Owner/Manager businesses often tell us that they feel they are being excluded from public procurement contests. We have written elsewhere about how companies can improve their bid management capabilities (through the development of a better strategy, by seeking bid management support or by obtaining training on writing bids). Increasingly, the consortium is becoming a further, potential solution for owner/managers to consider.
The public sector is using tendering frameworks to establish panels of preferred suppliers. Long-standing suppliers are being left out in the cold because they may not provide enough services to satisfy framework requirements or they may not be large enough (in terms of headcount or revenue) to qualify for such a framework. This means that they have only one alternative and that is to consider forming a cluster (a cross-sector network of companies) or a consortium (a network of companies within a sector).
Debt-free business growth
The consortium model is best suited to ambitious, growth-focused companies. The members need to be committed to making things happen. A consortium (or cluster) requires businesses to come together and agree a set of goals the network can collaborate on and work towards. The biggest attraction of a consortium is that the set-up costs are modest but the pay-off can be significant. A good consortium with advanced collaboration processes allows business networks to bid for work at a size and scale that they would not be able to on their own without incurring significant capital costs. That is why we call this debt-free growth – companies can win large accounts in big organisations without incurring the kind of costs that they would have to incur if bidding alone (in fact they wouldn’t be eligible to bid without a consortium/cluster).
Long-term plans for long-term success
Patience is a virtue and it is required to operate a successful consortium. Sourcing members is a critical initial step. Flexibility is needed in identifying suitable members. Most sectors and industries have room for a consortium but there are competition law considerations so it is advisable to obtain professional advice before starting the set-up process. The consortium that gets their governance right first and develops working relationships before they start to bid for work is more successful than companies that come together on a once-off basis to respond to a tender. Buyers like to see that companies know each other and have worked out how they can work together to service their needs.
Together you can be more. Fortune favours the brave.
A version of this article appeared in the May 2016 edition of ISME’s Owner-Manager magazine. This publication is distributed to the membership of ISME each month.