Lesson 1, Topic 1
In Progress

2.1. Appropriate tenders for own business are identified with reasons why they suit own business.

ryanrori January 7, 2021

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This is where the tender process starts.  The entrepreneur must position himself to know and learn about opportunities on a regular basis, and to take it upon himself to make buyers aware of his products and services. The tenderer has to ensure that should a tender be awarded to him all the necessary resources need to be in place and delivered, otherwise do not tender!

A tenderer should take a cold, hard and honest look at their resources before getting excited and carried away by tender opportunities.  Over-committing limited resources to a highly competitive tender-awarded contract can adversely affect core business, with the level of service to traditional customers going into decline and cash flow drying up.

Many businesses have got themselves into serious difficulty by blindly jumping into contracts they simply cannot manage. Think extremely carefully about the risks involved were you to be awarded the tender.  Can you manage these properly?  In terms of South African law, offer plus acceptance means a legally binding contract.  If you do not comply with the conditions of the contract, you could be liable for damages.  Think of the effect on your reputation too.  You don’t want to get a bad name.

Only tenders related to your type of business are investigated for viability. Answer the following important questions:

  • Do I have (or can I obtain) the additional capital that will be required for the stock or extra equipment needed?
  • Can I provide the security that is being asked for?
  • Can I manufacture or supply the quantities needed?
  • Can I meet the deadline dates set for delivery?
  • Can I consistently meet the quality standards required?
  • Do I have enough quality staff to complete the contract?
  • Do the specifications fall within the range of what I can deliver?

Look at the following examples of tenders to analyse which will be suitable for your business.

Open Tender :               Anyone can tender

Closed Tender:              Only pre-qualified tenderers, identified by buyers, whose names are included on a short list, and who have passed an eligibility test, are invited to tender.

Example of an Open tender:

Closed Tender:

Closed tenders are never publicised in the media.  Buyers have a list of pre-qualified names on their tender list. (Usually 4 to 5 names).  The organisations/companies that are on the tender list are contacted directly by the buyer of the organisation that needs the product or service.