Startups are known for innovation, are generally launched by youngsters, and are backed by venture capitalists. Their focus is not on profits because funding can take care of their immediate financial needs but to increase revenue and market share and establish their brand. Selling to Government agencies can help in this regard. Many Governments are committed to supporting startups because it helps the economy grow.
Conversely, payments are late, and the process is lengthy, complex, and bureaucratic. However, the order sizes are generally significant. Therefore, there is no escape from selling to Government agencies. Unfortunately, most startups avoid them owing to the hurdles mentioned above, and the challenge lies in overcoming them.
Table of Contents
The Advantages of Selling to the Government
- Repeat orders are typically the norm rather than exceptions. This is because the nature of Government is such that it is gigantic in size, and requirements are manifold. Projects, once started, are either repeated or followed up.
- Order sizes are enormous due to the sheer size of the Government bodies.
- There is greater visibility.
- Government can support raising capital and loans if the project is executed competently
- Selling to large bodies increases the credibility of your product.
The Negatives
- A longer cycle from quoting to obtaining payment. This is more relevant for startups because their products are usually novel and have a short shelf-life since they constantly innovate.
- The bureaucratic processes are incredibly time-consuming, tedious, and frustrating.
- Information on projects is hard to come by since the coverage is restricted.
- It could negatively impact the general impression that one has to bribe to close Government orders.
- The RFP (Request for Purchase) and RFI (Request for information) are often poorly worded.
- There is a general impression that the specifications are tailored to their favorites. Organizations and the documents inviting participation are just formalities to meet tender obligations.
Tips for Efficient Selling in the B-to-G Sector
- Identify the key individuals or influencers. Due to the open nature of Governments compared to the private sector, this is comparatively easier. There could be multiple personalities or agencies involved.
- Use your Sales Executive to buzz the influences or authorities persistently. Demonstrate aggressiveness. Emails usually are ignored, not even read, because they come in the thousands. Invent excuses to meet them – like: “I want to share a success story with you.”
- Focus on cost savings and efficiencies derived from your product or service. Do not forget that Governments are perpetually short of cash and workforce.
- Try for an early appointment with an influencer or the decisive authority. Do not waste his time, and he is hard-pressed. Speak succinctly and briefly about the advantages your product offers. Speak about the value it will provide to the prospect. The best course of action is to carry a 5 to 10-slide demo. Do not get technical. Bureaucrats are usually not assertive on the technical aspects. Talk business. If possible, carry your product. Focus on how you will solve his problem, not brag about your product. Request for a quick demo. If they do not have time, ask for another date. After the demo, volunteer for an unpaid prototype (if affordable) for better understanding.
- After submitting the quote, you must delve into the procurement process. Become friendly with an official who knows this and take him out for a coffee or lunch. Try to influence this process by suggesting modifications. Commonly held beliefs about the Government being impervious to changes is not always true. Emphasize the benefits of an early decision.
- Be patient. If you are selling to the Government, you should be aware in the first place that the government processes are lengthy. However, do not stop engaging, waiting for the outcome.
- One Government order automatically places you in an advantageous position when you bid for the following order, so do not neglect it.
- Nonetheless, they are more predictable than the private sector. Early on, you should be able to gauge where you stand. Withdraw if you believe so.
- Do not even hint at offering bribes. It could be disastrous.
- If your product has unique features, state that explicitly in the quote and presentation if you get to make one. However, that cannot be a ground for complacency since they could be having a price cut-off which may act as an impediment.
- Try to price it below the minimum threshold set by the agency.
- If your product has been sold elsewhere and is appreciated, provide the contacts. No Government agency wants to be the first mover, and it would be best if you made a couple of sales to the private sector and then approach the Government agencies.
- All Governments are in the process of digitizing, yet accounts for approximately one-third of what can be done (as per global estimates worked out). Hence, digitizing should be of prime importance.
- Unlike the private sector, here, the freedom of any individual is limited. Officials have to stick to the process of passing your proposal through innumerable committees. Be aware of these processes. Short-circuiting could lead to censure by the Audit and questions in Parliament. Do not even expect this to happen.
- Political contacts in the ruling Party could help.
- Certifications like ISO 9001 carry immense value for Government agencies. Obtain a certificate or two relevant to the product or service on offer.
- Contracts are comparatively more accessible in the Government than in the private sector because they are standard in content and format. Get hold of a contract signed earlier, assess whether it will suit you and the customer, and start working on it as soon as you bag the order.
- Current global focus is on the Environment. Try and establish the potential scope to reduce the carbon footprint.
- All Governments award additional points if you have, as an organization, contributed efforts for the benefit of the disabled or the disadvantaged. Even if you have not started earlier, do so before submitting your proposal.
- Governments ask for more information on your organization, promoters, activities, experiences, investors, shareholding structures, authorized capital, financial performance projections for the future, business plans and several employees, your Data security processes, and a host of other details. Be prepared with these. Do not cook up data.
- For apparent reasons, compliance occupies a special place. You need to emphasize the processes to ensure compliance with all statutory obligations. You may find specific questions irrelevant after dealing with the private sector. Like whether you have QR Codes and batch numbers for all products, details of your quality processes, etc. Enquire through your sources on the emphases laid down by the particular prospect.
- Preferably hire a salesperson who has dealt with the Government sector earlier.
- There will be many meetings, procedural formalities, and revelations as you advance through the cycle. It is best if CRM software like Salesforce is implemented to capture these details.
- Early on, get to know the electronic system used by the agency concerned for data interchange, submission of proposals, etc., and get familiar with them. It may prove to be a show-stopper.
- Data hosting norms are essential if your solution involves processing data. Many Governments, including India, have strict regulations to store critical data within the country’s shores.
- Focus on innovation efforts. Governments emphasize this aspect tremendously because it enhances the country’s prestige and contributes enormously to the economy. It also shows your enterprise in a favorable light, and it is even more critical as a start-up. No startup with a me-too approach can ever succeed. You have to be different from the rest.
- Tie up with scientific research bodies, preferably from the public sector and universities, to demonstrate your commitment. It will be considered more sustainable than claiming that you have all the expertise to innovate and invent because the latter involves massive resources, which is difficult for most startups.
- Try to use deep tech and the latest technologies in your solution – Big Data and Analytics, Blockchain, IoT, Artificial intelligence (AI), etc. Even if the applicability is limited, brainstorm how these technologies can be integrated into your solution. This is recommended because every government worldwide is now focusing on them.
All Governments demonstrate commitment to startups, but the Government of India has emphasized startups contributing to the economy’s growth because both the Government and traditional Government and PSU jobs are drying up. The Government has launched the maximum number of schemes to promote startups.
Keep this in mind. As a startup, you are in an advantageous position. However, entrepreneurship, commitment to the disadvantaged, compliance with regulations, honesty and integrity, sustainability, an adaptation of the latest technologies, and innovation are key factors that have got to be emphasized repeatedly both in the proposal and during presentations, demos, prototypes, etc. Do not follow the beaten path. Demonstrate the uniqueness of your product or service and your organization’s commitment to the same through its organizational structure, policies, and procedures. It is tough to bag a Government order, but once you do so, you sit on top of a gold mine.
