If you rely on winning tenders or quotes for your business, this information could be extremely valuable. It has been shared by our CFO On-Call Partners, who have used these tactics to help their clients win some very large jobs.
Here’s what you need to know to improve the success of tenders and quotes.
1. 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.
2. Requirements of the Customer
The key requirement is your ability to do the job, understand all the requirements of your customer, do the job well and do it within budget. Government and large business requirements often include compliance with Occupational Health and Safety, Industrial Relations, the Tax Office, Quality Assurance, Environmental and Legal organisations as well as Union representatives, to name just a few.
3. Tender Processes
‘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.
4. Government, Large and Small Business
Government clients and large businesses may allow you to check who won previous tenders. It’s worthwhile to speak with the relevant officer to learn what the key points were that got the winner over the line, and what were seen as the strengths and weaknesses of their bid. You may not get all the answers, but it’s worth being patient and following through.
5. The Financial Side
Costing and pricing are key areas in tender – it must be accurate 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 confirm you can cover any unforeseen costs and still make an acceptable profit for your business.
6. 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 that the progress payment dates are followed up. In fact, it’s even better to call clients just prior to the payment due date, to check all will be OK with payment.
8. In a Nutshell…
● Don’t waste time tendering for jobs you are not likely to win.
● Understand your customers’ requirements 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, download our eBook ‘Eight Pointers to More Successful Tenders and Quotes’.
Download our free eBook ‘Eight Pointers to More Successful Tenders and Quotes’ and learn how to get the most out of your quoting and tendering.