Attention to Detail Counts
The idea of kicking off a new company in the current economy seems strange to most people. But it is happening. Some construction companies began directly before the recession out of bad timing and are trying to survive and other companies have started up due to layoffs and necessity. With new projects being at a premium and many of the larger more experienced companies bidding in markets untouched for many years, competition and experience is fierce. Many new contractors aren’t sure where or how to break into the market. But some basic concepts apply the same to both experienced and new companies.
Many companies tend to view the public bidding process as only a ritual, and wonder if they’re wasting their time on a contract that’s already been decided upon. What they don’t realize is that laws and regulations are in place to ensure the process is conducted fairly. Companies that shy away from government and state invitations to bid, miss out on potentially profitable business, as large dollar‐value sales, government or large‐company buyers are most apt to use a formal RFP process. It pays to understand the process, and to learn how your company can best respond to the next RFP that comes your way in this “post recession culture.”
Understand the art of competitive bidding. Small businesses must understand the art of bidding on contracts; this is the downfall of over 75% of small businesses. The problem is that small businesses either bid contracts way too low or way too high; it seems that there is no middle ground. Federal and state guidelines often require a competitive bidding environment. The reality is that businesses will need to know how to bid contracts; how to read and understand Request for Proposals (RFP), how to rearch their competition and know their industry.
When government wants to award work, it releases an “Initiation to Bid.” A full description of the product of service up for bids is provided, along with conditions for purchase, deadline for bids and other details. You may have to act fast—some bidding deadlines are as short as a month or less; it all depends on the agency and the urgency of awarding the contract. Have your business information ready so you can add whatever details apply to a particular bid.
Many businesses will need to create a “Boilerplate” that can be used on potential contracts. When a Request for Bid hits the street it is important that your business have the bare necessities needed to begin to prepare the proposal. First time bidders who enter in the government bidding process may assume that a low bid is the most attractive element of any winning bid. Not so. The truth is low bids can raise a red flag. Many small, inexperienced businesses tend to lowball bids. This means bidding contracts so low that no other business could afford to compete. The problem is that the government wants to know a business is going to be around in six months; the need to award bids based on cost and performance is where the industry is today. It’s called “Lowest Qualified Bidder” ‐ so it is important to understand the process and how your business fits in.
Remember, you won’t get rich over night; the government contracting world provides a host of opportunities; but never put all of your eggs in one basket. Balance both public and private contracts; keep all you options open and keep it simple.
When estimating projects—Make Sure You Calculate a Profit for Your Business
Businesses typically underestimate the costs of completing work on a contract they may be bidding on. Either they don’t calculate materials price increases on a long term contract, they don’t account for increasing labor costs, or they just don’t accurately measure and calculate when they’re bidding on the job. Paying attention to the details will save you time and money and will keep everybody honest.