Issue Date: 
Tuesday, November 3, 2015

Three Challenges to Starting a Business to Tender

Every day the average business owner faces different challenges in the tender process. Several challenges keep on repeating themselves over and over again especially when you are a start-up business or if you opened a company with the specific intention to respond to tenders. These challenges are:

1. Experience

Tender responses are evaluated according to Functionality. One condition under Functionality is always the amount of experience you or your company have in a specific industry. The experience element usually counts for a number of points and these points all add up to your total score that you need to achieve in order to move on to the next phase of evaluation. If you lack experience you are going to struggle to earn points. To resolve this we suggest that you respond to tenders that you have relevant experience in. A good example is where an IT sector person responds to tenders in the IT sector - this way you can use your own experience on your CV to earn points on Functionality.

2. Site visits

Currently the trend from Government Entities is to do site visits to ensure that the bidders are real companies. The problem with opening a company with the sole intention of responding to tenders is that the company is not really operational in business and therefor has no site from which it operates. Depending on the kind of tender that you are responding to the minimum that you need to do is to set up an office of some sort, even if it is at your house. You need to show them that you have capacity in order to earn points on Functionality and to move forward to the next phase.

3. Compulsory Governing Body registration

In South Africa there are numerous Governing Bodies that businesses and their employees and/or owners have to belong to. Three examples of such Governing Bodies are:

  • National Home Builders Registration Council (NHBRC),
  • The Financial Services Board (FSB) and
  • The National Contract Cleaners Association.

There are many more but we will discuss to these three. Many Government tenders require registration certificates showing your affiliation to a Governing Body. Failure to produce such a certificate can lead to your tender response as being judged as non-compliant and this can lead to you being disqualified.

There are two major challenges that the business owner faces when registering with the appropriate Governing Body:

  • Firstly the rules and regulations that the business must be adhered to in order to register and
  • The cost involved.

The solution would be to try and register even if it is costly. Remember that you will have to comply in any case with the rules and regulations of the Governing Body should you be lucky enough to win the tender. Find out what the rules and regulations are and start to comply now and register.

Starting a business is a very complicated process - starting a business specifically for the purpose to respond to tenders is even more difficult. Rather start a small business, get it up and running, get some experience under the belt, earn a bit of income and then start responding to tenders.

Visit our website for more details on our upcoming How-to-Tender workshops www.how2tender.com

Learn today earn tomorrow

Tenders, B-BBEE and the new Preferential Procurement Regulations 2017

We have previously asked: How important is a good B-BBEE status level of contributor in the tender process?

The answer is still the same: VERY IMPORTANT!

In all tender documents, you will find the NEW Standard Bidding Document 6.2 which is used to claim your Preference Points for B-BBEE. The higher your B-BBEE status level of contributor, the more points you will score on the Preference Points System. Ultimately the bidder or bidders scoring the highest points will be awarded the tender.

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