Navigating the Economic Crisis through Government Targeting
Have you dared check your pension recently? Or your stocks and shares ISA? If you have, then you’re braver than me.
While grateful that I moved house recently and am thankfully locked into a low interest rate mortgage for a good few years, the recent financial carnage on the markets has been anxiety inducing writ large – and I’m absolutely one of the fortunate ones. I can only imagine what it’s like for my fellow citizens who are facing up to the grim reality of choosing heating or eating this winter.
But of course it’s not just individuals and families who are experiencing economic difficulties. As bills spiral and economic uncertainty abounds, businesses, too, are grappling with increased risk and challenges. As a consequence, it is highly likely that private sector firms are poised to reduce spending – and certainly on anything that would count as discretionary. In a deep recession, which looms large according to many leading economists, such a scenario could prove quite drastic.
This means that we’ll begin to see private sector firms start to cut spending and future opportunities will begin to thin out. Even if your business has a full order book at the moment, and if you’re exclusively focused on the private sector, it is probable that this won’t last. It pays, then, to have a diversified customer base.
Setting your compass for the public sector
Now notwithstanding the recent comments from levelling up secretary, Simon Clarke, who appeared to forewarn that the next era of austerity is en route, the government sector – while not perfect – enjoys some big advantages in times as turbulent as these.
For example, its budgets are committed for the future, sometimes for years, and it cannot go bankrupt. Critically, the government must and will pay on time and there are channels to complain to if they don’t! The one caveat is that policymakers do like their paperwork – nothing changes on that front – so don’t neglect the invoices if you still want getting paid!
It’s also important to remember that much government spending is non-discretionary. It is going to happen – regardless of external pressures. And irrespective of the political party in power, government departments never want money left over at the end of the year – their civil servants will work hard to make sure they spend their allocations for fear of losing it next year. And finally, contracts can be committed for long term periods, giving suppliers certainty of demand – who wouldn’t want the security of a three to five year contract right now?
Think long term
But while having a number of public sector customers in your portfolio can be an excellent strategy, it’s important to remember that is no easy panacea for every economic ill. Remember that the buying cycle in the public sector is no overnight job – you can’t merely knock on the door and sell something tomorrow.
Rather, suppliers need to invest in the market, build relationships, understand the need and – critically – bid for the right tender and win it. There is an art to it and it takes a degree of commitment, not to mention realistic expectations.
Should a supplier be entering the government market for the first time, they should look to make a minimum three to six month commitment, depending on their industry. This means that now is the time to begin pivoting your business. Don’t wait until times are hard and money is short, that’s when those who have already invested will be making their returns at the expense of those that didn’t.
If you need any advice as to how to do this Contract Finder Pro is here to help. Don’t hesitate to get in touch