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7 Reasons Why Most First-Time Bidders Fail To Succeed
TenderingClaris Zimbiti | Nov 09, 2023 | | | |
Robert Kiyosaki, the famous author of Rich Dad Poor Dad said “Don’t let failures bury you, let them inspire you.”
If you're a first-time bidder who's been applying tenders but not winning, failing or not hearing any feedback, don't let failures bury you.
Why? Because the reasons why first-time bidders fail can serve as a roadmap for your business growth.
In this blog, we'll shift your focus from seeing these roadblocks as barriers to seeing them as stepping stones.
We'll explore these challenges in detail as well as strategies to rise above them.
It's time to shift the narrative from 'why me?' to 'what can I do to get this?'
So let’s get started.
Table of Contents |
1. Lack of understanding of the government procurement process
Imagine yourself in a treasure hunt. You're entering a dark cave with no map or guide, feeling lost as you stumble and take wrong turns. If you don’t know about the cave’s secrets, then finding the treasure is nearly impossible.
Likewise, as a first-time bidder, you're in a complex maze. Procurement is full of regulations, procedures, requirements and timelines. Without knowledge, you might miss crucial steps or documents for a winning bid.
If you're new to bidding, the best way is to start by learning about government contracts.
Here are a few ways to do that:
- Read the Public Procurement and Disposal Act -This document outlines guidelines outline the specific processes, procedures, and requirements that must be followed in government procurements.
- Attend government procurement training: Look for training programs or workshops offered by PRAZ, industry associations, or consulting firms
- Seek advice from experienced bidders. - Seek insights and advice on the procurement processes and challenges
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Recommended Reading : The Essential Guide to Understanding the Government Procurement Process |
2. Intense Competition
The planning stage is the most crucial part of the entire procurement process, yet it's often underrated and overlooked. Why?
Competition in government contracts is fierce.
This is because everyone wants a slice of the cake. It doesn’t matter whether it’s a big or small company.
If you look at registered bidders in the construction sector on PRAZ portal, there are 1441 registered contractors under the category Construction and Civil works (SC006).
This shows you that applying for government contracts is not a joke. It is so attractive to many people because of the big size of contracts.
You will find that construction giants like Masimba Construction dominate the industry.
These giants have:
- Well-established reputation and a proven track record
- History of successfully winning government contracts
- Resources to consistently pursue contracts.
Their presence adds to the intensity of competition on the market.
To succeed, focus on building relationships with government clients and collaborating with other small businesses.
These partnerships will not only enhance your capabilities. But also allow you to share resources effectively.
3. Limited Past Performance
Now let’s talk about the sourcing stage. Here the government client will take center stage, advertising tender notices far and wide to attract potential suppliers like you.
If you are a new kid to this market, it is highly likely you haven’t done work for any government clients.
Neither do you have a wide range of clients even from the private sector.
Without a proven track record of successfully fulfilling contracts, you may find it challenging to demonstrate credibility and reliability to government agencies.
Why? Because government agencies prioritize vendors who have a track record of performance and past references from clients.
This gives them the confidence that they are able to deliver when given the contract.
The good news is that there are three ways to overcome this:
- Consider subcontracting with experienced contractors who have a proven track record. By leveraging their performance you can enhance your competitiveness.
- Pursuing smaller contracts which don’t require you to submit proposals so you can gain experience and build a track record.
- Teaming with other small businesses.
Successfully completing these smaller contracts can provide references and testimonials that can be used to strengthen your position for larger contracts.
4. Inadequate Resources
Government contracting is resource intensive.
You need to have deep pockets. And if you are new, chances are you're struggling to make ends meet.
Now, let’s look at some of the expenses involved
- Certifications or registrations e.g. PRAZ Registration, NASSA, Vendor Number, VAT
- Purchasing tender documents
- Printing bid or proposal documents
- Travels to pre-bid meetings or site visits
- Bid bonds or guarantees
- Legal counsel fees to review contract terms.
Many people underestimate these upfront costs when bidding government contracts. They just assume that they can manage the costs along the way.
To succeed, consider creating a budget that takes into account the various expenses related to government contracts. This will help you strategically allocate resources and ensure that you bite what you can chew.
Another big one is don’t leave whatever is making you money to only pursue government contracts.
Instead diversify your revenue streams by pursuing a mix of private sector contracts and government contracts.
5. Pricing Challenges
Do you know the number one thing that can cause most bidders to lose sleep? It’s pricing.
It’s hard and challenging to determine a profitable price
Here are reasons why is it so:
- Not fully understanding the factors that influence pricing in this market
- Requirements and specifications in tenders can differ from those commonly found in the B2B market
- The competitive nature of government tenders makes it difficult to gauge the optimal pricing level
So, new bidders tend to underprice their offerings in hopes of securing a contract. However, this approach can strain you and makes it difficult to meet the expected quality of work.
To overcome these challenges, research past awarded contracts to determine the price to win. Also seeking guidance from accountants and estimators who can analyzing the project costs. This can help you to set competitive and profitable prices confidently.
6. Inadequate Training and Business Development Skills
Like I mentioned earlier, bidding government tenders is like a puzzle. There are different pieces of information that must fit together.
It requires an understanding of different aspects such as marketing, sales, business development, accounting, funding etc.
Without access to training programs, mentorship, or resources that enhance your knowledge and skills, you may struggle to navigate the complexities of the government tenders landscape.
I was recently having a chat with this other bidder who happens to be my friend.
She was telling me that for all the proposals that she submitted, she was just submitting for the sake of it.
No strategy at all. She just woke up and said to herself, “I want to apply for tenders today”.
And she wasn’t sure whether she was doing the right thing or not.
So you can imagine how such a lack of skills is costing her lot’s of money. All the effort and money is going down the drain.
To overcome these challenges, invest in training and development programs specifically tailored to government contracts.
These programs provide comprehensive training in marketing, proposal writing, market research, networking, and bid management which are necessary skills to compete effectively in the government market.
7. Lack of Patience and Persistence
Winning government contracts is often a long-term endeavour.
In fact, studies have shown that it takes 18-36 months to win your first government contract.
It takes time to establish a track record of successful projects, build a reputation, and develop strong relationships with government clients.
But if you are focused on short-term gains, you give up too quickly.
Also, as a first time bidder, it's common for you to face rejection .This can be disheartening and cause you to give up.
To overcome these challenges, be prepared for the long haul.
Understand that success in government contracting often requires consistent effort, relationship-building, and continuous improvement.
By staying committed, learning from setbacks, and maintaining a long-term perspective, you can increase your chances of securing government contracts and achieving sustainable growth.
Wrap Up
So, there you have it - a rundown of the seven reasons why first-time bidders fail.
From intense competition to inadequate training and business development skills, these stumbling blocks are more common than you might think.
These reasons should not discourage you; instead, they should empower you.
Think about it - every successful bidder was once a first-time bidder who faced these very challenges.
So, when you encounter obstacles, remember that they are simply stepping stones on your path to bidding success.
Before you go, though, consider this: now that you know the reasons why first-time bidders fail, how will you change your bidding strategy?
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