Determining Which Streams of Revenue to Pursue

This update was inspired by a recent conversation with a dynamic business owner regarding which route to pursue within the federal government. If you plan on offering staffing services from professional to administrative to custodial then you have two options.

You can pursue project work especially if you offer professional services such as engineering or organizational and leadership consulting or accounting services. Projects of this nature can range from a 30 day effort to almost two years with six months being the average. Margins on these efforts are higher as you are staffing highly skilled professionals such as Professional Engineers (PE) or industrial psychologists that merit higher fees per hour. However, project work requires a constant diligence to generate new business to keep the revenue pipeline flowing and to ideally smooth out the natural cycles of the opportunities.

In contrast, you can pursue support services such as providing support to operate a financial center where contractor payments are processed or federal employee expense reports are processed for payment. These types of support services contracts are generally awarded on a competitive basis and are for an average of five years. This provides a reliable base of revenue flow and the ability to plan and manage your business due to the predictability of operations. However, obtaining competitive support service contracts is more difficult and requires higher level of risk tolerance. You will be competing against other small businesses and it takes a lot of time to gather intelligence and then prepare for the proposal.

My experience for winning a 50 person contract that will last five years requires two years of planning, a proposal team of about four people and good fortune and resources to sustain your company during this pursuit period. Both revenue streams can be pursued and both have their pros and cons. I used the project revenue approach as a fast way of getting in the door and earning a customer reference as well as generating some cash flow to sustain the business. I then proceeded to exclusively focus on support services contracts and luckily landing several that provided a solid base of revenue as well as strong references for future work.

In addition, the support service contracts gave me insight into the operational context of the agency. This allowed me to focus on the project work leveraging the knowledge of the agency and the reputation for delivering excellence. You must determine what works for your company and then pursue one or both of the revenue strategies. I shared my strategy but there are several options you can take just develop one that is relevant and effective for your company.

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One Response to Determining Which Streams of Revenue to Pursue

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