Should You Add a New Business to Your Government Services?

In the world of government contracting, growth often means expanding your capabilities, teaming strategically, and adapting to changing needs in the federal market. One of the most common questions small businesses ask as they evolve is: “Should I add a new business to my government contracting services?”

Let’s explore when it might make sense to do so—and when to pause and plan more strategically.

1. New Business = New Opportunity

Adding a new business line can position you for more contracts, especially if it falls under a different NAICS code or satisfies a gap in agency demand. For example, a janitorial business may consider adding debris removal or PPE distribution during disaster response seasons—this opens the door to more solicitations and sole source opportunities.

However, the key is making sure your new business fits within your past performance narrative or your subcontractor teaming plan. Agencies want to work with businesses that demonstrate capability and readiness.

2. Do You Have the Infrastructure?

Before you file for a new LLC or expand your SAM.gov registration, ask:

• Can your team manage operations, billing, and compliance in a second business?

• Do you understand the FAR (Federal Acquisition Regulation) implications of running multiple entities?

• Are you set up to track reporting and deliverables separately?

If you’re not yet winning contracts with your current entity, adding another business might split your focus instead of sharpening it.

3. Branding vs. Strategy

Some business owners want to “separate” different types of services under different business names—but in GovCon, your Capability Statement, SAM profile, and past performance matter more than having multiple brands. Often, it’s more strategic to expand NAICS codes or add new services under one umbrella, rather than start a new entity.

4. Teaming Can Be Smarter Than Splitting

If you’re trying to break into a new niche—like IT services, medical supplies, or disaster response—it may be better to partner with a business that already offers it. You can subcontract, joint venture, or form a mentor-protégé agreement under SBA programs.

This way, you test the waters before committing to building an entirely new business from scratch.

5. Certifications and Registrations Take Time

Each business you register with the government needs its own:

• SAM.gov registration

• UEI number

• DSBS profile

• SBA certifications (like 8(a), WOSB, SDVOSB, etc.)

If you're considering forming a new entity, be prepared for the long runway of registration, setup, and proving performance.

Final Thoughts: Expansion Requires Clarity

Before you add a new business to your government services, ask yourself:

• Is there demand in the federal market for this?

• Can I support this growth operationally?

• Would it be better to team or subcontract instead?

• Does this decision align with my 12-24 month strategic plan?

Sometimes, expanding your service offering under your current business is more efficient—and more profitable—than starting from scratch.

If you’re unsure, consider booking a strategy session to evaluate your path forward. In government contracting, clarity and positioning are everything.