This is the next in our series of special reports for OODA members focused on federal business strategies for the Startup CEO (find them all here).
This special report is written for the tech CEO considering when to stand up a federal office. You will want to time this just right. If you do it too early you will be wasting money. If you do it too late you will be losing an opportunity to grow and to serve the nation.
Although every firm is unique, there are general considerations that apply to all. We provide these general considerations below for your reference. Review and think about your capability and it may help you decide how aggressively to run towards federal business.
Questions To Ask Yourself Regarding Standing Up Your Federal Office
- Do you need to hire more engineers in order to have a great product? If so, that is probably a better deployment of your resources than standing up a federal office. In most cases it is better for everyone, including government, if you build a great commercial product before you seek to sell it in the federal market.
- Have you detected any “demand” signals that indicate the government needs you now? This can help you decide how fast to move in this direction.
- Have you raised VC financing? If yes, then we can assume several things. One is that you have some staying power as a VC-backed firm. Another is that you have some great VCs that are probably connected into the DC ecosystem. Tap into their network and get their sense of whether or not you should move towards the DC market.
- Do you see other firms with similar capabilities in the federal space? Watching competitors and what they are doing in the federal market may help you decide where you are on the federal readiness curve.
- Are you ready to make a long term investment? A general rule of thumb for high tech firms pursuing federal business is that you will pursue business for at least two Octobers before you see significant results. The government does business every day, but for software and hardware purchases, there is a cycle centered around the end of the federal fiscal year. New firms that enter the federal market a few months before the end of the fiscal year can frequently benefit from money that must be spent, but that will probably not be a statistically significant amount. The “Two October” rule of thumb is an important one for planning.
- As CEO, are you ready to personally invest time and energy working on the federal market? If you are dedicated to this market you may want to stand up your office earlier vice later. If you are not going to be able to focus personal time and energy, it may not be the right time for you to aggressively work the federal market. As a rule of thumb, we recommend CEOs be prepared to spend at least 20% of their time personally working with federal buyers or partners to efficiently grow.
- What is the nature of your relationships with the federal systems integrators? Do you have personal contacts at very senior levels? The strength of these relationships may impact your decision on when to establish your federal office, since you will likely need these integrators to help you get established.
- What is the nature of your relationships with senior government leaders? Sometimes being lucky enough to have trust-based relationships can impact your decision on when to come to the federal market, as these friends may be more willing to listen to your sales pitch.
- Would your capability benefit from a relationship with a strategic partner who can act as a channel or reseller or other solutions provider? For example, have you considered a relationship with a firm like Carahsoft? For many they provide an incredible strategic boost to federal growth. They can also provide expert advice on how to approach the federal market and how to stand up your federal office.
Now What?
After thinking through the questions above you should have a better feel for whether or not the timing is right for you to invest in standing up a federal office. If your sense is that the timing is not right, you can still take steps for future growth in the federal space by tracking government mission needs and staying in touch with partners in the federal ecosystem. If you decide you are ready to invest to stand up a federal office, it will be time to shift your thinking towards execution. A next key decision point will be who to select as leader of your federal team. In our view, the skills required to stand up a federal team are unique, you need not just a federal sales leader but a entrepreneurial self starter who has stood up federal teams before. There are just a few super-stars who have done this well. Engage your network (which includes the OODA Network) to seek out the best candidates.
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