There are some minimum requirements you must have in place before you can submit a tender. These are to verify that an enterprise is legally operating and is tax compliant.
- Company registration documents.
- Be registered on the Central Supplier Database (CSD)
- A tax pin (You DO NOT have to register for VAT if you turnover is less than R 1 million
Remember that to have a registered company and to have a business, is not the same thing. Once you comply with these three items you must actively start doing business. In other words, your business must be a running concern.
These items are only the beginning. There might be other requirements that an Organ of State might have which they will look at in order to decide if your business will be able to fulfil the tender. These requirements may include:
The business must have a bank account
If you are going to open a legitimate business, the second thing you will need is a bank account. This is a straightforward process and I recommend that you start out with a savings account with little or no bank charges if you start out with a small one-man business. Obviously, you must consider the needs of the business when opening a bank account but try and keep the initial costs to a bare minimum. You will need proof of identity as well as proof of your address to open a bank account. If you are in a partnership, you will also have to have a partnership agreement. In the case of a company, you will have to have the company registration documents on hand to give to the bank.
The business must have a fixed address
You will have to have a fixed address from which you are going to operate your business. Keep this in mind because South African Legislation dictates that you must supply a legitimate address when registering for a multitude of things. Currently the trend from Government Entities is to do site visits to ensure that the bidders are real companies. The problem with erecting a company with the sole intention to respond to tenders is that the company is not really in business and therefor there is no site that it operates from. Depending on the tender that you are responding to the minimum that you need to do is to set up an office of some sort, even if it is at your house. You need to show them that you have capacity to earn points on Functionality and to move forward to the next phase.
It is essential that you are knowledgeable in the goods you want to supply or services you want to deliver. During the functionality stage of your application, the Organ of State always consider the amount of experience you or your company have in a specific industry. The more knowledge the enterprise has of its supply, the better its odds are of being awarded a tender.
This little point in the tender process is many start-up businesses’ downfall. To resolve this, we suggest that you respond to tenders that you as person have relevant experience in. It is practical to start a business in something that you have experience in, so we advise start-up entrepreneurs to use their experience, gained through studying or working in a specific sector, in their tender responses. Use personal references and ask the supplier/s that you dealt with in your previous job/s to be your references.
A good example is where someone who worked in the IT sector, starts their own business, and then responds to tenders in the IT sector – this way you can use your own experience on your CV to earn points on Functionality.
Have a B-BBEE certificate or an EME Affidavit (in the case of a start-up)
It is crucial for an enterprise to have some B-BBEE credentials because the enterprise’s B-BBEE score is used in the Standard Bidding Document 6.1 to calculate the enterprise’s Preferential Points. Without these points it will be difficult for an enterprise to get pass the evaluation stadium of any tender process, not even to mention the adjudication stadium. No points will result in losing the tender. The good news is a Start-up Enterprise automatically qualifies as a Level one, two or four Contributor to B-BBEE. It all depends on your Black ownership.
Compulsory Governing Body registration (if applicable)
Numerous industries in South Africa have statuary bodies and you must be registered at to conduct business and many Government tenders require registration certificates showing your affiliation to a Governing Body. Three examples of such Governing Bodies are:
- National Home Builders Registration Council (NHBRC),
- The Financial Services Board (FSB) and
- The National Contract Cleaners Association.
Failure to produce such a certificate can lead to your tender response as being judged as non-compliant and this can lead to you being disqualified. Find out if your business falls into such a body and if so, register.
There are two major challenges that the business owner face when registering with the appropriate Governing Body:
- Firstly, the rules and regulations that the business must adhere to register and
- Secondly the cost involved.
Try to register even if it is costly. Remember that you will have to comply in any case with the rules and regulations of the Governing Body should you be so lucky to win the tender. Find out what the rules and regulations are and start to comply now and register.
Proof that you will be able to deliver
Do you have enough financial resources to fulfil the contract? It might be that in order to deliver, you will first have to invest a great deal of financial resources in stock prior to you getting paid. Once a tender has been awarded to you there is no room for non-delivery. If you miss a delivery the contract can be terminated and that could mean the end of your business. Government Entities want to see that you will be able to deliver.
Do I have the work force needed to fulfil the contract?
You will always find that Government Entities ask for CVs of employees that are going to be involved in the tender. Only if you have enough capable employees; then you are ready to tender.
So how does an enterprise, especially a start-up enterprise, overcome these challenges?
An alternative to overcome the lack of experience would be to go into a Joint Venture. Collaborate with an enterprise that has the necessary expertise and that complies with the Functionality requirements and technical criteria of the specific tender. Finding enterprises to go into a joint venture with can be difficult but if a start-up enterprise can bring unique skills or Black Ownership to a joint venture, it will be easier to find a joint venture partner.
Finding enterprises that will go into a joint venture can be difficult but if the start-up enterprise can bring some specific skills to the joint venture, it will be easier to find a partner.
|To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops and webinars. You can book online at https://howtotender.co.za/workshops/. Contact us at email@example.com should you require more information.
Remember: We have various manuals and guides to assist you in the process of completing your tender documents. ….. More info