How do I tender, where do start?

BASICS STEPS TO FOLLOW TO BECOME A TENDER ENTREPRENEUR

Tendering is a massive business, almost all procurement, buying, sourcing of goods or services by government or state owned entities is done through tendering. There are items that are sourced by national government only but otherwise each province controls its own budget. This budget must filter to schools, hospitals, municipality etc.

At the initial stage of tendering with government or private sector you do not have to own any manufacturing factory or any fancy offices. I'm using initial stage because it is unlikely to be given bigger tender projects without even owning registered offices. Whilst it is relatives easier to enter tendering, we must remind each other getting a tender contract may also take a long time that you expect. Our first tender we were awarded, we excited, our name was published on local newspaper but sadly that's where it ended. The tender was later cancelled.

A friend of mine left his comfortable job to try his hand on tendering in 2009, its 2011 now he has not had any luck yet. But then again I also know individuals who are successful beyond belief.

WHERE DO I START - BASIC STUFF


I always advise tendering entrants to start on request for quotes (RFQ). Unlike formal tenders RFQ are usually just one page to fill and are not subjected to a long valuation criterias. Usually the cheapest supplier/tenderer gets the order. RFQ are awarded almost every second day and usually involve amounts less than R30,000 with less stringet requirements or items less than R200000. Profits from this projects come handy. Also see online tenders on our page.

Step 1

You will have to register your business with www.cipc.co.za .Have in mind at least 5 names you want to call your business in the order of your preference, starting with the most preferred.A registered accounting officer or lawyer can help you.

Step 2

Since close corporations are discountinued you will have choose what type of business you want to register e.g private company (pty) Ltd, co-operative. Sole trader or partnership are also quick but not advisable as they tie your business debts to your personal assets. If you are in a rush you may also buy a shelf company i.e. a company that already exist. Remember this option will not give you the luxury of your personalized name or preferred name but its quick and you get used to the name. Shelve company names usually read like this : Springboard Investment 69, New Horizon 55 Pty Ltd. Buy shelf company online below :-

• http://www.pty-online.co.za/
• http://www.dbs-accounting.co.za/

Step 2A

Create your own free e-mail account. Try any of the following e-mail accounts (we recommend gmail.com): -

• Webmail.co.za
• Gmail.com, 
• mail.com, 
• mail.yahoo.com

Step 2A
Create free fax to e-mail. This will help you receive faxes until you buy your fax machine, not only that  but you will also be able to access your faxes anywhere. Register free here :

• Faxwize.com

Step 3
Open bank account. Remember you can only open a business account once you are duly registered as a business.

Step 4

Register your business with SARS and obtain Income Tax number, UIF (if you will employ staff or you will leave your job) PAYE.Avoid applying for VAT at early stage of your business, it cumbersome to manage and in any case very hard to get. You can only register with SARS once you have opened a business account with your bank.
Step 5

Start registering your business in various procurement database departments.Depending on which sector you want to trade you will have to register on following:

• CIDB    : Building & Construction
• BCCCI : Cleaning Services
• PSIRA  : Security Services

Step 6

Do not forget business cards and get business stamps, 

Step 7
Usually being registered on database allows you to tender but to be invited to submit quotes will require you to submit your business cards to every procurement department you know.

End of part 1

Never under quote to get contract

Things to avoid when submitting quote or tender

Under quoting is offering a price that cannot cover your cost and allow your business to realize profits. Most small businesses source and supply various goods and services and add whatever mark-up for their efforts. It is very important to source credible wholesalers and be sure you will be able to deliver on given timeframes at agreed price. Always request a written a quote.

Get a minimum of three quotes from your wholesalers and from popular retailers. Why get retailer’s price? : When submitting your tender or quotation your price must be market related. Bread is currently R9.50; you cannot quote to supply bread for R39.99 unless it has a McDonald Meal and Coke inside. Your prices will determine if you will be invited next time.

Never guess work your prices.  Always keep workings of how you arrived to your selling price. I always do my price calculations on a spreadsheet and have a column for selling price, cost price, mark-up, market price and overheads.

It’s better not to get the contract because your prices were high than to get it and discover you will make high losses.

Avoid offering bribes to officials.

Things to avoid when submitting quote or tender

This is my quick take on this subject:  it is very unlikely any official will ask a bribe from your unique talent, service or product they need. For example how do you ask for the bribe from Danny K to sing on the event, he charges say R40000 if you cannot afford him then try Mandoza. Its easier to dictate terms if you are not like everybody and you have built a strong brand. David Kau is a stand-up comedian, there is no other David Kau and I do not see how you can want a bribe from him, I think he will laugh at you. Companies like Makro only accepts cash on despatch and they do not deal with government because they do not pay on time. I hope I make sense.

Unfortunately most SMME sell computers today, funeral services tomorrow, training next year and they become vulnerable. Actually, there are the ones who suggest: we have thought about you, we are willing to talk or do you want to talk, we are all in this together sir, we are open minded sir, you rub ours we rub yours.

The reason I say you careful offering a bribe or a gift (so they call it) because not everybody is corrupt, some officials will never consider you for business once you have suggested a bribe. The other problem with offering bribe yourself

What am I saying?

If an official approaches you and says let’s work, do not ask what are you expecting, decide when he makes an offer whether you want in or not. If you decide to go ahead make sure you do not loose. Never sell your soul for money!

Government officials deal with hundreds of suppliers, paying a bribe today can never guarantee you tomorrow. A friend of mine once said, “This people are worst than prostitutes, there are never satisfied”. There is always a next one with money.

Never prepare your document on the last minute

1.      Things to avoid when submitting quote or tender

Preparing your document on time will help you go through terms and conditions of the tender. This may include where to return the document, very important. Hear this; Inkatha Freedom Party were disqualified to run some 2011 municipal elections because they initially returned registration documents on the wrong address and by the time they were moved to the right address it was late. The matter had to be handled by courts and they eventually missed the opportunity. The African National Congress could not run in Western Cape municipal elections because the documents were delivered late. You will be amazed how many tender documents are returned to the tenderers and are disqualified because they were late.If the conditions say no tender documents will be accepted after a closing date and time, that's. Your document will end up on rejected pile. Look at the following tips when submitting your tender document.

•  Make your own copies of the document before you send it. If you get the contract or disputes arise they will come handy. Remember you may do the same tender again with another department and have the reference. Create an index file of documents attached with document. Always submit original copies where possible or certified copies where allowed.
•   Spend a little bit of money on a graphic designer and create a professional page you can always use when submitting your tender documents. Believe me your document will stand out and attract attention.
• Use glossy paper on your attachments it’s stronger and looks good. Tendering is long process and your document will pass through several hands before the decision is made.
•  Bind your document together preferably with spiral binding. Remember they will hundreds of other documents and you do not want to lose your pages.
• Submit your tender document a day before. Do not take a chance on closing date, what if you get a puncture, traffic jams or the bridge collapses. You will never know. In case you are posting your document use a reputable courier company that will hand deliver your tender document on time and be able to track delivery.