Why you should never base your business model on a government entity

Unless your a defense contractor that spends millions of dollars on lobbying in congress, I would highly recommend not making your business model and revenue streams dependent on a government entity. When I say government, I mean any organization funding directly by the government

Here's why:

  1. They make you jump through hoops that are not present in the free market - The government puts up what they call "red tape" for no other reason than to just have it there. It serves no purpose, but they want to show the public that they have a protocol that makes like they are doing something. This red tape could mean filling out unnecessary and ridiculous forms, having a certain number of people of a certain race working for you
  2. They only fund projects that serve their agenda - This is especially true of science. If you are not studying or doing work associated with whatever agenda is being moved forward at a particular time, don't count on getting funding for it. I've even seen cases where government organizations will fund unqualified or ineffective programs and businesses just so they can check a box.
  3. Their staff do not play by the rules of the free market - Working for any government organization or non-government organization such as a 501 c3 non-profit that receives government funding is basically a ticket to be an asshole. Corporate America would never tolerate the kind of bullshit government employees get away with. The petty behavior the lack of punctuality in communications, whatever it is, government entities are rarely held accountable for their shitty processes. Just so long as they exist and can show the public that they exist, that's all that matters. How they handle their business affairs has no bearing whether or not an employee gets to keep their job. Unless they are breaking the law, don't count on anything being done quickly or with any level of professionalism and if it is, that would be the exception to the rule. See my podcast on How to Spot a Petty Person.
  4. At any moment your income stream could be gone - If I ever did business with a government entity, I never invested heavily to support that business and I always looked at it as a bonus I didn't expect. The fact of the matter is that unless you are a manufacturer of fighter jets and other heavy weaponry, the chances that you're going to have something long term and sustainable could be limited. There are just too many factors at play none of which have to do with the free market. You could have one politician in place that supports your cause and then a few years later the entire program gets slashed. That being said, temper yourself with respect to what you're doing to support that line of business and understand that it could all be gone overnight.
  5. There is too much competition, especially if you offer a commoditized product - People are willing to whore themselves out for anyone and anything. You already know this. When it comes to attracting government business, people who often bid a project the lowest or in the mid-range typically receive the business. That doesn't mean that this business is profitable though. They may just be using it as a way to get in. But that's a foolish way to base your entire enterprise. I would never do that. That's the same thing as artists who play for exposure to the wrong audience. You want people to appreciate what you do, not reap your rewards for no compensation.
  6. Government employees are often misinformed - If a government employee saw an advertisement for a Fake Guru in the back of a tabloid they would hire him. Basically, what that means is that government employees don't want to work, especially the administrative ones. If there is a simple solution or a path of least resistance they will take it. I've been able to get some nice business because my solution was the most expensive and they had to spend the money. That's how lazy government employees are. As that relates to you always remember that in dealing with the government the easiest solution could take precedence over the best solution.
  7. They can take forever to pay their bills - Yes, they might always be good for the money, but at what cost? I'm not going to wait 30-60 days to get paid from you. Sometimes the contract even states that payments must be made up front. Even after signing the contract they still may wait to pay you until services rendered. Even after they say they will pay you when services are rendered, the government employee will apologize and say "we'll get a check in the mail to you right away". This stress can be debilitating, especially when running a business. Can you imagine if you worked for a corporation for 6 months and they told you that they wouldn't be able to pay you for another 6? That's how the government works sometimes. If you ask about where your money is, sometimes you will even encounter contention from government employees in the accounting department as if it was a crime for you to even remind them that they owe you money.
  8. Mastery is rarely rewarded in the government system - If you achieve any level of mastery doing anything and are competing against other people, don't expect you being the best person for the job will mean that you will get that job. When dealing with a government entity, every kid gets a trophy. Everything has to be fair, including being unfair. So if you have the best solution but you're the wrong color, that may mean you won't get the business.
  9. Government employees are often unskilled in the areas they make decisions in - As I mention in the 14 Things a Real Artist Does podcast, or maybe it was How to Keep your Business in Check podcast, you should never take advice from someone who is not proven in their field. This is actually what the government does all the time. People who have no idea what they are talking about or no accountability for the failure or successes of their decisions often get to make them. Not just that, but they don't have any expertise in what they are making a decision about.
  10. There is little or no accountability - People talk about their being accountability in the American government, whether state, local or federal and that is true to an extent, depending on what you are talking about. If an employee doesn't do what they’re supposed to and it affects your contract, don't expect them to be fired like in corporate America. While the bad decision might be rectified, they are not going to pay you for whatever that employee fucks up. It's ultimately you're fault because you should have known how stupid and unqualified they were to handle it in the first place.