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Three Unique Challenges Small Defense Businesses Face

Updated: Oct 25, 2023

In the sprawling landscape of defense industries, small businesses often find themselves in a unique and challenging position. While they contribute significantly to innovation and flexibility within the sector, they also grapple with hurdles not always faced by their larger counterparts. A confluence of regulatory, financial, and operational challenges often places these enterprises in a tight spot. Let’s delve into some of these unique challenges and understand their intricacies.

Navigating the Regulatory Maze: A One-Size-Fits-All Approach?

At the heart of the defense industry lie stringent regulations, many of which, like the Defense Federal Acquisition Regulation Supplement (DFARS), are crafted with large corporations in mind. These regulations dictate how businesses should handle controlled unclassified information and ensure the safety of defense information systems.

However, their broad-brush approach often overlooks the operational realities of small businesses:

1. Complexity: The intricate requirements, often written in dense legalese, can be overwhelming for small businesses with limited resources. While large companies have dedicated compliance teams, smaller entities often find themselves lost in this maze, struggling to interpret and implement these directives.

2. Cost Implications: Compliance is an expensive affair. Meeting the standards set by regulations requires investment in technology, infrastructure, and personnel. For a large enterprise, these costs, while significant, are a fraction of their revenue. In contrast, for a small business, they can be prohibitively high, often leading to tough financial decisions.

The Cost Quandary: Finding the Right MSP/MSSP Partner

Managed Service Providers (MSPs) and Managed Security Service Providers (MSSPs) offer specialized services to handle IT and security needs. For many defense businesses, especially the smaller ones, these services are crucial. However, here lies the catch:

1. Perceived ROI: Many MSPs and MSSPs, accustomed to working with larger enterprises, might hesitate to partner with smaller businesses. The reasons are twofold: the perceived lower return on investment and the disproportionate level of effort required to bring small businesses up to compliance standards.

2. Tailored Solutions: The defense sector's security requirements are specialized. While large businesses can demand custom solutions, smaller entities often have to make do with off-the-shelf offerings, which might not always be a perfect fit.

The Talent Crunch: Searching for the Needle in the Haystack

For any business, the backbone is its workforce. In the defense sector, given the sensitivity of operations and the need for compliance, having the right team is even more critical. However, small defense businesses face significant challenges in this regard:

1. Scarcity of Specialists: The defense industry's niche requirements mean that only a select group of professionals possess the necessary expertise. With large corporations offering lucrative packages, small businesses often find themselves outbid in the talent market.

2. Training and Development: Even if a small defense business manages to hire a promising candidate, they might need extensive training to get up to speed. With limited resources, providing this training becomes a challenge, leading to longer onboarding times and potential operational risks.

3. Retention Challenges: Given the competitive landscape, retaining talent is another hurdle. Larger companies, with their deep pockets and extensive perks, can often lure away professionals from smaller businesses.


The defense sector's allure lies in its dynamism and the critical role it plays in national security. Small businesses, with their agility and innovative spirit, are invaluable contributors to this ecosystem. However, the challenges they face, from navigating dense regulations to finding the right talent, are significant.

While these challenges might seem daunting, they are not insurmountable. With the right strategies, partnerships, and a bit of ingenuity, small defense businesses can not only survive but thrive. Recognizing their unique position and understanding the hurdles is the first step in this journey. As the industry evolves and the role of small businesses becomes even more pronounced, there's hope that the landscape will become more accommodating, recognizing the value these entities bring to the table.

Through NexTier, it is my sincere hope that I can help small defense businesses not only get over the regulatory hurdles they face but continue to thrive and innovate for our country. Please reach out today, I would love to speak with you during a no cost, no obligation consultation.

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