Government tenders are an opportunity for businesses to bid on contracts, which are awarded based on the price proposed by the lowest bidder. However, these tenders offer the potential to earn a profit outside of a normal business environment.
The benefits of government tenders
- They are a low-risk
This means that you do not need to make extensive financial investment for bidding. This will ensure that you are not funding the project fully and in case of failure, you will still have your primary business intact.
- They are easy to win
Government tenders involve lots of processes, which require a bidders to follow the stipulated rules and regulations. Hence it is more likely that inexperienced bidders will slip up and miss out on the opportunity.
- The profit potential is more
Tenders often make the position of a bidder rather attractive. With enough effort, you can go on to secure some lucrative projects that come with significant profit margins. It is this extra income that will otherwise have been impossible to achieve through your regular business.
- They are a good marketing
You can market yourself as the best bidders by sponsoring other bidders and actively promoting your company name throughout the process. This boosts confidence in your brand and makes future customers aware of you as a reliable bidder. When they see you get awarded, they will also accept that you have value and that they would be wise to deal with you in future.
- They are a good way to diversify
Government tenders provide you with an opportunity to diversify your business in a new industry. You can capitalise on the knowledge that you have built through your core business and apply it in a new field. In this case, you will find that government tenders are a little easier to bid on because the processes involved are similar to the ones found in private companies.
- They are a great way to ensure that your company is always relevant
Government tenders require you to be constantly up to date with the latest trends in a particular industry. This is important because it ensures that you are always up to date with the latest changes. Regardless of how good or bad your current situation is, government tenders will ensure that you keep moving forward and do not stagnate.
The disadvantages of government tenders
- They can be very costly
Government tenders often have an unnecessarily high financial barrier for new bidders who do not have sufficient funding for bidding. This means that there is often no room for smaller companies, which could have been successful otherwise.
- They do not guarantee that the contract will be won
In the process of submitting a bid, you can spend time and resources but still end up losing out. This happens because there are many factors that affect the final decision. You cannot control some aspects such as who has made the highest bid or whether you have met all the criteria. Additionally, you are competing with experienced firms that have secured similar jobs in the past. They tend to be more competitive during tender processes and therefore it is harder for newcomers to secure contracts even if they are offering better prices.