Why sell to government?
Small businesses, and even medium businesses at times, often dismiss the opportunity to sell to governments. They may have any number of reasons for this:
• Government contracts are for the “big boys”
• The process seems too bureaucratic, too much paperwork, too tedious, too complex
• “I don’t know how to go about it!”
• They may not have even thought about it
But that is no reason not to give some real consideration to this opportunity.
What is the Opportunity?
Imagine a customer that has a big budget and buys almost every conceivable product or service year after year. They buy during good times, and they even buy during recessions. Sounds like a great client, doesn’t it? Well, government agencies do just that.
And many contracts run across a number of years. That makes them an ideal customer for many small and growing businesses.
The Australian Government is a large potential market for businesses of all sizes. From advertising and cleaning services to engineering and office equipment, and from training and project management to research and recruitment, Australian Government organisations purchase a wide variety of goods and services from the private sector.
Over the last nine years, the total value of Australian Federal Government Procurement has ranged from $32,962 billion to $59,447 billion. It is not a steady increase but varies according to budget and program requirements.
The number of contracts ranges from 64, 092 to 85,870 each year - that’s a lot of business!
Many small businesses supply goods and services to the Australian Government. The Australian Government encourages small businesses to compete for Government work and is committed to sourcing at least 10 per cent of procurement by value from small and medium enterprises (SMEs).
Note: The Government’s target for SME participation by contract value is 10%. SME participation for previous years was 24% in 2015-16 28% in 2014-15, 34% in 2013-14, 32% in 2012-13.
If you would like to see more on this, such as the breakdown between goods and services, go to Statistics on Commonwealth Purchasing Contracts.
And it is not just Federal Government; State and Local Governments are also major players in the market place, spending large sums of money every year for a wide range of products and services.
The NSW Government alone spends $12.7 billion annually procuring goods and services. At the other end of the scale the NT Government is the major buyer in the Northern Territory, procuring over $800 million in goods and services each year. NT Research found that whilst the tender process for goods and services under $50,000 represented just 2% of the total value of tenders awarded, they comprised 47% of the total volume of tenders.
Why governments’ buy is another question; an issue I explored recently in “Are you Selling …. Or Solving?”
How do I find out about the Opportunities?
Information on tender opportunities is available online through both government and commercial sites.
AusTender provides centralised publication of Australian Government business opportunities, annual procurement plans and contracts awarded.
State and territory tender websites provide information about procurement opportunities for businesses. Tender sites usually include upcoming, current and closed business opportunities, details of awarded contracts, as well as the ability to register to receive email notifications of new relevant business opportunities.
The AusTender site also provides a link to tenders for states and territories government tenders websites which save you time if you are looking for opportunities at state level across Australia. Select your state or territory for specific information.
The commercial sites are subscription but save you the time and effort of researching opportunities.
- Australian Tenders is an Australia-wide, locally-owned and operated service, providing information on current tenders by Federal and state governments.
- TenderLink provides search capabilities for current tenders, RFQs, RFPs & EOIs by category.
- TenderSearch is a specialist service that searches and notifies you of tenders, quotes, expressions and registrations of interest from Australia and around the world - including tenders and opportunities.
- Projectory provides intelligence on major projects throughout Australia.
Similar sites will exist in New Zealand, USA and UK etc.
What are the problems that may confront me?
Many find completing government tenders a bureaucratic burden. I’ve heard all the complaints over the years:
• It’s too complex,
• It’s too bureaucratic,
• Everything takes too long,
• It’s biased,
• Tender forms are repetitive,
• Small businesses can’t win, big business has an unfair advantage,
• The requirements aren’t always clear, it’s confusing
• It’s too demanding, it’s too costly
On and on and on.
Although governments have made a serious effort to work with small businesses, the process can still be cumbersome. Often you have to pore over long documents to ensure that your company can meet the government’s requirements.
As a business owner, you must balance these benefits against the challenges of working with the government. Only you can determine if this is the right opportunity for your company.
How to turn Problems into Opportunity
When you do your research into the opportunities you may be confused by the range of choices. The only way to deal with this is to specialise and focus your efforts. Start with one level of government (federal, state, or local) and then expand as your abilities improve. Don’t try to do too much at once or you will be overwhelmed.
Identify your impediments – Are you tender ready? I explored this, including a checklist, in “Are you TenderWins Ready?”
Cultivate sound professional working relationships with potential Government users of your goods and services so that they are aware of the capabilities of your business. For example, many government organisations with Standing Offers may invite their suppliers to provide information about their goods and services for distribution to other government organisations or they may conduct supplier expos.
The AusTender website provides are some basic tips on marketing to and doing business with Australian Government organisations to help get you started:
- Try to identify the organisations likely to need your goods or services, and within those organisations, identify the specific areas that are most likely to make purchasing decisions
- Develop your relationships by meeting with the relevant officials, and provide useful information. Information could include your corporate profile, track record, testimonials, website address, pricing schedules and contact details (but don’t flood organisations with advertising material or constant phone calls - cold-calling is not an efficient marketing method)
- Make sure organisation buyers know what sets you apart from your competitors
- Maintain contact with organisations to ensure you are aware of future prospects
- Be aware of any regulatory requirements, conditions, pre-qualifications, licenses etc that you might need to supply to the organisation
- Consider whether you can partner with other businesses that sell to government organisations
- Build a reputation for providing value for money - bid competitively and wherever possible add extra value within the scope of the requirement. An innovative solution is often welcomed.
Register with the Industry Capability Network. This is an independently managed non-profit national organisation that introduces local buyers and sellers for the development of effective supply chains using Australian and New Zealand companies. Registering with Industry Capability Network can introduce your products and services to buyers seeking competitive and capable local suppliers. There are links on the site for each state office, and I recommend your register with your state office.
Have testimonials ready, both on your website, and a database of testimonials and references you can draw on to support any submission you may make.
What is your experience?
I’m working on a new online course to help people transform their success rate in tendering, while reducing the time and stress involved, and would like to build your experience into the design of the modules.
And if you would like to understand more on my approach to tendering you might like to download my freebie – “How to Overcome the 19 Most Common Mistakes in Tendering”.