Big benefits for small businesses pursuing defense programs.

AuthorGalambos, Dave
PositionViewpoint

Serving the defense industry presents small business owners with numerous benefits. But unlike large contractors, small businesses live in the shadows, usually playing a support role to high-level programs.

Winning a role in one of these coveted programs can mean a great deal to the bottom line. They often represent long-term revenue, as many Defense Department programs can last in excess of 40 years. For example, the U2 spy plane, Aegis Combat System and the Patriot surface-to-air missile all have been in service more than 30 years, and current plans are to keep them viable for another three decades.

Understanding the dynamics of military contracts is crucial for small businesses wanting to work for the defense industry. The process can be broken down into three stages. The first stage is discovery, where companies prepare for and obtain military contracts. The second is the execution and initial fulfillment of the contract. The final stage encompasses ongoing, long-term support.

The discovery process for military contracts involves two steps. The first is an internal process that assesses the strength of a company. The second involves finding opportunities that align with its strengths.

A self-inventory of the company is advisable before seeking government contracts. A key step is to identify the expertise that best defines the firm and focusing on programs that match those strengths most closely. The bidding for defense contracts is highly competitive and specialized. Pursuing an opportunity that is not in the company's core competencies can waste a good deal of time and effort.

It is better to have fewer opportunities closely tracked than to have too many opportunities loosely managed. Seek the contracts that best fit what the company does well. This will make bids more attractive to the military and more competitive against other companies.

Caton Connector Corp. does this by focusing on a small corner of the military market that needs high-voltage cable assemblies. Caton pioneered this sector 40 years ago and remains one of the primary producers of such components. Although Caton has diversified into low-voltage and hybrid cables, it still focuses mostly on the high-voltage market, since it matches its expertise so precisely.

Locating and identifying opportunities involves developing a deep understanding of the needs of the project and the prime contractor. Focus on listening to the customer to determine its requirements. Obviously...

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