GSA Business Opportunities and Pitfalls

Business Brain, the show for entrepreneurs, episode 423 for Friday, February 10, 2023. Greetings, folks, and welcome to or welcome back to the Business Brain Show. We are the show where we take our business brains and try to apply them to all aspects of our lives. Because there's so much that we can all learn from each other and the way we each apply our business brains. Here in Durham, New Hampshire, I'm Dave.

Hamilton and I'm still out here in Lafayette, California. Just got back from Tahoe with tons of snow and it was amazing. And. Yeah. Drove home in a fierce snowstorm. First time in a long time.

Yeah, yeah, yeah.

Took an extra couple hours, about five miles an hour over the. Over the grade.

Oh, that sucks.

With the. What is it? The defrost on full hot to keep the window from freezing the front window. Because the. The windshield wipers, those are called, if I'm correct, are just covered with ice the whole. The whole way.

Oh, wow.

Yeah, it was pretty crazy, huh? It was pretty wild.

That sounds. That's worse than what we usually deal with here. I try not to drive in the snow too much. I mean, get snow, but I. I try to, you know, it's like if it's snowing, I'll just avoid drive. So.

Yeah, yeah, yeah. I tried that too, but this time and normally it just knows and you get the wipers on or whatever. But this time it was freezing, sleet, wet.

Oh, was it right at the cusp of like 32 degrees? Yeah, it was like 20 something or other.

Yeah. And it was just admitted it fell. It would. It would. It would do it.

So that sucks.

It was happy to. Happy to get home.

Hey, you know, we recently Talked in episode 4:15. I asked about GSA, the government contracts, because I got a call from somebody that wanted to sort of wanted me to pay them to walk us through that process. And we asked and Todd answered if anybody knew if there was some way of like, if this was worthwhile. And yeah, Todd says paying someone to get you a GSA schedule is analogous to paying someone to set you up to go fishing when you have never f. In the end, you will have all the correct fishing gear. You will understand the fundamentals on how to fish, but you will have to go out and find the location, select the correct bait for the fish you want to catch, catch the fish, skin the fish and cook the fish all by yourself. The salesperson that called you, Dave, and relayed that they will get you a GSA schedule is glossing over all the work you or your team will have to do to truly see success. This includes the fact that they know nothing about your company, which that was clear in the conversation. So thank you for confirming this, Todd. Yeah, he says they will know all the forms and plans to create to land a GSA schedule, but you will have to fill in all the blanks and it will take a lot of your time. Fees for all of this typically run in the 10 to $20,000 range, Todd says, I've been a government contractor for over 25 years and have had experience with GSA Schedule, which sold a catalog of PC components. The goal was to sell hardware to a government agency in which we had a labor and facility contract to repair PCs. This worked out very well, but the GSA schedule was open to any US government agency, so we would get one offs where some government location overseas needed a $10 keyboard that cost us $40 to ship to them. Perhaps we could have avoided that requirement, but the company who assisted us in getting the GSA schedule either did not know this or conveniently failed to tell us. In the end. This was rare and more of a hassle than a ton of money, but it's an example of the nuances to these schedules. We also had a GSA schedule for providing people and labor. There were defined labor categories based on education, skill area and years of experience. In Shannon's example of a friend who was moving hardware on a GSA schedule where the cost of items fell over time, the cost of labor does not fall. GSA contracts have a two to four year period where you may have small escalations but the rates are otherwise locked in and they do not cover the wage increases. Your talented employees will request to remain with your company. We often ended up with an employee leaving because we could not meet their increase requests and then having the government all over us for turnover and positions not filled while we found someone else who would only stay for a year. A lot of time and frustration it was to manage. Obviously there are many, many companies with GSA schedules who are successfully using them to make lots of money. Worth noting that they have a person or a team of people who manage the schedule for updates and compliance, research all the requests for proposals and then submit those proposals. Bottom line, you really need to know what you're getting into before signing a contract with someone to land a GSA schedule. I get a call every other month, he says from a company promising me that they will get us a GSA schedule and a 30% increase in revenue. As stated above, they gloss over the details to the point where one could say they are outright lying. Todd, thank you for this. This is exactly what I was looking for.

You rock email.

Yeah, thank you.

There's a lot to unpack here.

Yeah.

And one of the things I, you know, right off the bat is this concept of consultants and companies coming into your business without really knowing anything about it, and, and making promises like that, and you really have to flush those out. And. And I would say be very skeptical of someone that's going to charge you up front to, you know, get you all the fishing gear, but not get. Not. Not get you to the end where you're going to actually catch a fish and figure all these things out.

