The intense competition in almost all industries and sectors and the need to stay relevant in a rapidly changing business landscape are prompting companies and organisations to constantly seek and explore new avenues for development and implement strategies that could help them achieve their long- and short-term goals.
To this end, an increasing number of businesses, especially those in the small and medium enterprise (SME) category, are turning to the public sector as a solution. Until not so long ago, public sector contracts were somewhat out of reach for smaller businesses. Steep barriers to entry kept them from submitting bids and competing with larger, more established firms to win government contracts.
However, the UK’s procurement landscape has seen significant shifts in the meantime, with the Government adopting several initiatives, such as the Procurement Act 2023, specifically targeted at making public sector tenders more accessible for SMEs. This means that if you run a small or medium-sized business, you too can take advantage of government contracts to fast-track your company’s growth.
Nevertheless, doing so requires a thorough understanding of how these contracts work and what you stand to gain from partnering up with entities in the public sector, which is exactly what we’re going to discuss further.
Government contracts explained
Government contracts represent legally binding agreements that facilitate the delivery of goods and services from different privately owned businesses and providers to one of the many institutions and organisations that form the public sector – from national and local government agencies to NHS providers, educational institutions, and so on.
This may sound no different from how private companies operate when they need to obtain the goods they require. However, the public procurement process is governed by specific standards and a set of very strict procedures that differ significantly from those applied in the private sector.
When a public body wants to purchase products or services from the private sector, it starts by releasing a public contract notice, also known as a tender, usually published on their official website. The document lays out the terms and conditions that providers have to comply with to participate in the tender and invites interested parties to submit their offers.
This allows companies of all sizes, including SMEs, to search and apply for tenders they find suitable, thus encouraging free and open competition and a fair and transparent public procurement process. After a rigorous evaluation, the entity that issued the tender will select the provider that meets the eligibility criteria and offers the best value for money.
The benefits of winning public sector tenders
While bidding for government contracts has become much easier for SMEs in recent years, you need to know what you’re getting yourself into and how exactly government contracts can benefit your business. As it turns out, the advantages of securing government contracts go well beyond immediate financial gains.
Procuring new business
Business success depends not only on your ability to keep existing customers coming back but also on drawing in new clients that can bring new revenue, which is often difficult, especially if you activate in a very narrow or crowded niche.
Comprising a wide range of agencies and institutions from very diverse fields, the public sector in the UK can open up a world of opportunities for your business. By working with the public sector, you can break into new markets where you’ll find new potential buyers to whom you can sell your products/services and thus expand your reach and diversify your customer base.
With over 50,000 government contracts issued every year, an estimated £300 billion allocated to public spending, and a set target of awarding 33% of all public contracts to SMEs, you stand a solid chance of finding and winning contracts with public organisations and procuring new business.
Steady source of income
A steady stream of customers translates into a steady income stream, which represents the lifeline for any company, but even more so for smaller enterprises, which are more vulnerable to demand fluctuations.
This income steadiness is guaranteed not only by having a larger number of customers purchasing goods from you, but also from the length of the contracts you sign with them. Contracts in the public sector tend to run for longer periods of time, setting you up for lasting commitments that guarantee repeat work. Knowing that you have this solid foundation that you can rely on ensures stability and allows you to plan for the future. For example, you can focus on making long-term investments in key areas that can take your business one step further.
Reputation booster
While financial benefits represent, without a doubt, the biggest incentive for stepping into the public sector, there are other less direct ways in which government contracts can help your business thrive. One of them is by improving your company’s image and reputation.
Government organisations are known for holding all their partners and suppliers to very high standards and running thorough checks when vetting them. So, if a company manages to win a contract with a pubic body, this serves as a sign they are truly reliable and trustworthy. Associating your image with a government agency also makes your company more appealing to lenders, investors, potential partners, and top talent, leading to numerous advantages in the long run.
Network expansion
Last but not least, winning public sector tenders comes bundled with networking opportunities. Think of the public sector as a giant network of interconnected agencies and associations. Once you get inside and start building a relationship with one of them, you’ll have the chance to connect with many other professionals and organisations in this environment and potentially pave the path to new contracts and other beneficial collaborations.
Business growth is an objective that all businesses share, but there are many different paths to it. Thanks to the numerous opportunities they provide, government contracts can help you achieve your business goals and smoothen your way to the top.
Also Read: First smart contracts launched on Microsoft’s .NET architecture
