Government contractors are changing habits to survive

Government contractors lost millions of dollars during America’s longest partial government shutdown. The impact was felt across the country, especially among small contractors and low-income employees who are not likely to receive back pay from Congress.

The damage from the 35-day shutdown during December and January has inspired many executives to change how they do business. According to AFCEA, some contractors are abandoning the traditional practice of focusing on a handful of government agencies as clients. Instead, they are broadening their scope of potential clients through a wider array of agencies and/or aiming at private-sector customers.

Contrary to Vince Lombardi’s adage that “winners never quit,” these contractors are quitting to win. They are abandoning the traditional government contractor business model because of a dynamic assessment of risk versus reward in a time of uncertainty. Their wisdom will help their companies thrive when the rest of the industry struggles through the next government shutdown.

These leaders are also providing an example to the rest of the business world on the value of quitting practices that are no longer of value or are detrimental to a company’s success. For example, MSD Advisors CEO Mary Sue Dahill will tell entrepreneurs at a Northern Virginia Chamber of Commerce event on May 14 how they can scale and grow their businesses through using technology instead of working excessive hours.

“I would like small business owners to quit working so hard!” Dahill told me. She said that “many small business owners fall into the trap of working excessive hours or hiring expensive staff when they can simply leverage technology to automate routine business matters.”

Just as people quit bad personal habits after a heart attack or stroke, contractors who expand their client base are being self-disruptive for professional health. They are refusing to stick with ways that aren’t working and are detrimental to their futures.

U.S. Sen. Mark Warner of Virginia is an expert at quitting to win. An entrepreneur and investor before entering public office, he told me that failing at two businesses before the age of 30 “taught me that there is something courageous about knowing when to walk away.”

According to Warner, while “there is is virtue in commitment and seeing things through,” that is not always the right answer. “Sometimes, quitting means having the integrity to admit that something isn’t working, and the courage to try something new,” he said.

The principles espoused by government contractors, Warner, and Dahill are those which helped Mike, the owner of an automobile services company, rapidly grow his revenue. “Mike was a client of mine, and he regularly struggled with low revenues from December to March,” Susan Trivers, CEO of Trivers Consulting Group, told me.

“He finally invested in a highly-skilled front-desk representative despite 20 years of having lower-skilled staff in that position,” she said. “While that person cost twice as much to employ as past front-desk representatives, within a year that single change in staffing increased revenue by five times the extra cost.”

Alas, not every company is willing to have the courage to see the writing on the wall. Sometimes these are Mom-and-Pop shops which stick with what they’ve always done. Other times, they are billion-dollar corporations like Blockbuster.

Fifteen years ago, Blockbuster was the king of video. Six years later, the company declared bankruptcy because it had doubled down on what it had always done — rent videos from brick-and-mortar stores.

In contrast, Blockbuster’s competitor Netflix adjusted to the changing economy. Founded as a company which mailed DVDs to homes, Netflix transitioned to a streaming service that sent movies directly to TVs. Last year, Netflix had revenue of nearly $16 billion — while as of this April, just one Blockbuster location is still open.

“Many of my clients tell me, ‘we’ve always done it this way,’” said Trivers. “They so often confuse quitting ineffective business practices with ditching company or personal goals.”

Unlike Blockbuster, many government contractors are setting themselves up for long-term success. They are ready to do what it takes to win -— by quitting practices which aren’t working, and by opening their minds to new ways of thinking and growing. 

Dustin Siggins is owner and founder of the Kingstowne-based publicity firm Proven Media Solutions,  http://provenmediasolutions.net