5 Simple Steps to Making Successful Bids: Tips for Small Businesses
Bids can be labor intensive to prepare but many freelancers rely on them to get new work, especially trades and creative businesses, according to Fast Company. Many companies, from nonprofits to government agencies to big companies, send prospective suppliers request for proposals (RFPs). The suppliers then need to send a proposal or bid back.
In this article, we’ll cover:
- Decide If You Want the Project
- Set up a Meeting with the Client
- Calculate Costs
- Check Profit Margins
- Send and Pitch Your Bid
1. Decide If You Want the Project
Just because you receive a RFP or a prospective customer asks you to bid on a job, doesn’t mean you have to. A bid is a labor-intensive document to create and you shouldn’t submit one unless you’re really interested in the project, you’re likely to win the job and you have the expertise to do the job well.
Fast Company recommends only bidding on a job if one of the three following situations are true:
- You’re an insider. You know someone in the company or you helped the company write the RFP.
- Your unique expertise fits the job. This means you’re the most logical choice for the job.
- You need the money and you don’t have any current projects on the go.
It’s also ideal if you actually find the project interesting.
- For example, a graphic designer who specializes in the construction industry is a good fit to bid on a branding job with a general contractor. Plus, the designer knows the owner and it’s an interesting project because it’s an opportunity to do a complete branding package that includes a logo, business cards, fonts, colors, letterhead, email signature and social media branding.
The Houston Chronicle recommends saying no to the following types of projects:
- Projects where access is difficult
- Projects that require too much commuting
- Projects with unsafe environments, environments that are too hot or cold or jobs that require difficult materials
2. Set up a Meeting with the Client
Read through the RFP again and write down any questions you have for the potential client. Now it’s time to set up a meeting with the client.
Not all companies will want to meet with you. But it’s in your best interest to see if the project’s really worth your time, explain your experience and set up a working relationship with the client to improve your chances of winning the job.
An in-person meeting is best, according to Fast Company. But a teleconference or phone call can also work. Send an email to request a meeting and promise to make it quick. If the prospective client doesn’t want to meet, you probably won’t get the job. At least you know.
During the meeting, ask the following questions:
Why Did You Ask Us to Submit a Bid?
If the prospective client says they chose you to bid because they found you on Google, this isn’t a good sign. But if they said someone referred you or they heard about your good work on another project, your chances are much better.
Also, ask why you think your expertise will fit in with the job (and feel free to sell this point, as well).
How Many Companies Did You Ask to Bid on This Job?
And then ask: who else is actively bidding on this job? If there aren’t too many competitors and the companies chosen are quality firms, this is a good sign.
Why This Project and Why Now?
This question helps you understand what the client wants from the project. It also gives you the chance to ask questions about the specifics that show your expertise. Ask about deadlines, too. If an important project has a tight timeline, they’ll be in more of a hurry to select a bid.
It’s okay to tell the client that you don’t think the project is a good fit for you. Being upfront (and polite in doing so) is professional and makes a good impression.
3. Calculate Costs
Correctly estimating costs sets you up for success by making sure you turn a profit down the road. If you don’t know how to estimate costs, this article lists the five best estimating techniques you can use plus a list of bid apps, software and calculators to make the task even easier.
In a nutshell, you should list all the materials you’ll need for the job or services required. Get prices for them and tack on 10 to 15 percent as a service charge.
Then multiply your hourly rate by the number of hours you estimate the job will take. In this case, it’s really helpful to base this off how long similar projects took you in the past, according to the Houston Chronicle.
Add the material costs to the labor costs. Then add a percentage on top to take into account transportation, insurance and other overhead costs, if applicable. It’s also a good idea to add in a margin in case something goes wrong.
The final amount should fit within the client’s budget and make sense to you. If not, raise or lower it.
4. Check Profit Margins
Simply charging for material and labor costs is going to put you into the red. You need to add a percentage on top of those costs to account for overhead and any surprises, according to Capterra.
Overhead could include any tools you need to buy and marketing you need to do for the project, though you could also write these costs off.
How much you mark up your costs depends on the industry. For example, builders usually mark up their costs by 15 to 25 percent.
The worst thing you can do is undervalue your service. You may win a bid if you underbid your competitors but that won’t help you run a profitable, sustainable business in the future.
5. Send and Pitch Your Bid
Don’t simply email or mail your bid, says Capterra. You need to pitch it, not just send it. Ask the client if you can walk them through the bid in person, or at least over the phone. You want to be able to explain the services listed, costs, their amounts and why your figures may be higher or lower than your competitor’s.
Talking through the bid also prevents miscommunications and gives the prospective client to ask you questions. Plus, it helps add a personal element to the bid document.
People also ask:
How Do You Make a Bid?
To make a bid, you need to make a bid document. It’s easier to do so by using an existing template.
MS Office has a construction bid template you can download for free for Excel. Template.net also has bid templates that will help you bid on cleaning jobs, construction jobs, landscaping, painting and more.
If your client is only looking for approximate numbers you can make an estimate using FreshBooks estimating software. Or if they want a lot of detail and information about your company, you can use FreshBooks to make a proposal and easily send it to your client online.
How Does Construction Bidding Work?
The bidding process is especially common in the construction industry. Here are the common steps to bidding for construction jobs, according to Bizfluent:
- The prospective client submits a bid package to potential contractors. This package may include project plans, timelines, specifications, information on site or building conditions and more. Private bids mean the client only sends the package to certain suppliers. Public bids may be advertised and anyone can bid for the job.
- Contractors use estimating software or apps to determine labor and material costs (this article lists tools you can use) plus resources required.
- Organize a site visit to get a sense of potential problems like limited site access.
- Ask the client questions about potential problems or issues you discover.
- Submit your bid document by the required date. Some companies choose the lowest bidder, others the best contractor for the job no matter the price. A bid may be rejected if it didn’t provide all the documents and information requested in the bid package.