Tenderpreneurship: How to Play it Clean

It was always going to be difficult to write on this especially with the recent news and happening around the country. In a country where there are newspaper adverts to join the cartels why would one really work in building a business around tendering? But it can be done. It has to be done. World over, serious economies are premised on tenders. For example. Toyota has over 200 suppliers most of them on framework tenders. Anyway. I identify with the pain of entrepeneurs who have had to go through hell on earth due to pending bills held by the government for years. How do they feel when they watch in the news people who supplied nothing and got paid in the millions. Must be hard for them.

The word tenderpreneurship is yet to gain acceptance in the circles of academia and business. In Kenya it is synonymous to getting government tenders through cutting corners (‘deals’). To me, ‘tenderpreneurship’ has a nice ring to it and I use it to mean doing business in servicing tenders. Did you know that government accounts for about 60% of the consumption done in any economy? Yes! 60% of the value of business in any country is consumed by government and Kenya is no exception. The GoK will continue to consume and guess what? It will continue to give tenders to the private sector to service what it can’t.

Now, in an ideal world, getting government business should be on market merit. Better product/service against best quote and value for money. Problem is that when it comes to Kenya, we operate beyond market; not the best product/service wins, not the most competitively priced wins, not the most efficient, not the most innovative and definitely not the most sustainable. Those charged with procuring hardly seem to care about value for money. There is a lot to write about the situation. But of interest here is how would you succeed as a tenderpreneur?

1. Know Your Thing

Sadly, because our economy doesn’t function normally, then you find a class of people who aren’t even business people dealing or specialized in any goods or services offering to supply. Others will be out there doing everything. Today you have a deal to build schools, tomorrow you are supplying grains to schools, the next day supplying X-Ray machines to hospitals etc. Never mind, you have not even a basic understanding of the business you are doing. Talk to anyone in biz and they will tell you how steep the learning curve is. So. If you aren’t specializing on a few aspects how are you able to compete in all? Connections? Whatever you do whether it’s producing service or goods, there is a market for it in the tendering world. Now make it better and competitive.

2. Find the Opportunity

Ever noticed that most guys participating in tenders are always chasing deadlines? The reason why they do it the last minute is because they get to know the opportunity at the very last minutes. How about staying ahead of your market in anticipating opportunities. If you know you build bridges (J), do you contracts out that kind of work? Government departments, counties, KURA, KERA etc? Do you know what their budget is? Do you know when they are likely to advertise? When was the last time you visited their website? You don’t need a complex CRM system to keep track of biz. A simple excel form is enough. You can even have an intern develop it for you. List all your possible leads, contact them, follow up with them and evaluate how much biz you are getting. Its better this way, you have something to do when you get to the office rather than just doing the trial and error thing. Procuring entities need also to be encouraged to be more proactive in sharing information on opportunities.

3. Broaden Your Scope

A big problem I faced on training youth was their singular focus on AGPO opportunities. Guys, you won’t always be youth. Maybe you might always be a woman or handicapped but that’s not enough. You need to prepare to compete in the real world. Guy you age are running multi-million businesses yet you have become a cry baby running from one office to another looking for AGPO. Mmmmmmh. There is much more business beyond AGPO. Did you know, if you are into construction, government will give you business, but so will NGOs, private sector, churches, individuals etc. Don’t just focus on supplying maize in one school because you know the principal otherwise you will do it only once or twice a year. That’s not business.

4. Ready the Requirements

If you are going to be in tenderpreneurship then you must know and prepare the requirements for application. Most tender documents for government work are fairly standard with very little variations. There are mandatory documents and the technical documents, those you must have. Then there is the financials, you must have a sensible formula of arriving at this. The template for doing that is all the same. If you are into building ERP systems you will know how much roughly it costs to build, customize, buy licences etc. Then you must know the industry mark up and only then you will have a rough idea on how to quote. Tenders will be done in many formats; open tenders, restricted tenders, invitation for bid, expression of interest, call for quotations, framework contracts etc. Know them all. It’s your business to know.

5. Ready the Financing

Sometimes (almost all the time) you will be expected to service the tender on your own financing. It is quite rare where you get part payment before starting to do the job. Even when you get some financing, you might find you will need more money for the job. So. You can’t run away from the reality that you will financing. To get that you will need records, good bank statement and collateral. So get them ready. It’s a shame how many people out there can get these tenders but raising the money becomes impossible. I have done few sensitization on AGPO financing and the cries are always the same. Access to finance is the bane of our youth. Come on prepare for it or stay home.

6. Build Capacity

Most SMEs will be limited in technical or resource capacity to bid for or deliver a certain tender. If you know your limitations then it is easy to work on them. It is always possible to make or join a consortium of companies bidding for a tender. It is much easier that way as it reduces competition but also gives the procuring entity higher assurances of your chances of delivering. Sometimes instead of focusing on the procuring entity you can target the winner of the tender for subcontracting. There is an increasing tendency to include local content in contract that of international nature. You will know how best to target this.

7. Playing Fair

The problem with people who aren’t entrepreneurs is that they don’t care about the business or even tomorrow. They are willing to play rough to win today. They don’t care about suppliers or partners or employees. They don’t even care about their reputations. They will bribe to get the tenders, bribe to get paid, fail to do the job (supply air) or do such a shoddy job and deliver pathetic quality while feel nothing. They are the same guys who will not get the regulatory compliance and will evade taxes. So you can’t simply compete with them. While you may not risk the brand of your biz with any dark practices, the average tenderpreneur doesn’t care. When they are caught they will still look at the cameras and smile. Even when not caught, if you do the calculations of the money you pay to get tenders, the interest on loans, the money you pay to get the cheque etc and subtract from your revenue then you will realize that sometimes it’s not worth it.

8. Your Obligation

The biggest threat to tenderpreneurship is corruption. There are laws and ethics. Follow them. If you see someone cutting corners make noise and take action. If you keep quite then you are contributing to the rot in our economy. If nothing is done then the market for oranges will continue being tarnished by the lemons. I get gutted each time I walk into a public office and first thing I see is imported furniture. Please. We can make most of these things. Buy Kenyan. Give us those jobs. Lets all create jobs for one another by keeping the multiplier domestic.

Advertisements

7 thoughts on “Tenderpreneurship: How to Play it Clean

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s