How can a start-up business win a tender?
In the tender process, it is essential that an enterprise be knowledgeable of the supply it wants to bid for. In fact, the more knowledge the enterprise has of its supply, the better its odds are of being awarded a tender.
The question is ‘where or how do start-up enterprises gain experience?’ or, ‘can a start-up enterprise win a tender?’ The simple answer is yes, start-up enterprises can win tenders.
Organs of State have identified certain industry sectors such as cleaning, grass cutting, security and a few others where they will try and award tenders to start-up enterprises. Furthermore, the new Preferential Procurement Regulations 2017, have got three specific Regulations that Organs of State can apply, to the advantage of designated groups, through sub-contracting 30% of a tender to Small, Medium and Micro Enterprises (SMME’s).
An alternative to overcome the lack of experience would be to go into a Joint Venture. Collaborate with an enterprise that has the necessary expertise and that complies with the Functionality of a specific tender. Finding enterprises to go into a joint venture with can be difficult but if a start-up enterprise can bring unique skills or Black Ownership to a joint venture, it will be easier to find a joint venture partner.
It is practical to start a business in something that you have experience in, so we advise start-up entrepreneurs to use their experience, gained through studying or working in a specific sector, in their tender responses. Use personnel references and ask the supplier/s that you dealt with in your previous job/s to be your references.
The Preferential Procurement Policy Framework Act dictates that Organs of State enforce certain minimum requirements when awarding tenders, in order to verify that an enterprise is legally operating and is tax compliant.
The minimum requirements any enterprise must met in order to respond to tenders are:
- Being tax compliant;
- Be registered on the Central Supplier Database;
- Have an B-BBEE certificate or an EME Affidavit (in the case of a startup);
- A Fixed address;
- Bank account;
If you want to learn more about the tender process and how to complete a tender correctly and hopefully successfully, we advise that you attend one of our tender courses. For more information on the tender courses please email Werner at email@example.com.
This article was written by Werner van Rooyen, Director of HowToTender which specializes in tender consulting and tender training. (04/05/2018)