Working with government: a guide for small businesses

For a small business, working with various parts of the government has much to recommend it. There is plenty of work to be had, and new rules mean you’re likely to get paid faster than big corporates.

The new Procurement Bill, currently winding its way through government, should make it easier for smaller businesses to win bids from government departments thanks to decreased red tape and lower upfront costs.

“Government pay their bills for small businesses within five days of invoicing,” says training provider Carol Deveney, who runs consultancy See Changes, working with the government in the UK and Canada and training others to do it too.

“They also have targets to spend £1 in every £3 with SMEs every year – a target they never hit so they are always keen to have more small businesses,” she adds.

However, many small business owners find the idea of bidding for government work daunting.

Afsaneh Parvizi-Wayne, founder of organic period care group Freda, says that the government tendering process is still biased towards large companies.

“Many startups simply don’t have the structure which is compliant with the requests,” she says. “I no longer even bother to look.”

So, are SME’s that shun government work missing out on heartache, or simply missing out?

Getting started

Emma Mills-Sheffield, who has run major bid teams for private and public sector organisation before becoming a self-employed business consultant at Mindsetup, acknowledges that government work can feel “out of reach”.

“In theory it’s supposed to be easier for SMEs, but the processes are cumbersome, the language used can be archaic and it often feels like you’re not dealing with a real person either,” she says.

“It’s a big-time commitment for what may be little, or no work guaranteed from it.”

However, there are steps you can take to make it easier, and the process does get quicker over time, she adds.

Here are some top tips.

Get signed up

Sign up your business with relevant government and public sector procurement websites. These publish opportunities regularly and you’ll get a notification when something aligns to the criteria you’ve set,” Mills-Sheffield says.

Get documents in order

Bidding for your first government contract will be cumbersome, but if you save your work and have your documents ready it will speed up considerably.

“Have your accounts and insurance policies saved and labelled clearly by years, as well as other relevant policies, CVs/ team bios and case studies or testimonials,” Mills-Sheffield says.

Be appropriately picky

It sounds obvious, but experts say that it is easy to get sucked into bidding for work you don’t want to do, at a price you can’t afford.

“Be sure you’d like to do the work before investing time into the proposal,” says 

Hayley Brackley, a Learning Consultant and Coach specialising in neurodiversity who has worked with government-affiliated departments including the fire service and NHS through her business, “Great Minds Don’t“.

Mills-Sheffield agrees:  “Be specific and don’t bid for everything as they can be really time-consuming and exhausting. Only bid for what you know you can deliver really well.”

On a more specific note, ensure that you know when you are pricing whether the business will take you over the VAT threshold when you win it, so that you can include VAT on the pricing.

Read the small print

Government tenders come with payment schedules, meaning that you often have to wait to hit milestones to be paid, while there may be other contract issues you haven’t noticed at first glance.

“You could be months into a contract before you see any finances coming your way,” warns Miles-Sheffield.

Call the experts in

There are ways to streamline the process, with Brackley praising online templates that can cut down on time, but if you are unsure, she says that expert investment could well pay off.

“Consider outsourcing your bid writing to someone with that expertise if it sits out of your skill set.”

Rosie Murray-West

Rosie Murray-West is a freelance journalist covering all aspects of personal finance, as well as business, property and economics. A former correspondent, columnist and deputy editor at The Telegraph, she now writes regularly for publications including the Times, Sunday Times, Observer, Metro, Mail on Sunday, and Moneywise magazine.