May
23
Contractors: You Are Creating A Market
May 23, 2008 | Comments Off
When a full time employee goes on his/her own and starts selling his/her services there is one interesting thing that he provides the companies who may be interested in hiring them: A Market.
Big companies can’t offer services that they can’t deliver. But since the contractor offers to deliver services on their behalf, now they have access to a pool of resources to offer those services. A market is born.
Now, a market is nothing more than a set of offers and bids. You offer your services for some ammount, and the buyers bid some ammount. Hopefully it is the same ammount and you get a contract. Most of the time, it is not. Most of the time your price is higher than what the buyer is willing to pay. That is fine: you do not want to win them all!
You only want to win the opportunities that you can deliver and those that can give you a good margin — enough to replace your old salary, for example, or at least to cover your personal life expenses. Most of the offers (proposals) and bids (counter-negotiations) will appear to be lost effort. In reality, it is not. You are helping create a market for those kind of services. The prices may be pushed up or down, depending on how many more contractors offer your services and how confident they are (how firm they are on their bids).
When you see that process of bidding and accepting counter-negotiations as a natural way of creating a market you learn to:
- Don’t Sweat The Loss – Don’t sweat loosing an opportunity for which you didn’t invested too much of your time. You will loose most. You only have to win a few good ones.
- Don’t Spend Too Much Time On Proposals – Focus on building trust with the client. On understanding what they need. On getting a verbal agreement on what they want. Summarize it in as few pages as possible on a proposal, and send something quickly.
- Respond to Quick Bids – Sometimes the potential buyer wants a ballpark estimate. Try to discuss the project details to be able to provide a good estimate. But if they refuse, it is for a reason. Maybe they just want to make a budgetary estimate (which could be good). More often than not, they just want to use your bid to improve their negotiation power with the competition. This is not the time to lower the price. Give a quick, high estimate. Don’t spend more than a couple of pages. See it as part of creating the market.
- Don’t Rush to Lower Your Bid – Just like on a stock or commodities market, you know what your inventory is worth, and you price it accordingly. Don’t lower below what it is worth. Otherwise, you will contribute to a services market crash — not good for anyone – it will send you into a job fair.
Also, feel good about creating a market. Creating a services market supports the sales of products that move the economy. You contribute to the GDP in many more ways than you think.
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