Should You Continue to Bid or Fold?

            I know that with the winter that never came, I’m sure many business owners and managers are trying to come up with a carrot that will help to bring in more work. One of those methods has always been the bidding or quoting process as it is often referred to.

Whatever you call it, it is one of the most difficult areas of business to deal with especially with so many companies just trying to exist. Why? Because you are faced with so many business obstacles that often have an impact on making a decision and one such a decision is providing stable employment. This, of course, is just another tentacle of what is referred to as company over-head.

Over the past several months, I have had the opportunity to chat with a few company owners and managers who tell me that they are making adjustments, like making Saturday and Sunday part of the normal work week, asking employees to take an early vacation or taking part in a work-share program.

A work-share program is something that some states offer to help companies keep their employees employed at fewer hours by sharing in some of the company’s labor cost. Generally, the employee will work 32 hours and is able to keep benefits while the state will off-set the wage.

This plan will generally stay in place until the company can find other methods to generate more business, possibly through diversification or in some cases rethinking the company’s existing business plan. For some readers, this may be worth looking into within your own state.

In the case of bidding for work, I notice or hear that business owners and suppliers are considering or have already lowered their price to get the work, and I guess in some cases perhaps its works. But in my opinion, it depends on what rubber rule is being used to measure the success of what is called and ‘I GOT the bid.”

Did the bidder actually make the margins required to keep the business operating with a good/ better GP or was it a desperation attempt to find some cash? If you made a good to better gross profit, great or was it a case of just working harder not smarter?  For example, there are those who are selling 100 gallons of oil on a cash basis at a 50 cent margin, pricing any job at a 20 GP or a supplier selling something at a 10- 15 percent margin. In most cases this would not come under the heading of selling. It would be called buying the business.

My first thought would be to take a close look at the bid opportunities presented and decide if you can submit a bid that will not only satisfy the buyer, but meet the level of profit necessary to continue operating your business. Another suggestion would be to never put quantity over quality. Proper bidding or pricing is a necessity in order to meet the demands of every business overhead, otherwise you will have no choice but to fold.

For those who would like a copy of my season load graph that I mentioned in a previous article, send your e-mail address to ChasBursey@aol.com