What is Competitive Bidding?
As a small business owner you may wonder how to win business by doing business with big companies. You have heard of competitive bidding, but the process seems overwhelming and confusing. You wonder whether or not a business your size can possibly win a bid. The good news is that small businesses do win bids from large companies. It all starts with learning how the competitive bidding process works.
When large corporations and government agencies foresee a supply need, whether it be for a product or a service, they have two options. They could hire additional employees to do the work in house. Many companies decide not to hire because of the time, money, and space required to expand their company. The other option is to source the vendor by sending out a request for proposal (RFP) to ask companies and businesses already in existence to provide the product or service. The businesses who think they could handle the job send in a competitive proposal and the corporation or government agency reviews the proposal and chooses whom they think can do the best job for the best price.
What Does the Competitive Bidding Process Look Like?
There are six steps to the competitive bidding process:
- Finding bid opportunities. The first step is to find out about bidding opportunities. Depending on your business, you may be able to find bidding opportunities through a simple Internet search; however, this can be like looking for a needle in a haystack. Part of what our customers like about Coupa is the ability to find and filter competitive bidding opportunities that match their capabilities and certifications. Since buyers also use Coupa, a business profile enables your small business to be seen by large buyers including Fortune 2000 companies.
- Determine your bid position or approach. Once you have examined the RFP, then it’s time to figure out how you could fulfill the request before you start responding to the RFP. Sometimes, it may be best to team up with other small businesses to fulfill the request together. Other times, you may be able to bid as a subcontractor rather than the prime contractor. Large companies also seek out MBEs (minority business enterprises). If diversity is part of your message, you can make that clear in how you position your bid.
- Participate in pre-bid activities. In order to properly communicate with bidders, some companies require attendance at events, meetings, or conferences for potential bidders. Other companies require you to submit pieces of information before you submit a final bid. The most common types of requests are a RFI (Request for Information) or a RFC (Request for Comment).
- Submit a bid. After you have collected all the necessary information from the pre-bid activities, then you are ready to submit a bid. Be sure to follow every single instruction given. If you have overlooked a piece of information, it’s very likely that your proposal will be rejected without being reviewed.
- Participate in the bid evaluation process. After you submit the bid, be available for any follow-up questions or requests that the company may make. Answer the company professionally and promptly.
- Win the contract. Hopefully, this is what happens for you! If not, don’t be discouraged. Learn from the experience and move on. Sometimes a contract is just not the right fit. Get right back in the game looking for the next competitive bidding opportunity.
Tips for a Successful Bid
When you are preparing a bid, it’s helpful to put yourself in the company’s shoes. What are procurement professionals and buyers actually looking for in the winning contracts? It’s not just about the product or the service. The competitive bidding process results in a business partnership. Do everything you can to show an attitude of cooperation.
Think about the kind of people you want to do business with and not only about the excitement of winning Fortune 1000 contracts. Be honest, trustworthy, professional, and courteous.
Let your bid reflect a level of excellence that foreshadows the excellence of your products or services.
The bid will probably take longer to prepare than you think. Do not leave it until the last minute!