Jack of all trades "Government Suppliers".

Lately, I have seen an increase in government suppliers that are looking for purchase order financing. It's no secret that factoring companies like working with government suppliers because the US government is a great payer.

One thing that I have noticed is that the number of "jack of all trades" suppliers is increasing - dramatically. These are suppliers that claim they will sell anything and everything to the government. Form IT Equipment, to radios, to cleaning supplies to food. All by themselves. More often than not, the "jack of all trades" supplier is a single owner (or husband and wife team) entrepreneur who started their company intending to be a government supplier.

In my experience - most of these fail. Period. That is not to say that some will succeed and do nicely. Sure. But those are few and far between.

There are probably many reasons for this but I'll hazard a guess. Most government purchases are highly specific, which requires specialization. The government even has specifications for buying simple things like mops. Imagine their specifications when buying complex things like IT equipment, or radio equipment , or electronics. Few business owners could develop the expertise and the supplier relationships to be able to service all types of contracts. What a juggling act! How can they develop meaningful supplier relationships if they go fishing for a different supplier for every order? Also, how can they can develop sufficient volume with any supplier to get favorable terms?

There is another catch. Profit margins in government sales are low because of competition. The only way these supplies can make a living is by getting their product at rock bottom price and by fulfilling large orders. Again, the focus seems to be volume and specialization.

But this makes sense. How many successful companies started and became successful by doing disparate things. That's also why the only business financing we offer is factoring and purchase order financing only :-).

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