Market Expansion is the Key to Long Term MWBE Growth

By Lawson Brooks, III

It’s a warning that many business leaders hear on an ongoing basis…diversify or perish.  This alarm should have particular meaning for many Minority and Women owned businesses that continue to generate the bulk of their revenue from a single source.  Whether you’re successfully doing business with the Federal Government, states and local jurisdictions or commercial entities, your company’s health over time will be determined by participating in multiple markets.  

This is not to say that companies should enter new markets for the sake of growth or expand into areas outside their core business area. Rather, a strategically planned business development effort into clearly identified and targeted markets can reap substantial benefits for forward thinking MWBE leaders.  No matter the market, companies must also understand that relationships will drive business and the need to raise their visibility among the right decision makers will be paramount.

In recent years, many MWBEs experienced a great deal of success in providing products, services or solutions to the Federal Government.  So it’s understandable given the opportunities in this space why minority firms actively pursued them to the exclusion of putting forth efforts in other markets. However, by doing so many of these well meaning entrepreneurs put their companies in long term jeopardy by not expanding their revenue base to include the state & local governments and commercial concerns.

This has been especially true among 8(a) firms that have spent their entire time in the program without securing one client outside of the Federal Government.  As a result, when they graduate many are ill equipped to compete for business in other sectors and have short survival rates beyond the program unless long standing federal contracts are in place.

On the other hand, many MWBEs have experienced successes in commercial markets and with some states and localities, but haven’t been able to penetrate federal agencies and departments.  There are many cases in which minority businesses have actually obtained 8a certification but have been either unable or unwilling to develop and implement an effective federal business development effort.  With a nine year shelf life (four year developmental phase and five year transitional period) failure to act in a timely manner could result in a wasted opportunity.

Regardless of the scenario, MWBE executives need to understand the value of robust business development and sound government relations and view them as worthwhile investments.

These activities are crucial if minority and women-owned firms are going to experience consistent success beyond a single revenue source. However, there are several actions that companies can take as they explore opportunities in other sectors.  They include:

1.  Understand the environment.
Whether your goal is to sell to the federal, state or local government or commercial entities you have to possess in-depth knowledge of the surroundings.  You need know the rules and processes for doing business, the products, services or solutions being sought, the leaders and decision makers who need to be touched and the politics that are involved

2.  Know the needs of customers.
As your company enters a new business arena, based on your products, services or solutions it will be important for you to research and understand past and present performances in those areas and align them to the future needs and interests of the customer.  It will also allow you to identify or help shape future opportunities well in advance of any RFP.

3.  Look for jurisdictions, federal agencies and companies that aren’t meeting their small business targets.
Each year the Federal Government, many states, cities, counties and companies establish goals related to small and minority business participation.  Many of these concerns annually fall short of these targets.   This information, which is readily available, particularly in public sector domains, could provide future opportunities for your business if properly and aggressively utilized.

4.  Develop relationships.
As your company begins its new market efforts, developing cooperative relationships among a variety of players within your targeted environment is crucial.  At the federal level it’s important to get to know Contracting Officers and their representatives.  In state and local government it will be crucial to not only have contact with the procurement team, but also department heads and elected officials.  It’s also important to interact with potential teaming partners both large and small on an ongoing basis.