Should my business be tendering for work? Is it worth the effort? How do we know if we're ready?
These are questions we’re often asked, and with a market worth up to $650 billion annually1, tendering can be a lucrative option! But if you want to be successful then there are a few things to think about before jumping in.
So whether you’re a small enterprise or a large company, new to the tendering game or in it but struggling to win, here are some questions to help you decide whether it’s the right option for your business, along with a free resource with exercises to help equip your business to tender successfully.
1. What are your business goals, and how will tendering help you achieve them?
• Growth – Are you looking to grow your business and revenue?
Whether you want more clients because you’ve got the capacity, you’re looking to grow your books in order to sell your company later on, or you’re more focused on long-term revenue results, tendering can be an effective way to achieve your goal. Building relationships with more Buyers through the bidding process and winning high-profile tenders can grow your reputation and open up more opportunities later on.
• Expansion – Are you looking to expand into new locations or industries?
You may already have expertise and experience in one area and are now looking to provide your products and services in a new location, or re-purpose and adapt to meet the needs of a different industry. The clearly defined scope and evaluation criteria of a tender can ensure you do this in a low-risk way. In this situation, make sure you create a strong case for why your other experience is relevant and transferable, as this will increase your chance of winning.
• Financial Stability – Are you looking for a way to line up work in advance?
It generally takes between 2-8 weeks from the date a Buyer publishes a tender, to the date the contract actually commences (though in some cases it can take as little as a few days or as long as a year - find out more here). This longer timeline makes tendering a good way to plan in advance, so if your business struggles with big fluctuations in workload and revenue, then tendering could help you gain more long-term financial stability.
2. What is your business strategy, and how will tendering fit into it?
• Approach – What will your approach be, ad-hoc or strategic?
Research shows that companies who use tendering as a long-term business development tool, as opposed to an ad-hoc way of bolstering their revenue, are more successful and have a higher win rate2.
Rather than bidding on tenders sporadically when you run out of work, or bidding on everything just to be in with a chance, it’s best to make strategic decisions about which tenders to pursue, and only spend time and resources on the opportunities you’re most likely to win. We recommend defining a set of criteria which will help you decide whether a tender is worth bidding on or not (see our downloadable resource).
• Market Research – Do you know what tender opportunities are out there?
You’ve probably done some market research already, but it’s important to understand your industry in terms of tendering too. The number of tenders available in any industry will rise and fall across the year, but in general, more opportunities means more chance of finding tenders suited to your business. You can search for opportunities online or use a tender notification service to get email updates.
However, tendering could still be a good option even if there aren’t that many opportunities available. For example, if the contracts are high value, or if there aren't many competitors tendering, or the contracts recur yearly and can offer long-term revenue. You can use awarded data to find out this sort of information.
• Competitor Analysis – Do you know who you'll be up against when tendering?
You probably already know who your main competitors are, but they may not be the same businesses you’ll be up against when tendering, so it's worth finding out. You can start with competitor websites, or use tender outcome information (also called awarded data) to find out who's successfully tendering.
If most of your competitors are already tendering, that’s a good sign that you could be too. However, their experience means they’re probably in a stronger position to win, so consider your point of difference and what additional value you could offer to a Buyer.
If none (or only a few) of your competitors are tendering, consider why; it may mean there aren't many opportunities out there, or it may just mean they don’t yet have the knowledge or expertise, in which case getting into the tendering game first could give you an edge.
3. Are you aware of the requirements of tendering, and does your business meet them?
• Experience – Does your business have the track-record to tender successfully?
It can be more difficult for newer businesses to win tenders when they’re up against organisations with more experience. If you’re just starting out, it's a good idea to do your research, build relationships with key Buyers, and gather evidence of your experience before joining the tendering game.
However, there may still be some tender opportunities for young businesses. For example, price could be the deciding factor in an RFQ (Request for Quote), and the evaluation criteria might be more relaxed, so things like a strategic approach to tendering and understanding your market could help you win, even if you don't have extensive experience.
• Resource – Does your business have the resource to tender successfully?
One of the most important considerations is whether you have the resources to allow you to tender, including capacity to take on more contracts, as well as having the relevant human resources.
The bid-writing process can be shared across a team, but ideally you need someone with strong writing skills, attention to detail, time management skills, and workload capacity. Alternatively, you could outsource to a professional bid-writer, or up-skill your team with training so that they're faster and more efficient at writing responses.
As mentioned earlier, the tendering process can also be quite long and you need to factor in time to find relevant opportunities (or use a notification service), thoroughly read the paperwork, plan and write a strong bid response, and prepare all your supporting documents (find out more about this process here).
If tendering is going to take away crucial resource from the business, or have negative impacts because the workload is unmanageable, then you may need to create more resource within your business first before jumping in.
• Documentation – Does your business have key tendering documents sorted?
While specific requirements change depending on the tender, a lot of contract opportunities request similar supporting documents, so it’s best to have these sorted first.
You’ll need evidence of previous work to prove experience and capability, such as testimonials, case studies and referees. Having relevant certifications and qualifications handy will ensure you meet any compliance expectations, and core company information like health and safety policies, organisational charts, and financial models are often required. We recommend creating a document library with these common items readily available, to ensure you’re prepared to put together a high-quality response (see our downloadable resource).
If you've asked yourself all these questions, you should now have a clear idea whether tendering is an option for your business, or what you need to do to get tender-ready! To help equip you to succeed, we've created a free PDF resource with a range of exercises related to the questions in this blog.
It may all seem daunting at first, but don’t let it overwhelm you! Tendering can be an incredibly lucrative industry, you just need to do a bit of work up-front in order to give yourself the best chance of being successful.
If you’d like any more information or need advice, have a chat to our experienced team on 1800 233 533 (AU) / 0800 698 363 (NZ) or contact us here.
Now that you know whether tendering is right for your business, you’ll need to know how to find tenders – we’ll cover this in our next blog, so check back here in a few weeks, or sign up to our mailing list!
1Estimated annual value of all known contracts across Australia and New Zealand that are let through some form of bidding process, including all levels of government (Federal/Central, State/Territory and Local). Source: independent research by BidWrite (2018).
2Strategic Proposals Limited, (2018). How The Best Win. Retrieved June 19 2020, from https://www.strategicproposals.com/downloads/