Should my business bid for Government contracts?
The short answer is yes. In fact, it shouldn’t be a case of ‘why’ but ‘why not’?
Providing goods and services to Government and the Public sector can be highly lucrative for small business. Winning a Government contract can be a great way to establish a name, generate consistent cashflow and secure the future of your business. But like most things in business, there is strong competition. You need to be prepared and aware of all the risks.
The market opportunities
Winning government contracts can seem like a way to lock in cash flow surety in volatile markets. The Building & Construction sector in Australia for example is expected to head into a downturn this year. Yet the Federal Government spent $5.4 billion in this area in the 2016-17 financial year. And this is just at the Federal level. Other thriving Government sectors include Defence and Employment, with just fewer than 65,000 procurement contracts awarded in FY 2016/17, at a total value of $47.3 billion. Of these procurement contracts, SME’s made up 26% (a value of $12.3 billion) and Small Enterprises made up 12% (a value of $5.8 billion) – this represents a huge opportunity for small business.
What keeps small business from engaging in tenders?
Australian small business can be more risk averse than their larger counterparts, as they often have more to lose. A big government contract can be a life saver, but who wants all their business tied up in one client? Other barriers for small business can include:
- Process – understanding the requirements for a Government tender, steps and jargon.
- Resources – having time and people to produce the necessary documentation.
- Risk – often small business will have personal collateral at stake.
- Finance – making sure finance is in place as part of the bid, ensuring that if and when the operation needs to be upscaled, your business is able to deliver.
Finding Tender opportunities
Each year there are more than 20,000 requests for tender. There are hundreds of resources for finding tender opportunities, so we recommend using a site such as Australian Tenders. They collate all national tenders in once place, allowing you to search by region, category and also subscribe to receive latest tenders to your inbox.
Tips to win!
- Know the tender inside out. Make sure you read the questions carefully and understand all the conditions of submission from evidence to timing. Failure to meet the basic conditions could mean your effort is wasted.
- Understand the scope of works. Ask yourself, do you have the capacity to deliver based on your current situation? Or will winning the tender mean you need to alter your business model? For example, you may need to increase your employees / employ sub-contractors / invest in your infrastructure to deliver. Do you have the necessary finance in place?
- Meet the criteria. Make sure you respond to all questions within the tender. Check that you have provided all the details and evidence requested. Be careful not to over-provide, keep your tone direct and weed out any content that doesn’t help your case.
- Differentiate yourself. A good place is with a capability statement or USP (unique selling proposition) to help identify what makes your business stand out from the competition – make sure this is referred to throughout your submission.
- Learn the tendering process and language. Take the time to familiarise yourself with the documentation required (know your RFT’s from you RFP’s).
- Know your pricing structure. Ask yourself, are you competitive? What makes up your pricing structure? Make sure it is aligned with the requirements of the tender.
- Hone your persuasive writing skills. Make sure your writing answers the questions fully, keep to the word count and other specified constraints.
- Check, and check again. Proofreading is so important, use a second pair of eyes to ensure you don’t fall down on sloppy spelling or editing.
- Find the right opportunities. Stay ahead of the game by signing up for a tender alerts service, this will keep you up to speed with what’s out there, what’s coming up and make sure you have the full scope of time to meet the deadline.
- Don’t give up! Play the long game. Many SMEs make the mistake of thinking about the tendering process as short term. You need to make it a central part of your business plan by building it in to your strategy and budget, the rewards are big for those who win.
Getting your finances sorted
One of the key issues small businesses face in reaching their potential and maximising opportunities is obtaining funding for growth.
In the past, Apricity has been able to help clients at the tendering stage. In some cases, we have provided documentation to be included as part of the submission to demonstrate that funding is in place should the tender be successful.
Make working with big business work for your business.
Download our eBook