The new year is a time for reflection for many businesses, and an excellent time to set new objectives for the year ahead. Growth target setting is an integral part of looking ahead, but have you thought about how these targets can be achieved and influenced through tendering?
Whether your growth targets are centred around expanding in existing markets with existing products and/or services, or branching out into new areas, successful and selective tendering can be the key to achieving your goals.
Deciding bidding activity based on growth targets
Growth targets should be aimed at challenging your business. Although they can appear daunting, they also present an opportunity to refine your bidding process. Three key areas you might consider when you decide your level of bidding activity are:
average project value
previous success rates (%)
annual growth target
These factors can be used to determine your bidding strategy for the year ahead to ensure the correct number, size and value of bids are targeted.
For example, you want to grow your business by £5 million per year. Based on previous performance, you have an average project value of £500,000, and a 10% success rate. To achieve your target, you would then need to submit 100 tenders a year. Although simplified, this example demonstrates how your growth target can be used to guide your bidding activity, and enable you to plan your time and resource efficiently to ensure you meet the tendering needs of your business. It also demonstrates how much of an impact a low success rate can have on the volume of tendering in which you will need to engage.
The cost of writing losing bids
Discovering you have submitted an unsuccessful bid is disappointing from many perspectives, not only in terms of the lost potential revenue, but also the real time and opportunity cost impact this has on your business. Tendering, when managed poorly, can be a costly process. This is particularly true for companies tendering in-house. Tendering requires not only financial investment, but time, dedicated resource and personnel, and can distract from other core business activities.
Engaging a bid writing consultancy service can present a more time and cost-effective solution to your bid writing needs. As well as ensuring your bid is of a professional, high-quality standard, vastly improving your chances of winning, you are free to continue focusing on your core business activities. It also takes the strain from your own internal costs and resources, increasing your chance of achieving your growth targets.
Focusing on success rates
A key principle when tendering should always be ‘quality over quantity’. When presented with a challenging growth target and several open opportunities in your market or sector, it may be tempting to submit as many bids as possible to increase your likelihood of success. Experience shows, however, that a quality bid is far more likely to increase your success rate over a portfolio of sub-standard bids. When evaluating your bid, the buyer will not only be checking that it is fully compliant with the tender specification, but will also be focusing on the quality and detail of your responses, and how they compare to those of your competitors.
In the above example, the bidder is submitting 100 tenders to win just 10 contracts. The cost of submitting 90 unsuccessful bids is significant – and in most cases completely avoidable. Imagine the effects on the business if the bidder could achieve the same number of wins by only submitting 15 to 20 tenders.
Establishing whether you are in a position to submit a quality bid is another key step in your bid strategy, and an effective way of determining the likelihood of success for each new tender. This can be achieved by following a simple bid/no bid process. Consider the below questions when assessing each potential tender:
- Does it fit the company’s strategic direction?
- Is there an existing client relationship?
- Do you have the competitive advantage – can you realistically compete?
- Is there sufficient information available – are the needs and concerns of the client known?
- Can you deliver – are there sufficient resources and skills available?
- Are the risks presented by this contract acceptable and manageable?
If your answer to one or more of the above is ‘No,’ it may be time to re-evaluate your decision to bid. Not only does a ‘No’ indicate that it may not be in the best interests of your business to proceed with the tender, it should also make you question whether you can deliver the contract successfully. Any uncertainty here will also be apparent to the buyer, and will drastically reduce your chances of winning the tender.
Contact our team of bid writers to discuss how we can support you to increase your bidding success rate and achieve your 2018 targets.