Staying Alive
The struggles of a business trying to survive.
The end of summer brings a surge in calls from government clients, mostly from the military, looking to spend remaining dollars in their budgets before the fiscal year ends on Oct. 1. This year is no exception. The surge has started and is most likely to peak at the end of August. Just last week we got calls from the State Department, the Army and the Marines. The person on the phone is generally a low-level officer, responding to a request from a superior for pricing on a large and fancy table. Our bid will be presented to the upper ranks as one of a number of ways to spend their remaining money. Consequently, we sell a much lower percentage of these inquiries than those from private clients. But August is usually a slower month for private business, so we take the time to write proposals anyway.
This year, however, the expected slowdown in private business has not happened, even though the number of visitors to our Web site has not changed. I believe that this is because the site is yielding more calls per viewer. Of all the metrics I track with Google Analytics, we’ve seen the biggest change in the bounce rate (number of people who leave after viewing one page) and the time spent on the site. Our bounce rate had hovered between 50 and 60 percent for the last two years, but now it’s down between 40 and 50 percent. Time on site went from three minutes to five minutes. Potential clients are clearly finding it easier to spot the things they are looking for, and we are seeing it in more calls per week. The revamped site has only been active since the last week of June, so I’m not sure whether this is a blip or a permanent change. But the result has been an overload on my sales department (which consists of three of us). We’re deep in the weeds right now. It’s taking us two to three days to get to new proposal requests, when normally we get them done in a day or less.
It’s tempting to ignore the government callers, or at least to cherry-pick the most promising. On the other hand, some of these jobs do come through. In the fall of 2008, an order from the Air Force kept the business from failing. Last year, we got a large order from NASA, and a couple more from the Air Force. Our direct sales to the government were $146,355, out of a total of $1,549,488. That’s a month’s work for the whole shop. If I add in the orders from defense contractors ($36,423), who are undoubtedly also spending government money, we’re looking at 12 percent of our sales.
All of the recent talk of debt ceilings and default has added another note of uncertainty. Government work is done on a strict net 30 basis: do the work and deliver it first, get paid 30 days later. There are some arcane billing procedures to deal with, but my experience has been that as long as I do a good job and jump through all of the hoops, I will get paid. But lately there’s been talk of delaying payments to the military and defense contractors, which could leave me hanging. We finished a job for NASA in the winter, and delivered a month before the near-shutdown in March. I was told by the contracting officer that the funds were already allocated, but that if the government shut down, there would be no one to disburse them to me. Fortunately, we got the payment as promised.
Some people talk about government spending as if it’s fundamentally different from private economic activity. I don’t see it that way: for me, a dollar is a dollar no matter where it comes from. If I get money from, say, an H.M.O. in Ohio, I pass it on to my suppliers, my employees, my landlord. I keep a little bit, and some goes back to the government in payroll taxes. If I get some dough from the Air Force, the same thing happens. Maybe the H.M.O. borrowed the money used to buy my tables, and maybe the Air Force did, too. So what? They decided to buy something from me, and I’m glad they did. So are my employees, suppliers, and landlord. The government dollar isn’t destroyed by being spent — it just goes back into the private economy.
I think I’ll do this: speak to every caller the same, whether government or private. We’ll make a judgment call once we get off the phone as to how likely we are to get the job, factoring in the size of the job as well. Private callers with large potential orders who need quick delivery will get first priority — they are the easiest jobs to sell. We have made more sales to the Air Force than to any other branch, so it takes priority among military clients. Calls from other branches of government will be evaluated on a case-by-case basis. Calls from California government agencies will, as always, be discarded immediately.
If you do business with government agencies, do their financial difficulties affect how you work with them?
Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside of Philadelphia.
Article source: http://feeds.nytimes.com/click.phdo?i=bef61645cadfcb04911d187580bc274c