Government contractors reshape growth strategies for 2014

With three out of every four government contractors having flat or declining sales in 2013, it should come as no surprise that many companies are rethinking their go-to-market strategy and making changes in the way they compete. To get a handle on some of these changes, Market Connections and Lohfeld Consulting Group teamed up to conduct a poll of 220 government contractors.

Surprisingly, about a third of the companies surveyed reported they are not making changes to their 2014 growth strategy. I wonder how rational this “stay put” strategy is, given only 15 percent of companies surveyed reported having positive sales growth last year.

For the companies that are reshaping their growth strategy, here is what they are planning to do in 2014.

Changing market strategies

Expanding into new markets is the battle cry for 2014. Forty-five percent of companies surveyed reported that they are expanding sales into new markets, and 40 percent are expanding into new government agencies.

More than half (57 percent) of large businesses surveyed are moving into international markets, whereas only 19 percent of small businesses are adopting an international growth strategy.

The figures are reversed when it comes to expanding into state and local government markets. Fifty-eight percent of small businesses are moving into state, local, and municipal markets whereas only 36 percent of large businesses are moving in this direction. Similarly, 23 percent of small businesses are moving to sell to associations and non-profits, whereas only 7 percent of large businesses are targeting this market sector as a growth strategy.

Forty percent of companies are expanding sales into new federal agencies. The most popular expansion markets are energy, health services, veteran affairs, public safety, law enforcement, transportation, and finance.

This focus on new government markets is not unexpected since a well-established growth strategy is to expand sales with current customers and move into adjacent markets.

Changing growth strategies

Government contractors cannot ignore the need to change their market strategy, especially when 75 percent failed to achieve positive sales growth in 2013. The past year provided us with a clear and compelling mandate for change. Clearly, trusted growth strategies of the past failed to deliver the results shareholders expected. Now is the time for every company to reshape their growth strategy for 2014 and beyond.

By Bob Lohfeld

Lohfeld Consulting

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