I think it makes me sort of sit back and think, if you are in the business of helping people do a thing, right, like, you know, a consulting business or, you know, whatever. Whatever bucket that might fall into, oftentimes it's easy, you know, what you can do. And so you go out and sell that to people, Right. And that's what the folks who called me and the folks who called, you know, Todd every other month or whatever try to do for him. And it makes me stop and think, well, wait a minute. Maybe the first question is, hey, here's a thing I can do or my business can do. I want to learn about your business to see if it makes sense for us to do this for you.

It's a better value approach.

It's a better value approach. Now, of course, it requires more of your time because you, as the business person, the salesperson, whatever the service provider, the first thing you want to do is vet these companies before you even pick up the phone, because you don't want to waste your time calling someone that you know out of the gate is unlikely to. To benefit from this service that you're going to provide them or going to try and sell them. So you do your vetting, then you call them to continue your vetting, not begin the sales process. Like, you know, and I like if I got a call from somebody that said, hey, we're in the business of helping people get GSA contracts or GSA schedules, but I'd like to learn more about what you do to see if it makes sense for us to. To do this for you. If that one line, much better pitch. Oh, that pitch is like, absolutely. How much?

Don't really hear that. Yeah, you never really hear that.

Yeah.

Yes.

Yeah. Yeah, I like that.

It's comes back to that, you know, adding value first.

Well, let's.

Before I try to Pitch you on giving me money. Let me, let me spend some time looking into your business to see whether I can even add value to it. Instead of just this, you know, blanket, I'm sending emails to 500 companies and, and gonna see who, you know, who clicks on, who clicks on the link. I really, I like that a lot. I think it's great.

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There's that. You mean. I think it's pretty prevalent if you think about like social media and advertising, that kind of things, that 80, 20. Oh, I'm, you know, 80% of what you post, you're sharing information and about your business and this kind of thing, but 20% of the time you're asking them to buy something. And, and so that maybe that's prevalent there.

It's, it's prevalent in the freemium model. Right. You know, sign up for Dropbox, you get two gigs for free, whatever. Yeah, right. All, all of those things. So it, it is, it's out there when it is fundamentally baked into the way the business operates from the get go or from.

Yeah, that's, that's the only way you're going to succeed in those areas. Right?

Correct. Yeah.

Yeah.

But in the service business, in the consulting business, everybody wants to bill from minute one.

Yep.

And you know, I wonder if that creates an opportunity for folks who are willing to bill from minute 31, maybe. Right. Like, I mean, think about, think about minute 31. Like if you're willing to give away 30 minutes of your time again to very well vetted prospects. Are you going to wind up having more customer loyalty and in the end making more money? Or perhaps I should say making easier money or maybe making money that's more pleasant to make.

Yeah. Building your loyalty.

Right. Better referrals. Not only does the customer get to vet you before they spend a dollar, you get to vet them. Because if you're at minute 21 and you decide, I don't want to work with this person ever again.

Yeah. Or it's just not gonna work.

Yeah. They haven't paid you yet. You owe them nothing. Right. You're not on the hook. You get to walk away when they say, oh, you know, well, what about minute 32? Yeah, I don't have time for that. I gotta move on to the next thing. I mean, you find ways of saying, I'd be curious to hear from you folks. Feedbackusbrain show, of course, like Todd did to see. Has anybody like, are you doing this in a service slash consulting business where you're. You're giving away a little bit and maybe it's not 30 minutes, maybe it's 10 minutes, maybe it's 15 minutes. And, and I'm, I'm, I'm putting this in the confines of a build by the hour thing. Maybe there's a different. But you're not giving away, you're giving away your time, you're giving away your expertise as part of this freemium model. But I just, I wonder, is there, is there a way. I mean, what we do here on the show is freemium.

Yeah, you know? Yeah, sort of. Yeah. Yeah. The other part of this, of Todd's email about GSA stuff that I wanted to mention or comment on was the $10 keyboard with a cost of 40 to ship, you know, and I bring it back to our previous episode where we were talking about pricing and things like that. And I think this is another one of those good examples where, hey, we, we take it, you know, we don't make any money. We lose money on these when we have to ship them over. But as long as it's a small enough number and it's enabling. Enabling you to have this larger relationship, you know, although having a large relationship with the government really kind of gives me the shivers, it. That is one of those examples that, you know, certainly you'd want to do it until such time that the offset, you know, didn't. Didn't work anymore.

