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organizational capacity and bidding

April 17, 2009 on 9:55 am | In Management tools, profit coaxers | No Comments

Bidding is an artform in and of itself.  Let’s review some of the things to be aware of as you submit bids and try to make new sells.

I read an article last night that greatly intrigued me.  So today, instead of just writing a blog of my own, I am going to share two recent bidding experiences, and then quote part of that article before tying it back into these recent bid experiences.

We recently had the opportunity to bid on the three Seneca Casinos’ hood cleaning contract.  They brought all of the competitors together for a single pre-bid question conference and a site walk-through.  We finally got to talk with some of our competitors.  It was an education for us, and a good experience.  We realized less than an hour into the walk through that this bid was so far over our heads it was unbelievable.  They have more than 2000 feet of hoods, which they want cleaned monthly.  We could do probably do the work desired, but not on their strict time schedule.  In order to meet their bid requirements, which meant cleaning between 3 and 7 hoods nightly, within a short, six or seven hour time window, we would have had to hire two additional crews and purchase and outfit two additional work trucks.  There is no way that we could amass that level of additional resources in so short of a time period without taking on heavy new debt.  Thank you but, no way.

Two rules of thumb we live by in our business:

1.) You don’t take on any new debt without first ensuring that you will be able to comfortably afford the payments, and all the interest.

2.) And when things are tough for your industry, your customers’ industry, and for your firm, you don’t go about suddenly taking on huge risks, expanding like crazy in a rapid fashion and incurring huge amounts of new debt to do this.

I know from my graduate school studies that most businesses are too fragile to survive super fast, uncontrolled, unplanned spurts of business expansions.  The waves of change introduced break the firm and often destroy it in such a situation.  Needless to say, we ultimately chose to decline to submit a bid for hood cleaning at the casinos.  Since we are the only firm who possessed a permit to treat the dirty water onsite, and dump it down the customer’s drain, we offered to assist the other competitors if they wanted.  Our offer created some super good dialog with the competitors after the bid site walk throughs.  All in all, I’m glad we participated in the bidding process, because we were able to “plant some marketing and collaboration seeds” which might help us at some point in the future.
Next, we decided to bid on some landscaping work for my church.  My husband and potential employees/ friends of ours, know some stuff about landscaping having done a lot of it in other job positions , and we thought we would try it, even though it is outside of our core compentency.  We closely evaluated our skills levels of my husband and the interested friends willing to join us to fulfill the bid obligations, and determined that we could indeed perform the work.  Of course, I had zero experience in bidding landscaping work.  We timed how long it would take to perform various aspects of the scope of work desired, and tried to guesstimate from there.  I did the best I could in writing up the bid, put in way too much of a contingency buffer because there were so many angles I was unsure of, and ended up a submitting a bid that was much too high, and we didn’t get the work.  The client graciously allowed me to see all the bid figures submitted by every one we were bidding against.  It taught me a bunch about bidding landscaping work.

But I also noticed a common trap that the winning bid fell into.  He wanted the contract so badly that he clearly concentrated only on undercutting everyone else. The winning bid came in so low that the owner has to do all the work by himself, and he isn’t even going to earn minimum wage on the job.  Why would you want to do that?  How do you provide for a family when you must work super long hours, and won’t even earn minimum wage at the end of it?  How is he going to pay for gas to travel around to mow the different locations?  What happens if some of his equipment breaks down?   He may have just unwittingly put his entire firm into harm’s way, by his not taking enough time to evaluate his firm’s capacity and the true costs of the scope of work to be performed.
Now for the article quotes from the thing I read last night.  It is from a talk given at Brigham Young University by one of the leaders of the Church of Jesus Christ of Latter-Day Saints, Apostle Jeff Holland.  He was talking about how to have a happy and strong marriage.  But what he said can also be applied to a business and the capacity and resiliency of its employees to turn a profit for the firm.

Here are his words of wisdom. . .
“Some things in life we have little or no control over. These have to be endured. Some disappointments have to be lived with in love and in marriage. These are not things anyone wants in life, but sometimes they come. And when they come, we have to bear them; we have to believe; we have to hope for an end to such sorrows and difficulty; we have to endure until things come right in the end.”

“One of the great purposes of true love is to help each other in these times. No one ought to have to face such trials alone. We can endure almost anything if we have someone at our side who truly loves us, who is easing the burden and lightening the load. In this regard, a friend from our BYU faculty, Professor Brent Barlow, told me some years ago about Plimsoll marks.”

