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Survey: Contractors Spend More For Fewer Contracts

Contract
Contract

If at first you don't succeed, try again. And again. And again.

According to a survey by American Express OPEN, it takes a small business contractor, on average, 4.4 tries before landing its first federal contract. The survey, which polled 740 contractors, also found that they are investing more money even as they bid on fewer contracts.

“[The survey] actually reveals the fact there’s some learning going on,” Julie Weeks, research advisor at American Express OPEN, told CNBC.com. “There are few folks that get successful the first time around.”

For minorities, success rates are less consistent. On average, they spend more money to achieve the same level of success — though that’s largely because they are not active contractors already, Weeks said.

“Once you get through those pearly gates of federal contracting, the opportunity is much more even,” she said.

But, opportunity is shrinking.

Funding available to small business contractors was $476.8 billion in 2011, down almost 12 percent from 2010, and down from a high of from $542 billion in 2008. As Washington tightens its belt, it means small business contractors will need to invest more time and money for fewer dollars.

So, it's important to make each bid count. The statistics show that the more unsuccessful bids a contractor makes, the less likely he or she will ever win a contract. Rather than blindly reapplying, it’s important that a business learn from failed attempts by developing relationships and seeking feedback from prime contractors and agency purchasing people, Weeks advised.

“If you lose and you keep on trying without maybe stopping a bit to learn, then you’re not going to be as successful.”


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