To avoid turning this article into an abbreviated course in macroeconomics, let’s look at three irrefutable trends to address this topic. To prove that you already know how stable this market is, here are three questions with obvious answers.
- Do you believe that taxes are (ever) going to significantly decrease?
- Do you believe the world is (ever) going to be so much safer that a dramatic decline in Defense spending will occur?
- Do you believe that a MAJORITY Congressional Representatives and Senators will (ever) be elected by campaigning to eliminate pork-barrel spending for THEIR voters?
History and ever-increasing Federal Government spending authoritatively answer all three of these questions. Even elected officials who claim success in “reducing the size of government” have no negative impact upon contractors. Here’s why. They have a dirty secret that they will never tell you. Reducing the number of government employees nearly always means converting those jobs to contractor positions!
Although the contracting industry may be slightly impacted by the overall economy, it is better protected than most industries. If the economy is doing well, then more tax revenue is generated, and that allows Congress to increase government spending which means more government contracts, benefiting Federal Government contractors.
If the economy is doing poorly, then Congress usually injects the waning economy with various stimulus packages, such as infrastructure investments. And who do you think benefits the most from these “stimulus” packages? Contractors do.
Of course, budgets do shift within the Federal Government due to changing priorities. However, in most cases, it’s primarily the larger companies that take a hit when a specific agency’s budget shrinks. “Tightening” budgets typically favor more contracts going to smaller businesses because of their lower costs. In nearly every case, smaller companies can provide the same services as larger ones for much less money.
Simply stated, if the Federal Government contracting market crashes, your best entrepreneurial markets will be selling sharp sticks and caves to help your customers survive the apocalypse!