Government Contracts vs. Private Clients: Which Is Better For Your Veteran-Owned Business?

As a veteran entrepreneur, you've got a decision to make that could define your business trajectory: Should you focus on government contracts or chase private clients? It's not just about preference: it's about strategy, stability, and maximizing your unique advantages as a veteran business owner.

After working with hundreds of veteran entrepreneurs through Guardian Business Coaching, I've seen both paths lead to success. But here's the thing: the "best" choice depends on your specific situation, goals, and how you want to leverage your military background in the business world.

Let's break down both options so you can make an informed decision that aligns with your business vision.

The Government Contracting Advantage: Built-In Benefits for Veterans

The federal government isn't just another customer: it's the largest consumer of goods and services in the world. And here's where it gets interesting for veteran-owned businesses: the system is designed to work in your favor.

Set-Aside Contracts: Your Competitive Edge

Through the Veterans First Contracting Program, veteran-owned small businesses can access contracts that only they are eligible to bid on. Think about that for a second: you're not competing against Fortune 500 companies or every business in your industry. You're competing within a much smaller, specialized pool.

Service-disabled veteran-owned small businesses (SDVOSBs) have it even better. About 3% of all federal contracts are reserved specifically for SDVOSBs, while the broader goal is for 23% of federal contracts to go to small businesses overall, with at least 5% specifically earmarked for service-disabled veteran-owned businesses.

The Numbers Don't Lie

Here's what the data shows: veteran-owned businesses report that government contracting provides more reliable revenue and higher average contract values compared to private corporate clients. When you land a government contract, you're looking at predictable payments, defined scopes, and longer-term relationships.

To access these opportunities, you'll need SBA VetCert certification, which opens doors to sole-source and set-aside contracts across the federal government. The certification process takes time, but it's your ticket to a massive market with built-in advantages.

Beyond Contracts: Additional Resources

The benefits extend beyond just contracting opportunities. Veterans can access the Surplus Personal Property program through the General Services Administration, allowing you to obtain federally owned property no longer in use. The Office of Veterans Business Development (OVBD) offers exclusive funding opportunities and entrepreneurship training programs specifically designed for veteran entrepreneurs.

The Reality Check

Government contracting isn't all smooth sailing. You're dealing with bureaucracy, extensive documentation requirements, and longer sales cycles. The compliance obligations are more complex than typical business relationships, and the certification process requires patience and attention to detail.

Private Client Relationships: Flexibility and Speed

Private sector clients operate in a completely different world from government contracting. The decision-making processes are faster, the relationships can be more personal, and you have greater flexibility in how you structure your services and pricing.

The Speed Advantage

Private clients can often make decisions in days or weeks rather than months. This faster pace means you can generate revenue more quickly, test different service offerings, and pivot your approach based on market feedback. For veteran entrepreneurs who are used to adapting quickly to changing situations, this environment can feel natural.

Relationship Building

With private clients, you have the opportunity to build deeper, more personal business relationships. These relationships can evolve organically, leading to expanded services, referrals, and long-term partnerships that go beyond formal contracts.

Flexibility in Operations

Private sector work typically involves less administrative overhead and fewer compliance requirements. You can negotiate terms more freely, adjust pricing structures, and customize your offerings to meet specific client needs without navigating complex regulatory frameworks.

The Challenges

The trade-off for this flexibility is stability. Private sector work is generally less predictable than government contracts. Individual clients or companies may face financial difficulties, reduce spending, or switch vendors more easily than government agencies. Competition is typically more intense without set-asides, and revenue streams may be less reliable.

Side-by-Side Comparison: What the Data Shows

Factor	Government Contracts	Private Clients
Revenue Stability	High - predictable payment schedules	Variable - depends on client stability
Average Contract Value	Higher average revenue	Generally lower individual contracts
Competition Level	Reduced through veteran set-asides	Open market competition
Sales Cycle Length	Longer (3-12+ months)	Shorter (days to months)
Administrative Requirements	Significant compliance and reporting	Minimal to moderate
Certification Needed	VetCert required for most opportunities	No specific certification
Market Size	Massive but regulated	Unlimited but highly competitive
Payment Reliability	Extremely reliable	Variable by client

Strategic Recommendations: Choosing Your Path

Your decision shouldn't be binary. The most successful veteran entrepreneurs often pursue a hybrid approach, but your starting point depends on several factors.

Choose Government Contracts First If:

• You have the patience for longer sales cycles and bureaucratic processes

• Your business can handle compliance requirements and documentation

• You want to leverage your veteran status for maximum competitive advantage

• Stable, predictable revenue is your priority

• You're in a service area that aligns well with government needs (IT, construction, consulting, logistics)

Focus on Private Clients If:

• You need revenue quickly to establish cash flow

• Your business model doesn't fit typical government contracting

• You prefer flexible, relationship-based business development

• Your services are highly specialized or creative

• You want to test and refine your offerings before pursuing larger contracts

The Hybrid Approach: Best of Both Worlds

Most veteran entrepreneurs I work with eventually develop a portfolio approach. They use government contracts as a stable revenue foundation while maintaining private client relationships for diversification and growth opportunities.

Start with whichever path aligns better with your immediate needs and capabilities, then gradually expand into the other area as your business matures. Government contracts can provide the stability to take calculated risks with private sector innovation, while private clients can keep you agile and market-responsive.

Making Your Decision: Next Steps

Before you choose a direction, honestly assess your current situation:

The truth is, there's no universal "better" choice. Both paths have created successful veteran entrepreneurs. The key is choosing the approach that matches your business goals, personal working style, and current capabilities.

Whatever direction you choose, remember that your military experience has prepared you for both environments. The discipline, strategic thinking, and leadership skills you developed in service are valuable assets in either market.

The most important step is to start. Choose the path that feels right for your current situation, execute consistently, and be prepared to adapt as you learn more about your market and capabilities.

Your success as a veteran entrepreneur isn't determined by which type of client you choose: it's determined by how well you serve them and grow your business strategically over time.