Yeah.

But the one thing that Todd mentions, the cost of labor that you know, how you build that out and get those bids. I mean, it sounds so foreign to me. And it just seems like it would be fraught with low ballers coming in, you know, at the lowest possible point they could, and then trying to squeeze money out everywhere else to the point where everybody loses.

Yeah, right, right, right.

It's got to give somewhere. You're either underpaying people, getting lousy talent, losing money, or the government's getting poor service. You know, your, Your client. I, you know.

Yeah. That idea of, of. Of committing to a labor rate for four years, brutal. That's, that's. I mean, I. Again, I haven't seen these contracts. Yeah, of course. Because I didn't pay the people to, you know, walk me down the path. But that, I mean, like, no freaking way.

Yeah.

I mean, there are like, just think.

If you'd have done it in the last four years.

Oh, right.

How the whole concept of, I don't know how you. How you do it. And I would imagine. And maybe Todd can follow up, that the, The GSA landscape must just be riddled with companies that go on, have gone under chasing, you know, these deals and then realizing, oh, wow, we, we can't. We can't make it work. Because I know from, you know, I'm a product guy and I'm guy that buys tons of stuff, sometimes from the government, you know, sometimes from corporations. And I have to bid on products all the time. And I often. I'm. I'm pretty good at it and have done it for 30 plus years. And when I look at it and I. Ultimately, if I lose a bid, I look at that and go, there is no way they're going to make any money on that. It's just impossible.

Right, right.

But there's enough companies that go around where all you need is one company to come in and think we can do it and they buy, you know, whatever large lot of X. Yeah. Product. And then the next time you go back and there's another one that tries it and tries it over and over and over. And that's kind of how, you know, I would imagine some of this GSA stuff gets where people are very excited, they think they can hire very cheap labor or try to do it offshore. Well, rules against that.

I mean, that's one way. And again, we're literally pulling this out of thin air because we've never done it. But is the other way that everybody that does this knows you've got to overcharge? I mean, there's a long history, like perhaps One of the first memes ever was the idea of the government paying $20,000 for a hammer. And maybe it's because the people that are seasoned, that have been burned the one time, or at least heard about someone who's been burned the one time, come in and say, I got a massively overcharged for this because I'm locked in for four years on the price of whatever it is I'm offering. So I've got to pad it with a massive amount so that I can be guaranteed, all but guaranteed to make money in four years. Maybe that's where this comes from. I don't know.

Maybe.

I don't know.

Yeah, I, I could speculate that some of those crazy numbers come from, you know, large corporations that are perhaps the only ones that could do it, you know, oh, it's Northrop Grumman and one other company. You know, something like that. But, But I have no idea. We had a, A government. Yeah, you're better at that than what? We got to go to Business Brain Show.

We do need to go to Business Brain Show. Yeah, we had that.

God.

What? Yeah, yeah, yeah, yeah, yeah.

Let me see if I can.

What was his name?

That's what I'm gonna find out.

Lloyd Chapman, the founder of the American Small business league, episode 317.

Yeah, yeah, he talked a lot.

Good episode to listen to. Yeah, yeah, yeah.

Go back and listen to 3:17. We'll put a link in the show notes. You'll see it in your podcast app or up at BusinessBrain show. When this one posts on Friday, the lieutenant.

Well, it's already been posted. If they're hearing it, Shannon, you got it.

That's the way it works. And I'm the guy who posted, so I should know that works. But, yeah, Lloyd had some really interesting comments to say about how. How people aren't. Or the government doesn't live up to giving it to all small businesses and stuff. So it's a great episode.

Yeah, it is great. I, I, I found that fascinating. I remember sitting here in this very ch. Chair kind of with my mouth hanging as he just ranted about it and, yeah, he was. None of it sounded false. Yeah, exactly.

No, I, I'm a believer.

Yeah. Same. Folks, thanks for hanging out with us for the last 18 minutes here, and hopefully you'll choose to spend your next 18 minutes with us. Maybe you'll go listen to the interview with Boyd Lloyd or, Or you'll listen to the next episode, 4 24, whatever that might be. Thanks for hanging out with us. Thanks for sending in your comments to Feedback at Businessbrain Show. We are loving having all this interaction. I hope you're loving the benefits of it and we'll see you next week. Keep living that charmed life, huh?