Business owners or business development managers can get very caught up in the idea of tendering for a new piece of business with a potentially large client.
This could be due to the fact that the client is a “big name brand”, which would look great in a future testimonial. It might also be an up-and-coming organisation that would be “cool” to work with, or perhaps they’re just desperate to bid for any new work they can get their hands on.
However, bidding for too much work can put an organisation in a difficult position, especially if it becomes evident they can’t deliver on what they promised.
There is a great deal of effort involved in tendering and pitching to become a supplier and sometimes it can be a lot of effort for not a lot of return.
Business owners, business development managers and sales people should think very seriously before they even begin tendering for a particular piece of business and ask themselves the following questions.
Is it part of your ‘core’ business?
Your core business is what pays the bills; it’s the most important thing you do that brings the majority of money into your business. If the work being tendered for does not fall within your core business, then you need to ask yourself how winning this tender will affect it.
Will servicing this new client take focus and resources away from your main money-making activity? Do you have the resources to compensate for this, or will your core business suffer?
Is there time to prepare?
The ideal time to make a bid is shortly after the tender has been announced. This gives you ample time to gather your resources and present a considered and compelling argument as to why you should be awarded the business.
If you decide to bid on a tender shortly before it closes, you are putting unnecessary pressure on yourself and your staff and your bid is likely to be rushed, unconvincing and possibly inaccurate.
Can you deliver what the client will require?
Is there a proven capability? Have you serviced this kind of customer before? Do you have the necessary manpower, materials and expertise? Will you be able to fulfil the demand in-house, or will you need to outsource some of the work and, if so, how much is that going to cost you?
If there is any doubt about whether you can give the client what you are about to promise them, you should reconsider making a bid. Failure to deliver will not only open you up to legal repercussions, but it will tarnish your brand and reputation in the marketplace.
What’s in it for me?
Is the potential profit to be made from taking on this new client substantial enough to warrant all the extra work, expense and disruption it may bring? Will you have to spend money upgrading plant and equipment or taking on new people to be able to meet the requirements?
Draw up a pros and cons chart and you’ll soon see which way the advantage lies. If it’s closer to fifty-fifty, then you should ask yourself if it’s really worth the effort.
Do you really know the client?
Have you studied the client’s policies relating to suppliers and know what to expect from them? Have you already built a relationship with them, or have they never even heard of you? If they do know of you, how have they responded to your initial inquiries?
Will they be easy to deal with, or are you taking on potential trouble? How tight are their deadlines? Are there penalties for late delivery? What are their quality control requirements?
If you don’t know who you’re dealing with, you won’t know what to expect from them and that’s never a good way to enter into a potential business partnership.
What’s the competition like?
Are there a lot of other competitors tendering for the same piece of business? How well do you know their strengths and weaknesses? Are there bigger companies than yours with more resources, who may have an advantage over you?
Is there an incumbent supplier and have they been delivering satisfactorily? If the answer is yes, then the chances are they will probably retain the business.
Is it all about price, or is the client also looking for quality? Do you have a realistic chance of winning, given the competition? If you don’t have a competitive advantage, then the answer is probably ‘no’.
The process of tendering for new business can be very useful for clarifying your aims, strengths and weaknesses, but it can also be time-consuming and potentially more trouble than it’s worth if you:
- are promising more than you can deliver;
- are disrupting your core business; or
- are not making a worthwhile profit.
Always ask yourself some serious questions before tendering and, if the answers don’t add up, put your hand down and concentrate on what you do best, until a better opportunity comes along.