Ask Andi: We bid on a lot of work. It’s a major revenue stream for us. We can’t put in rates we want because we’re competing with a lot of crazy low bids. Giving up the bids would be a problem. A lot of work comes in the door through bids, and if we’re careful it’s still profitable – just not as profitable as we want it to be.
Thoughts of the Day: Learn how to create winning bids. Make sure what you’re bidding on can turn a profit. Look for opportunities to get in the door, prove your company’s value, and get a relationship started. When the low-cost bidder is going to get the work, steer clear. Have a set of criteria that helps to sort through the bid opportunities.
Winning bids
Even when basing a decision on bids, remember, that buyers often do business with people they know and trust.
It’s good that you’re saying you can make a profit on what you’re bidding. Make sure that remains the case. Bidding to get work, just to keep people employed, doesn’t usually turn out so well. Anything goes wrong, and there go the company profits.
Look for situations where you can win the bid and then up-sell the client. Have a set of additional services packaged and ready to present, that is likely to be of interest to the buyer and that will generate more profit for your company. Work out the benefits to the client of accepting those additional services, so that when you win the bid it’s a no-brainer to promote the add-ons.
Look for buyers who build relationships with their vendors. In other words, they don’t bid out every single piece of business. They know that it’s easier and cheaper to complete the bidding process and then continue on with the selected vendor for a variety of services.
Winning bids deliver more value
When preparing a bid, check that the department issuing the bid has the authority to let additional services. If the contract gets punted from the bidding office to a contract manager, find out if that person has the authority to increase the scope of work once the contract is signed. If not, think twice about bidding.
If the bid explicitly states that the low bidder will receive the work, or if the bid manager makes it clear that will be the case, you may want to take a pass. In today’s economy, there are lots of desperate sellers, willing to cut corners and margins in order to get work. Remember that the greater fool is the one willing to offer the lowest possible price. If there is no recourse for error, changes to work scope, or another opportunity to adjust pricing to meet market conditions, you could lose your shirt taking on the work. Don’t do it.
Look through all of the bids that you’ve submitted over the past 6 months to 1 year. Do a little bit of analysis. Which ones have you been awarded? Did you make a profit on all of them? Which ones were you able to up-sell? Did that increase your profit? How would you adjust your bidding strategy based on what you know now about those jobs?
Understanding material requirements
Which ones did you think you’d get and you didn’t? If you can, find out what happened with those jobs. Was the buyer happy with the outcome? Oftentimes the buyer will have a bad experience, and then be open to alternative vendors without going through the bidding process again.
It’s worth a phone call to find out. Tell the buyer you’re closing out your records and just wanted to know how the job ended up. If there’s any sound of disappointment, or the job is incomplete, ask how you can get back in the door to be considered for future opportunities.
Take a look at the bids you didn’t respond to. Make some phone calls on those as well. Look for opportunities with jobs that never were completed, or where the company that was awarded the work got into trouble.
Looking for a good book? Bids, Tenders & Proposals; Winning Business Through Best Practice, by Harold Lewis.