“As a youth in England, Samuel Plimsoll was fascinated with watching ships load and unload their cargoes. He soon observed that, regardless of the cargo space available, each ship had its maximum capacity. If a ship exceeded its limit, it would likely sink at sea. In 1868 Plimsoll entered Parliament and passed a merchant shipping act that, among other things, called for making calculations of how much a ship could carry. As a result, lines were drawn on the hull of each ship in England. As the cargo was loaded, the freighter would sink lower and lower into the water. When the water level on the side of the ship reached the Plimsoll mark, the ship was considered loaded to capacity, regardless of how much space remained. As a result, British deaths at sea were greatly reduced.”

“Like ships, people have differing capacities at different times and even different days in their lives. In our relationships we need to establish our own Plimsoll marks and help identify them in the lives of those we love. Together we need to monitor the load levels and be helpful in shedding or at least readjusting some cargo if we see our sweetheart is sinking. Then, when the ship of love is stabilized, we can evaluate long-term what has to continue, what can be put off until another time, and what can be put off permanently. Friends, sweethearts, and spouses need to be able to monitor each other’s stress and recognize the different tides and seasons of life. We owe it to each other to declare some limits and then help jettison some things if emotional health and the strength of loving relationships are at risk. Remember, pure love “beareth all things, believeth all things, hopeth all things, endureth all things,” and helps loved ones do the same.”

http://speeches.byu.edu/reader/reader.php?id=1618

Do you use Plimsoll marks in your business?  i.e.  Do you know your firm’s capabilities and capacity, as well as your employees’ capapacities on an individual level?
Have you put procedures in place to enable your people to recognize when your firm or one or more of its employees are either approaching or have exceeded a Plimsoll mark?

How do you jettison excess baggage when you have exceeded a Plimsoll mark, and how do you evaluate when and how to create more capacity by expanding your business operations or hiring more workers?

The answers to these questions could easily make or break your business.

hints for equipment

March 31, 2009 on 3:18 pm | In Management tools, accounting tips, profit coaxers | No Comments

You have probably purchased a number of office equipment items and other equipment that you use in your business.  Most of these will have warranties that come with them.  Sometimes, you can get a price break when something goes wrong, even if it wasn’t covered under a warranty if you have kept good records about your equipment.  If there was a warranty card, make sure that you have filled it out completely and mailed it in.  I used to process these warranty cards for a manufacturer.  A couple of times, everyone who had returned the warranty card for a particular make and model got a sweet gift, such as a new electric razor or a gift certificate to a nice restaurant from the manufacturer where I worked.

Get a hard bound notebook and record all the serial numbers and model numbers of all of your company equipment in it – one piece of equipment per page.  Write down as much information as you can get from the serial number plates, such as make, model #, serial number, manufacturer’s name and address, volts, hp, etc.  Make a note of any warranties, and consider taping a copy of the approved repair facilities from your owner’s manual inside your equipment journal.  Also, take a picture of each piece of equipment, and tape this picture to the information page in your journal notebook.  [It might be prudent to have two of these notebooks kept simultaneously, one to keep at the office and the other one to keep at your home, just in case something bad happens to the equipment i.e. it gets broken or stolen or accidentally destroyed.]  This is your proof that you had the equipment, and it will help you file an insurance claim if needed.

On the back of the page of the individual equipment item’s serial numbers, manufacturing info, start a service history log for every time you buy parts or service the equipment – such as changing toner in the printers.  Note the date, what was done, who did it, and where you got the replacement parts from.  Then, in a separate file folder, make a copy of the receipt or invoice for this repair or part.  The original bill from the vendor will still go into your paid bills file cabinet, but the copy of the vendor’s paperwork should stay in the individual equipment item’s folder [which also contains the owner's manual etc.] – kept in a separate file cabinet drawer – this way you will have all information about that piece of equipment in one handy location if you should ever need it.  This hint can save you hours of frustration at some point in the future.
Usually, when the piece of equipment breaks, you can no longer read the serial number and other items on the serial number plate.  I’ve spent countless hours searching for the vendor who carried the replacement or repair part that I needed for a customer’s cooking appliance or refrigeration unit.
When you fill up a log page with the service and repair history, – just start a new page somewhere else in the journal.  Note that the journal must be hard bound.  Loose leaf or wire bound notebooks won’t stand up over time.