7 common mistakes vendors make when going after new business

President Donald Trump’s proposed budget for fiscal 2021 for the Defense Department was $706 billion, 4% less than the appropriated amount for 2020 after adjusting for inflation. For President Joe Biden, the pandemic response plan requires additional spending. His plan includes expanded tracing and testing plans as well as spending for vaccine distribution and informational campaigns as well as further spending for personal protective equipment. On the defense side, many analysts predict flat spending for FY 2021 and 2022 under Biden, with an emphasis on improving capabilities than boosting capacity.

As always, there’s opportunities for contractors to win lucrative contracts. Despite the potential to grab a piece of these billions, some contractors consistently make mistakes that hold them back from new business. Here are seven common mistakes vendors make, as well as some tips for standing out from the other bids and earning some solid 2021 contracts:

  1. Setting undefined business capabilities

Many firms fall into the trap of the old saying “jack of all trades, master of none.” They want to attract business and to provide value on multiple fronts, but in doing so they don’t define their capabilities. So they state their business goals as “We provide IT services,” or “We are an IT company,” instead of describing what the vague term “IT services” exactly entails. Don’t try to be everything to everyone. Determine your firm’s niche capabilities and define them narrowly such that your capabilities resonate with your target customers. Communicate this specialization with your clients and also your employees — the message has to be clear and consistent. Remain committed to your niche until your revenue base is well established and innovate methodically.

  1. Misaligning capabilities to strategy

In addition to presenting defined capabilities on your site and branding materials, you also need to align the capabilities with your new business strategy. Avoid following what other companies are doing because it’s “easy to do,” or seems like an attractive way to diversify. Seek out new business partners that line up with your strategic niche and core capabilities, so you further establish yourself as a leader in that space. Expand your niche and capabilities through partnerships instead of trying to do everything organically. For instance, if your strategic goal is to enter the oil and gas sector, find a company that is already doing business with your target audience. Give them an opportunity to enter your sector in exchange for you to partner with them in your target space. Stay on top of rising stars in your space and build partnerships.

  1. Underfunding the company

Creating a sustainable and profitable business takes time and resources, and the investment of financial capital. Too many firms think they can run on a long-term shoestring budget. But that’s why they have limited growth. To win business and to grow at an accelerated pace, you need to invest wisely in building a strong business infrastructure – this includes the right people, with the right technology working with defined processes. Don’t let this scare you – with the help of fractional experts and consultants, getting the right people has become extremely affordable. Interview few consultants and ask for recommendations. Take the expert recommendations to heart and implement their ideas but don’t try to short change expertise by trying to save a nickel. Sweat equity will only get you so far if you aren’t willing or able to fund the company properly.

  1. Creating a need out of thin air

You can’t build a business need where one does not exist. You always want to capitalize on needs and anticipate changing markets, but you can’t force it upon others. Some companies are born out of hobbies and the owners are convinced there must be a market for the hobby. That’s very rarely the case, so remember if you have a need for a product or service that does not guarantee there’s a sizable client base to match. Do your market research – with social media it is now easier than ever to test demand beyond your immediate circle of friends. When selling business-to-business, not only do you have to identify the need but also know how and where the money flows – the buyer is not always the actual user. While the buyer may love what you have to sell, they may not be the ones in control of procurement in the company.

  1. Digging the heels in

To acquire business in a competitive landscape you can’t be too stubborn, complacent or unwilling to pivot. The pandemic reminded everyone in business that needs and marketplaces change rapidly. Some owners are more interested in building a “legacy,” so they keep providing the same services and conduct business the way it’s always been done, even in the face of change. If you find yourself fearing change and disruption, then you’re already behind the competition that knows how to adapt and extract value from change.

  1. Painting into a niche corner

While you don’t want to paint a broad brush about your capabilities, you also cannot create an unappealing narrow niche. Some of your clients might want a “one-stop shop” solution. This provides you with an opportunity to expand through partnerships and subcontractors to offer a packaged solution. Customers want to engage your specific capabilities, but they also don’t want to award five different contracts when they can rely on you to facilitate.

  1. Waiting for the unicorn

You can’t accept every new business offer that comes across your desk, but you also can’t hold out hope for the unicorn. If you’re passing because the opportunities are too small, too big, carry too much risk, or aren’t exciting, then you’re missing out on chances to bring in revenue and grow your brand. Too many companies fixate on replicating their very first successful customer engagement. They see a win and want an exact match so they can keep winning. No two opportunities will be the same, so avoid looking for the unicorn win and instead focus on exemplary service and creating a reliable reputable business model.

Reena Bhatia is the chief executive officer of BidExecs Franchising and ProposalHelper LLC.

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