Your Business AND Government or VERSUS Government

In California, the most heavily regulated state in the nation, it’s easy to ask the question: is it a matter of your business AND government or VERSUS government?  A visit to the State of California’s somewhat-consolidated permit and regulation website demonstrates that even the most mundane business turns up pages of related federal, state, and sometimes local regulations.

Yet despite this situation, it is possible to leverage government for success.

There are four main areas that LA tech companies can use to avoid that adversarial dynamic and actually gain advantages. 

It’s helpful to think of these four areas as a framework with which your business can engage with government.  For our clients we arrange the four areas in a diamond framework:

 

Public Funding

Every year there are hundreds of millions of dollars available from the state to support a range of business needs.  Yes, hundreds of millions of dollars – only the federal government offers more. Learning more about these public funding options is the first step to improving the relationship between your business and government.

Public funding is provided in a few different forms but predominantly as grants, tax credits or deferrals, loans, and loan guarantees.  Sometimes the state is able to provide assistance with land use and other, less liquid forms of funding or financial support, but those are done on a case-by-case basis and usually require a significant lobbying effort in Sacramento.

Grant programs can be found throughout state government.  The largest to date have been in the renewable energy and advanced vehicle programs at the California Energy Commission, although the California Air Resources Board is gaining steam with funding from the state’s emissions-reducing cap-and-trade program.

Other key grant program areas are found in recycling, environmental cleanup and mitigation, medicine (especially stem cell research), agriculture, education, and even transportation.

Most grant application processes between your business and government can be daunting.  (We have seen grant application packages over an inch thick).

Remember, in California, government is ‘not your pal,’ so it is important to keep in mind that even the best grant applications may be disqualified for simply failing to follow the exact letter of the program’s directions.  With that in mind, it might be worth hiring a professional grant writer or grant manager to help your business and government better collaborate on this process.

Having said that, as a business person, you shouldn’t rely entirely on the government for your funding.  Public funding is great – it’s non-dilutive and, with the right approach in Sacramento, it can help propel your business to success.  It’s just important to not rely too much on public funding to get you there.

Government Contracts

In ScaleLA’s last post, there was mention of government being a potential source of business for LA startups.

While most government contracts are awarded to the lowest bidder, more and more contracts are being awarded based on best value.  What’s particularly encouraging about winning a government contract is that when a business does a good job, it can usually keep winning the same contracts repeatedly.

Contracts can be found through the California’s procurement portal.  Unfortunately, CaleProcure is probably the worst website ever designed.  Even seasoned procurement pros have a tough time finding particular contracts through the system, and for some reason they aren’t willing to put a Google search function on the site.

Maybe after breathing exercises and a morning of calming yoga, you can spend time going through CaleProcure to see what kind of opportunities you come across. However, if selling to government is important to your business, I suggest that you visit Sacramento in person to directly develop relationships with procurement officers in various agencies.

If you are a small business or a business majority-owned by a disabled veteran, then it is definitely worth getting certified as a Small Business and/or Disabled Veteran Business Enterprise(DVBE) by the California Department of General Services.

The state buys about $10 billion of goods and services every year, and it is a requirement that 25% of an agency’s purchases must be through small businesses and 3% through DVBEs.  To make that happen, the state offers contracting preferences to those groups, which can help a company struggling to get to a lower price.

Public Affairs

It can be very “legitimizing” for your company executives or technology to be photographed with an elected official or government executive.  Also, winning public funding can signal to investors and the public that your company has been vetted by government and is, therefore, a safe bet.

While it is sometimes better to operate in stealth mode while your company is starting up, it becomes increasingly important to build a reputation in government so that when your competition starts to play hard ball, people can make informed decisions.

Many local chambers of commerce and groups like ScaleLA have “lobby days” in which selected members make the rounds in Sacramento to introduce their companies to the legislature and the executive branch.

This can be a low-cost way to get introductions and begin to learn how Sacramento works.  Whether your company is growth hacking or advertising its way to success, public affairs is an important opportunity to shape perceptions and support your efforts to win government contracts and public funding.

Laws & Regulations

The California legislature produces upwards of 3,000 new bills every year, and often over 700 eventually make it to the Governor’s desk for signature or veto.

Many of these bills are drafted and sponsored by companies attempting to gain advantage against their competition or special interests trying to reign in certain behaviors.  As in the case of public affairs, due to the regulatory nature of California, as a business here it is important to pay attention to the legislative process.  This is an area that makes membership in a group like ScaleLA or your local chamber particularly worthwhile.  Those groups are focused on business-related bills and often alert members when there are especially challenging laws that might impact your business and government.

If your business is in a regulated area, then it is likely you will be hiring a lobbyist to represent you.  But even if you’re not a heavily-regulated business, it can pay dividends to meet your local elected representatives and develop enough of a relationship that your company can reach out for help if needed.

Using a framework such as the diamond can be helpful in the development of your business plan. 

It would be a shame to not take advantage of public funding if it is available in your area. If it is, and you’re not taking advantage of it, you can bet your competition will.

The same goes with government contracts; they are difficult to pursue but can turn into steady revenue for your company.  In short, government-focused public affairs and awareness of the legislative process is just smart business. 

Yes, California is known as a difficult state for business, however, there are advantages to be gained by aligning your business and government.

Groups like ScaleLA exist to help you succeed.

Will Semmes

Advisor, ScaleLA

Co-Founder, Bellwether Partners

Will Semmes