GovCon Industry Advantages: The Small Business Set Aside Program

Here’s a rhetorical question…What industry mandates that new or small businesses trying to penetrate a market must receive a guaranteed amount of market share? It sounds too good to be true, but that’s exactly what the Federal Government does. It’s called the Small Business Set Aside Program.

The Federal Government establishes a goal that 23 percent of their awardable prime contract budget must be awarded to new and small businesses. It also has a lesser-known goal that 29.43 percent of large prime contract dollars will be subcontracted to small businesses. To make this an even more unbelievable program, the Federal Government is actually EXCEEDING these goals!

In the free market space, that is unheard of! The Small Business Set Aside Program dramatically lowers the barrier for effective market entry to a surmountable level. Don’t believe it? Visit any Federal Government organization’s small business office. The fact that such organizations exist should make you giddy!

To illustrate the advantages of the Federal Government’s Small Business Set Aside Program, let’s compare launching a business in the Federal Government contracting industry to other industries. A rapidly growing market space is the fast-food industry. Your restaurant is in a high-traffic area with good visibility.

Unfortunately, you’re near a McDonald’s and must compete head-to-head with a global icon with decades of branding and customer loyalty. This does not bode well for you! How many kids are going to forgo a Happy Meal at the Golden Arches and ask their parents to eat at “New Guys’ Burgers?”

Now let’s assume that the fast-food restaurant industry mirrored the Federal Government’s Small Business Set Aside Program. In addition to the folks who would wander into your restaurant out of curiosity, Ronald McDonald would be standing under the Golden Arches, begrudgingly diverting 23% of his customers to your restaurant! Your burger joint could thrive just on this workshare, alone. However, it gets even better.

When tourist buses arrive, McDonald’s is required to subcontract around at least 29.43% of their Big Macs and fries to your restaurant. You get to make food under the McDonald’s logo and profit on 29.43% of their take-in revenue during large surges of business! Can you see how the Federal Government’s Small Business Program is a definite game changer?