For many small businesses wanting to grow means they will want to tender for public sector work. Both National and European Government want to make it easier for smaller businesses to bid for this work. This means its never been easier to find opportunities for new work.
However just because you can do something doesn’t mean you should. So what’s involved and is it right for you?
Most government organisations and some private companies are compelled by law to have an open tendering process for goods and services. What this means in practice is that you can easily find out about opportunities worth more than a certain value. Also you should be able to find out what the bidding process will look like and how the purchaser will decide who wins.
The bidding process that follows may have more than one stage. This can help weed out unsuitable bidders before they have committed too much time and effort. There may be a further negotiating phase once the purchase has shortlisted or even decided on the preferred bidder.
If it all sounds simple, that’s because it should be. However, there are a number of problems. Some buyers are better than others. Some organisations are better at defining what they need than others. Some buyers unwittingly don’t follow the process properly and in a few cases organisations may attempt to ‘game’ the system.
If you are still not sure if this is right for you and your business, I have set out the pros and cons.
5 reasons you should bid for public sector work
- Your business will be worth more. Last week shares in a Software Radio Technology Ltd (a small company based in Bath) surged by nearly a third. The reason – a major contract win with an Asian government. Now I’m not suggesting that landing a contract with your local police authority will have the same effect. It is true though that a company’s value reflects it ability to earn profit. If you win a 5-year contract that makes you money, your business has to be worth more.
- Your reputation will be enhanced. Other customers will take notice; your bank manager will treat you with more respect. You will become a more desirable employer – the list is endless.
- You are taking less financial risk. Generally public sector organisations and utilities don’t go bust. You may struggle to get your money sometimes, but in the end you will be paid.
- You can make longer term plans. With a commitment from a stable customer you can be more confident about recruiting staff, buying equipment and investing in facilities.
- You will have great PR opportunities. Every time you win, tell people. The local press will love it. Your networking groups will spread the news. Better still tell your existing customers. It will confirm that they made the right decision in choosing you.
5 reasons you shouldn’t bid for public sector work
- It will cost you time and money. People tend to underestimate the time that it takes to put together a decent bid. Many people leave the bid to the last minute after they have finished the day job. This can lead to frayed tempers, poor bids and potentially costly errors. I am going to be brutally frank – if you can’t or don’t want to spend time and money on a good bid, don’t do it.
- You can damage your reputation. If you submit a poor bid to an existing customer, you could highlight weaknesses in your organisation. What if you offer substantially lower prices – can you justify this?
- Generally, there are no second places. This means that you can put in a lot of effort and win nothing. You will get knockbacks which will demotivate you and your team.
- You may be dealing with hardened negotiators. A good buyer won’t push you to work at a loss, but some will.
- A large win may mean that your new contract forms a large part of your business. Some organisations may not award you contracts if they represent more than say 25% of your turnover. A large single contract could be a significant risk to your business and may disqualify you from other work. This is a really grey area and sometimes you just have to take risks. The important thing is that they are informed risks.
And the answer is?
If you haven’t already guessed, I’m generally in favour of bidding for public sector work. I think there are more and more opportunities and the regulation is improving all the time. I have some reservations about compliance and the amount of work involved. But as the saying goes “You have to be in it to win it”