your financial house? That also determines if you're ready to be a prime with the government. They may ask for your financials. If and when they ask for it and you have no clue of what they're talking about, that’s not a good look.
I have a couple of products on my website about bookkeeping and QuickBooks because I see the need so much with contractors, plus I have an accounting background, so I’m just the person to create such a product. You can definitely check that out over at https://feliciastreeter.com/store.
Those are the questions I want you to ask yourself, and then as you're answering them, think about what I shared with you here. Within your answers, you’ll discover whether to go prime or sub.
In what I've just shared, you've probably realized you don't just get to decide whether you're going to go prime or a sub. It's based on your experience, your capacity to perform, and your ability to meet the requirements, those answers will help you in determining which way to go.
If you can't make the decision, the government will make it for you. I don't want you to be bidding contracts and you don't meet the requirements, to begin with. That's a waste of time and money. Who wants to do that? Definitely, not a good look. It takes time to put together a bid. So don't waste time on projects you have no shot at winning.
I've shared about deciding which is the best option for you whether going prime or sub. Decide for yourself if you should be going prime or subcontractor as you're bidding on contracts.
I just had an idea. Maybe I'll make a handout for you guys. So I'll put that link below where you can get the handout, where you can ask yourself the questions, answer the questions, and then make the decision for yourself so that you can have something tangible to look at, versus having to keep hitting pause on this video or coming back here to the written questions.
Just know that you don't get to make the final decision on your own because the current state of your business will help in determining whether you go prime or whether you're a sub.
Don't leave money on the table. If you're not ready for government contracting, do some commercial projects. I have clients out there crushing it in the commercial sector, building up their past performance, building up their cash flow, and they started from scratch!
Yes, you can do it too. You just need to do things in the right order… sequence them. I want you to set your strategy on how you're going to go after projects based on the type of bid you'll be submitting. It's different how you'll go look for work. You'll look one way as a prime, another way as a subcontractor, and you'll look in different places.
Your business development will also be based on those things too, whether you're a prime or whether you're a sub. I know what I shared here today was a lot, and you may not know how to implement it all.
If you want to take this further, if you need some help figuring out whether to go prime or whether to be a sub, how to start and grow your contracting business, then I want you to check out how I can help you. You can check out the Contractor's Edge programs over at http://feliciastreeter.com/nlc.
For those of you that maybe need more, I do want to let you know that I offer one-on-one mentoring through my Contractor's Edge program. We’d focus on increasing your capacity, scaling with systems, people, and automation, and growing into larger projects and new markets. You can go over to thenextlevelcontractor.com, learn all about it. If you want to work with me privately, definitely reach out from that page.