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The Secret to Winning Small-Business Contracts

By focusing on added services or products – in addition to price -- you can offer a customer more value, a better alternative and a more likely deal.

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If we are to believe the standard depiction in popular culture, the relationship between a small business and its customers is a healthy, symbiotic one, where both sides treat each other fairly. In reality, customers more often act like a dysfunctional parent, playing siblings against each other in order to win their affection.

This is no more evident than when a client asks a small-business owner to bid on a contract. Contracts are crucial to the well-being of a small business because they essentially guarantee a steady stream of revenue over a period, but winning one can be difficult.

More often than not, you will be going against multiple competitors, all trying to deliver the lowest quote they can. To make matters worse, sometimes a newer business willing to lose money on a job to get a foot in the door will be bidding. But if you think differently than your competition, one strategy will almost always guarantee a win every time.

Go Beyond Price

In most bidding situations, your competitors will only focus on price. By focusing on added services or products -– in addition to price -- you can offer your customer more value, and thus a better alternative.
  • Add extra services. Say you run a business that cleans carpets and are bidding for a five-year contract on all the rooms in a hotel chain. Once your have figured out your best price, while still making a reasonable profit, consider a bonus. If the contract calls for a full carpet cleaning twice a year, offer one free touch-up per room, based on availability. This is a free added value for your customer. The chain now knows that if a guest spills coffee in a room, you will take care of it at no charge. You put the "based on availability" into the bid so that you can schedule these touch-ups when you are in the area on other jobs or when your crew has downtime, minimizing the impact on your bottom line.
  • Build in a surplus to your bid. For example, If your customer is asking for 12 dozen silk screen T-shirts to be sold at an upcoming event, throw in an extra dozen for free.This is particularly powerful because the cost to produce extra product as a manufacturer is minimal, but it will translate into a much higher profit for your customer.
  • Focus on time. Can you deliver a project or product in a shorter time than your competitors? If you are more efficient or have the flexibility to prioritize one customer's project over others, use those advantages in your bid.
  • Emphasize quality. Can you do better quality work or products than your competition for the same price?
The bottom line is that as a small-business owner, thinking about the things that matter to your customers -- above and beyond price alone – can help differentiate you from your competition and in the process ensure that you win the contracts that help your company to be a success.

Brian Lund's blog offers more on small business, the stock market, investing and the secret to eternal life.

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