What is Business to Government B2G? - Explained

What is Business to Government B2G? - Explained

There are businesses which targets governments all around the world as their sales targets to sell their products or services developed or manufactured by the business. Businesses which targets governments to sell their products or services is having a business model of Business to Government (B2G).

Doing Business with Governments

There are very less number of businesses in the world targets to governments to sell their products or services to sustain the business. There are couple of reasons behind the companies which are targeting governments to sell their products or services. Governments do have large amount of cash flow compared to businesses most of the businesses in the world and direct consumers.

If a business focus on a government to make a sale of the product or service of what they manufacture or develop in house, it could be something which can target the entire country. Something like Money Note Printing, everybody uses bills to pay for most of the stuffs daily. And there could be  million bills a government needs to print monthly to replace damaged notes to new notes.

There are many IT firms doing business with governments. Starting from the tax collection to paying the simple parking ticket are done by private limited liability businesses

There's another extremely famous factor in the world which is known as Defense. There are many Limited Liability Businesses in the world selling military equipment to governments all around the world to protect the country and to fight wars. Selling defense equipment is to governments are a high profit businesses where limited liability companies doing business with governments.

Extreme Strategic Business

Doing businesses with governments isn't easy like talking another businesses or a consumer and pitching the product and selling the product or service. There are businesses in the world who has been trying to sell a product or service to a government for a large number of years and some of the businesses do get failed selling the product or service to the governments.

Selling a product or service to a government is required extreme strategic business strategies. There are many space transportation businesses in the USA trying to win a contract by the government to send some cargo to space. And most of them are getting failed of proving the concept.

There are key factors that a government interested about the business. How much the solution will cost, What's the reliability of the solution, Is it easy to use and how stable the business is to provide such a solution.

If a business could tackle these questions in a round, there is a chance that a business could tie up the government and do a business.

Risk of Doing business with Government

Government is political decision of a country's population. Government can be elected by the vote of general public. There's a chance that one government do not like to the previous government's decisions. Doing business with governments could be the most riskiest business to make. 

If a government owned airliner make an order for 20 air planes in next 2 years by signing the agreements with the air plane manufactures and settling a payment in advance which is not the full value of the airplane. If the government changes and the next government can cancel the order of the purchase of air planes.

The cancellation of the order could hit the business in massive way. And broke the expectation of selling an air craft which already the business has put some effort and invested capital. 

Doing business with government needs extreme risk management approaches for a business to become sustainable and maintain the business momentum.