Empower Your Business Growth by Using NAICS Codes Strategically

Knowing how to leverage the North American Industry Classification System (NAICS) codes can be a game-changer for your business in the federal government marketplace. This blog outlines eight powerful strategies to help you go beyond using NAICS codes as industry identifiers and leverage them as strategic tools to grow and expand your business.

Strategy #1: Learn NAICS Code Basics

• What are NAICS codes? NAICS codes are six-digit identifiers federal agencies use to classify businesses by industry and size. Each business is assigned a primary NAICS code based on its main line of work. A company can add NAICS codes if it operates in various sectors. Click here for a copy of the NAICS Manual.
• Why Do NAICS Codes Matter? NAICS codes impact a business’s eligibility for federal contracts, including small business set-asides. The codes help agencies identify your business as a potential vendor and determine whether you qualify as a small business under Small Business Administration (SBA) size standards.
• Who assigns NAICS codes? The U.S. Census Bureau provides the latest information on plans for NAICS revisions and access to NAICS reference files and tools at this link.
• How Do You Determine a NAICS Code’s Size Standard? Click here for a copy of the SBA’s NAICS Codes Table of Size Standards.
• How Do You Add NAICS Codes? Log onto your SAM.gov profile, access your entity registration, and add or update your NAICS codes.
• Do NAICS Codes Change? Yes, so periodically review your NAICS codes to verify they reflect your current operations using the Census Bureau’s NAICS page.

Strategy #2: Use NAICS Codes to Build Your Pipeline

Knowing your NAICS code(s) allows you to search for relevant contracting opportunities on federal procurement platforms like SAM.gov. By focusing on contracts that match your NAICS classification, you can streamline your business development efforts and increase your chances of winning contracts that align with your core capabilities.

Strategy #3: Use NAICS Codes as a Marketing and Business Development Tool

Customize your marketing materials, such as capability statements, based on your NAICS codes to align more closely with the needs of specific government agencies. Tailored marketing materials that explicitly reference relevant NAICS codes can make your business more appealing to contracting officers searching for vendors in particular categories. This approach can increase your chances of being selected for participation in competitions.

Strategy #4: Use NAICS Codes to Stay Informed About the Competition

By identifying businesses with the same NAICS codes, you can benchmark your company’s performance against others in your industry. This insight can help you identify strengths and weaknesses in your offerings and adjust your business strategy to gain a competitive edge. Understanding the competitive landscape can also guide your pricing strategies and service differentiation.

Strategy #5 Use NAICS Codes to Set Up Teaming Agreements

NAICS codes can help you identify potential partners and subcontractors whose capabilities complement your own. You can create stronger bids covering a broader range of services by teaming with other companies with different but related NAICS codes. This strategy enhances your chances of winning contracts and helps you expand your business offerings without significantly increasing your overhead.

Strategy #6: Use Your NAICS Codes Knowledge to Maximize Set-Aside Eligibility

Understanding your NAICS code allows you to qualify for small business set-asides. These contracts are reserved for businesses that meet specific size standards determined by the SBA based on your NAICS code. Ensuring your business is correctly classified and meets the relevant size standards allows you to compete for set-asides that are not open to larger competitors, giving you a competitive edge.

Strategy #7: Add NAICS Codes to Expand into New Markets

If you want to grow your business, explore new NAICS codes that align with your current capabilities or growth plans. For example, if your business primarily focuses on one industry but has the potential to expand into another, obtaining an additional NAICS code in that area can open new revenue streams. This approach allows you to strategically diversify your business and reduce dependence on a single market or client base.

Strategy #8: Use Your Knowledge of NAICS Codes to Diversify Your Portfolio

If your business operates in multiple sectors, identify all applicable NAICS codes. This approach allows you to pursue opportunities across different industries, diversifying your revenue streams. For instance, a company providing IT services and management consulting might have NAICS codes 541511 and 541611. Actively seeking contracts in both areas allows you to tap into a broader market and reduce dependency on a single sector.

To win a government multiple-award contract (MAC) or government-wide acquisition contract (GWAC), you need experience across multiple relevant subject areas. To achieve this and increase your proposal score, plan on obtaining experience across multiple NAICS codes well in advance of the competition.

Conclusion

Effective use of NAICS codes is a cornerstone of success in the federal marketplace. By understanding your NAICS classification, targeting relevant opportunities, diversifying your offerings, and staying informed with updates, you can position your business for sustained growth. Whether you aim to secure a MAC or expand your presence in federal contracting, NAICS codes are not just identifiers but strategic tools that can unlock new avenues for your business’s expansion.

Related Content

• Victory Against the Odds: GWAC Survival Tactics

• Strategies for Winning Government Contracts in a Changing Landscape

• Growth Strategies for Small and Mid-Sized Businesses in the GovCon Market

• Video: Unlock Your GovCon Success: 12 Free News Sources Every Contractor Needs

By Brenda Crist, Vice President at Lohfeld Consulting Group, MPA, CPP APMP Fellow

Lohfeld Consulting Group has proven results specializing in helping companies create winning captures and proposals. As the premier capture and proposal services consulting firm focused exclusively on government markets, we provide expert assistance to government contractors in Capture Planning and Strategy, Proposal Management and Writing, Capture and Proposal Process and Infrastructure, and Training. In the last 3 years, we’ve supported over 550 proposals winning more than $170B for our clients—including the Top 10 government contractors. Lohfeld Consulting Group is your “go-to” capture and proposal source! Start winning by contacting us at www.lohfeldconsulting.com and join us on LinkedIn, Facebook, and YouTube^(TM).