Does it seem at times that you have trouble defining a new service or product on which you want a vendor to give you a bid? (Examples are an advertising campaign, new delivery truck, new phones or phone service, or maybe pallets for the shop.) In addition, after you receive the product or service, ever think that it’s not exactly what you wanted or ordered? Imagine the vendors’ frustration with trying to read your mind when they furnish the bids, and the time lost continuing to clarify the specifications for each vendor.
We learned to use a RFP (Request For Proposal) for any substantial item. In addition to getting more accurate bids and reducing the time to gather bids, the biggest benefit is in defining for your own benefit the description of what it is you want. On a new phone system, for instance, there are a million features and types of systems. What are the minimum features you want in the system? You will be surprised how often you can’t answer these questions internally; so how will a vendor read your mind? How many cordless units will you need? How many lines will be funneled through the system, and how much voice mail capability will be needed? After you have a basic configuration in mind, circulate it to key users in your company, and you will probably get significant comments that will help you refine the request before releasing it to several vendors. ALTERNATIVELY, you may want to release it to just one vendor, as that vendor will then give you lots of information, and you can further refine it before distribution to other vendors. By the way, even if you aren’t going to get competitive bids, the vendor will think you are getting bids and will then sharpen his pencil on the first presentation.
One of 3 things will happen when you prepare the RFP.
- You won’t be able to define the item and/or reconcile it to your needs and goals.
- You will define it so well that it is overwhelming, and you will need help or can’t even move ahead.
- You’ll define it so well that you get good competitive bids, and the specification becomes a tool for reaching your goals.
Vendors are your friends, and you need a good team of vendors just as you need good employees. If you can’t pay them on time, call them. Never avoid them, and always be up front with them. Vendors will help you solve problems with your customers also.
I enjoyed speaking at the 2 seminars In Salt Lake city, at the ARA Convention, and last month at the International Truck Parts Convention in Tucson, it was good to see many of you.
Next month: More good stuff from Chapter 3.
Remember, only you can make BUSINESS GREAT!
Please email if you would like me to send previous articles.
Ron Sturgeon is past owner of AAA Small Car World. In 1999, he sold his six Texas locations, with 140 employees, to Greenleaf. He now manages his real estate holdings and investments, and does limited small business consulting. You can learn more about him at WWW.salvagingmillions.com. (Click on “more about Ron Sturgeon”.) He can be reached at 5940 Eden, Haltom City, TX 76117, or email@example.com.