Securing contracts for goods or services can help your company establish consistent cash flow, better estimate inventory needs, and find new ways to grow. While certainty can be hard to come by in business, a contract provides some reassurance that you’ll have work for a set period of time.
With so many potential benefits for small businesses, the bidding process is often very competitive. Whether you’re interested in winning business-to-business or public-sector contracts, it’s important to prepare well ahead of time as you seek to convince potential customers that your company is best qualified to handle the job within the terms of the agreement.
While there’s no one way to win a bid, we’ve outlined common practices and processes below that can help small business owners put their best foot forward when competing for contracts.
How to Find Small Business Contract Opportunities
The first step in winning a bid is learning about opportunities in your industry. Large companies may have business development professionals whose job it is to identify potential customers; in a small business, this important task could fall to the owner. There are several ways businesses can find out about new contracts, including:
- Online supplier portals: Many enterprise businesses have web pages devoted to finding suppliers. Big box stores, tech giants, and restaurant chains are just a few examples of the types of companies that may be looking to work with new vendors. Think about your business’s strengths and capabilities, then search for supplier portals where you can register your business or find contact information for the procurement department.
- The System for Award Management (SAM): Companies that want to compete for federal government contracts should first register their business at SAM.gov. You may need to supply basic information like your business’s Dun & Bradstreet D‑U‑N‑S® Number®. The U.S. government lists contracting opportunities with federal agencies at beta.SAM.gov.
- Lead generation and networking: If you already know who you’d like to work with, you can contact those businesses and ask about their procurement process. They may have a supplier portal or internal list of companies they reach out to when soliciting bids. Traditional networking can also help uncover opportunities.
No matter how you learn about a potential contract, it’s important to focus on your business’s areas of expertise when thinking about preparing a bid.
Preparing Your Bid
Companies may solicit bids in a variety of ways, but a request for proposal, or RFP, is common among both private businesses and government agencies. The RFP is a crucial document that can guide your efforts to put together a competitive bid. A request for proposal often includes details on:
- The goods or services to be supplied by the winning bidder--in other words, the work your company would be responsible to complete.
- Which capabilities the prospective client believes are necessary or desirable to successfully fulfil the terms of the contract.
- Details about the form in which a bid should be delivered, including requests for supporting documents and the dates of relevant deadlines.
- Information on how the company or government agency will evaluate bids and award the contract.
Read and reread the RFP before you begin crafting a bid. Remember that the business or agency looking for help has likely put a considerable amount of time into writing the request. Try to determine which points seem most important to them and make sure you tackle these in your proposal. Don’t ignore questions or concerns because you don’t think they’ll like the answer; an incomplete bid can be a red flag and remove your company from consideration. If you’re truly interested in winning the business, find a way to share accurate information that also explains any past challenges.
Consider whether your company is qualified to fulfill the contract, has relevant experience, and can provide the procurement team with the information they’ve requested by the deadline. If a cost proposal is requested, you’ll want to arrive at a realistic number that protects your bottom line.
It’s not surprising that some small businesses fixate on offering the lowest bid for the job. In fact, in the case of government contracts the agency is often required by law to accept the lowest responsible bid. Bidding risks becoming a race to the bottom, but government agencies are also supposed to consider whether the quoted price is reasonable for the job and if the company is qualified to fulfill the contract.
This is all to say that whether your company is bidding on a private or public contract, it’s important to take into account your own costs to make sure there’s room for a profit. Underbidding simply to win a lucrative contract can be a dangerous strategy that leads to frustrated clients and disappointing margins (or worse yet, a loss).
Refer to the RFP often while working on a bid. You may or may not be in contact with the company or agency’s procurement team; it’s also possible they’ll point you back to the RFP to answer any questions.
Common Documents Requested
Your business may need to fill out provided forms and submit documents to establish your qualifications and compliance with the bid terms, including:
Supplier diversity certifications
Details on your capabilities
Conflict of interest forms
The process may seem intrusive and bureaucratic to some. However, procurement teams have a responsibility to perform due diligence on bidders. Failure to provide these documents or fill out the forms could disqualify you from the bidding process.
What are Supplier Diversity Certifications?
Many government agencies and businesses have supplier diversity goals. Simply put, they’ve challenged themselves to award a specific portion of contracts to businesses owned by women, minorities, disabled veterans, and other socially or economically disadvantaged people. There are multiple supplier diversity certifications available, though not all are acceptable to every company or government agency. Certified diverse suppliers may qualify for government set-aside contracts or get the attention of businesses looking to build a more diverse supply chain. Consult the RFP or your procurement contact with specific questions about supplier diversity certifications that may be relevant to the bid.
3 Ways to Help Your Business Stand Out When Bidding
Your small business may be up against companies with more experience or resources, so it's important to point out potential advantages where you find them. Here are several ways to help your business stand out to potential clients:
- Back up claims with data. While you’re certainly marketing your business, this isn’t a great time for puffery or taglines. Know your strengths and provide supporting evidence. That might come in the form of team biographies highlighting relevant experience, supplier diversity certifications, or case studies that show success in past jobs.
- Research your potential client. The RFP should tell you a lot about the bidding process but learning everything you can about the company could prove advantageous. Who are their competitors? Where have they been succeeding or struggling? Incorporating this information into your bid can demonstrate your interest and abilities. You can consult industry news websites, companies like Dun & Bradstreet, and a variety of other sources to get started.
- Try to arrange a meeting early on in the process. They may say “no,” but speaking with the procurement professionals or decision makers evaluating the bid could reveal insights that aren’t explicitly called out in the RFP.
Following Up on a Bid
Potential clients should be forthcoming about when they’ll make a decision and award a contract. If no suitable bid has been presented, they may begin the process again. If you haven’t heard a definitive answer within the expected time period, politely reach out to your contact and ask if bids are still under review.
Government agencies will often provide a schedule and be required to follow it, but businesses may deviate from their initial schedule. Use your judgement if it doesn’t seem like you’re getting traction; preparing bids is a labor-intensive task and your time may be better spent searching for the next opportunity.
Winning new contracts fuels growth for many businesses. While the process may seem intimidating at first, in time many small businesses learn how to tell their stories and sell themselves to new clients.