Everyone knows that the federal market is huge.
Problem GSA is Facing in Small Business IT market
Over the past three years the number of small businesses offering IT services to the federal government has significantly decreased in the GSA portfolio. The number of businesses in this sector has shrunk by an alarming 24% between 2018 and 2021. The main reason for this is that there are so few new small businesses entering the market to take the place of those that are being purchased or exiting. There has been a 70% decrease in new enterprises joining this market from 2018 to 2021
Trying to Overcome Small Business Perception
On the other hand the federal government and GSA are going out of their way to help small business IT firms. GSA IT sales increase from 34.7% to 37.8% of the IT market share between 2018 and 2021. This may not appear to be a significant increase but in raw dollars terms, it represents 4.3 billion.
GSA’s fix is category management
GSA is spreading the word about category management in order to entice new small business IT firms to enter the federal market. Category management goal is to divide IT into as many small niches as possible. Because small businesses tend to hide and/or specialize in these niches, increasing their visibility boost sales. When a federal buyer requires a solution, they can locate firms that specialize in that area, such as one that provides cybersecurity in a specific type of computing environment. Without it the federal government has 3000 buying offices and with 40,000 buyers in the IT space making it difficult for small businesses to compete. Small businesses simply do not have a way of getting the word out about what they do and what they do not do more small businesses do not have a way of getting the word out about what they do; they must rely on buyers coming to them.
Category Management Strategy
- Master Government wide Small Business IT Contracts greatly reducing administrative burden and marketing efforts for small IT firms. Small businesses need a GSA schedule or some other GWAC to effectively enter this market and get exposure.
- Support on the backend providing training and understanding the benefits for the 40,000 federal buyers to properly utilize the system.
GSA is doing its part to open up federal markets to small business IT firms resulting in a historic high benefits to firms. The question now is whether small business firms will see opportunity and return.
If you are an IT Small Business contractor consider how your firm could benefit from being a federal IT Contractor.