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Lead Your Team Strategy

Small Businesses Spend More to Do Business With the Government

Small Businesses Spend More to Do Business With the Government

As the United States government decreased contract spending in the past year, small businesses opened their wallets wider to do business with the world's largest consumer of goods and services.

According to the second annual American Express Open Government Contracting Survey, small businesses spent an average of $103,827 seeking federal contract opportunities, up 21 percent from their 2010 attempts to keep the government as a customer($86,000).

The government spent $461 billion on contracts in 2011, down 14 percent from the previous year.  

Many of the small businesses responding to the survey reported they were bidding less frequently for a share of the $461 billion.  Increased competition drove bidding frequency in small businesses down by almost  50 percent in both the prime and subcontracting arenas, according to the survey report. 

At the same time, business owners reported they needed to submit more bids to finally secure a contract.  On average, small-business owners  submitted 4.4 bids in order to secure their first federal contract. After these business owners won their first contract, they were able to win a second government contract in  just under a year. 

The research found that the average success rate for those seeking government contracts was 38 percent. That number varied, however, based on experience as businesses with over 10 years of experience in bidding enjoyed a 53 percent success rate, while those with three or less years of experience in bidding saw a 20 percent success rate. 

The findings were based on responses from 740 small-business contractors, American Express said. 

Reach BusinessNewsDaily staff writer David Mielach at Dmielach@techmedianetwork.com. Follow him on Twitter @D_M89.

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