If you rely on winning tenders or quotes for your business, this information shared by some CFO On-Call Partners, who have helped their clients win some very large jobs, could be extremely valuable.
- Time Investment
Responding to tenders requires more effort than you may imagine. The information required can be time consuming and needs to be presented in specific ways. Start early and aim to finish a week ahead of the deadline. If possible investigate previous winners and their bids to check if it’s an appropriate tender for you.
- Requirements of the Customer
The key requirement is your ability to do the job, understand all of the requirements of your customer, to do the job well and within budget. Government and large business requirements often include compliance with; Occupational Health and Safety, Industrial Relations, Taxes, Quality Assurance, Environmental, Legal, Unions, to name just a few.
- Tender Process
‘Open tenders’, where you are running with ‘all comers’ are the least desirable, as most bidders try to compete on price. If you can get a prospect to issue a ‘Closed tender’ you have a better chance of competing on merit.
- Government, Large and Small Business
Government and large business may allow you to check who won previous tenders. It’s worthwhile to speak with the relevant officer to learn what were the key points that got the winner over the line and what were seen as the strong and weak points of their bid. You may not get all the answers, but it’s worth being patient and following through.
- The Financial Side
Costing and pricing is a key area in tenders and it must be correct and commercially attractive. A prevalent problem is not understanding the true costs of a job leading to potential under-quoting. Make sure you understand the difference between mark-up and gross margin. For example, a 40% mark-up only equals a gross margin of ~29%. What is the minimum gross margin you require to cover your overheads and make an appropriate profit? It is also a good idea to ensure you have incorporated a “provision” in the quote to ensure you can cover any unforeseen costs and still make an acceptable profit for your business.
- When you’ve won the job
After you’ve won a tender it’s vital to keep track of all activity and costs on the job to ensure things go to plan and the costs come in as expected. This is an often overlooked aspect of job management. There are some terrific systems available to assist with this that can add much more onto your bottom line than they cost.
If you’ve quoted on a progressive payment method, that’s fantastic! Ensure someone is given the task of checking progress payment dates are followed up. In fact, it’s even better to call clients up just prior to the payment due date, to check all will be OK with payment.
- In a Nutshell
- Don’t waste time tendering for jobs you are not likely to win
- Understand your customers’ requirements really well
- Understand the tender process and use it to your advantage
- Don’t use a ‘cookie cutter’ solution for different organisations – appeal to how they operate
- Spend time and money getting the financials right – it’s an investment – not a cost.
- Have good systems for job tracking to ensure profit and learn from mistakes
- Have good systems for invoice handling to ensure you get paid ASAP
For more detail on these points, fill out the form below and we’ll send you our free eBook ‘Eight Pointers to More Successful Tenders and Quotes’.