By Steven Semaya, Associate State Director, CTSBDC

The key to competing with dozens—or even hundreds—of other businesses to score key contracts can be proving your company is able to meet the demands of the contract. Suppliers often focus exclusively on capability but do not address the question of capacity adequately, particularly the resources required to fulfill their side of the bargain. In other words, they don’t have a capacity plan.

To develop a capacity plan capable of convincing big companies you will be able to meet their demands, answer these five questions:

What will it take to provide the goods or services I promise to deliver?

Scoring a big contract is great news for any business but often comes with hurdles. For many small businesses dealing with large buying organizations for the first time, a step up in volume will bring new considerations around production and service volume, turnaround time, supply chain, and delivery. Can you build capacity, or buy it by outsourcing production, warehousing or services? Be sure you understand your limitations and decide whether they can be overcome before committing to a contract.

Do I have the physical & technology assets to deliver at scale?

A significant increase in the volume of orders can mean small businesses need to think about their infrastructure (e.g. machinery, systems, vehicles). From technology platforms to warehouse capacity and delivery capability, you will need to consider all angles. That includes maintenance, repair, overhaul (MRO), a comprehensive process designed to keep your equipment and facilities running, which in turn ensures safety, efficiency, and reliability.

Who will produce or deliver the goods and services contracted?

Capacity is not just about warehouses and machinery. Ensuring you have the right team is also critical to delivering on time. Start by outlining the size and qualifications of your team, with an emphasis on management structure, specialized staff, and training. You will also need to highlight workforce flexibility, which could mean temporarily scaling your workforce or subcontracting to meet demand.

Do I have the right processes and tech for maintaining quality and compliance?

Large contractors often have non-negotiable systems and compliance requirements, especially if they are governmental or prime contractors. Do you understand, and have the ability to use the buyer’s contracting, payment, forecasting, and other systems? Look at your processes for maintaining quality and compliance. Ensure they are up to required standards and highlight those for potential clients. Mention certifications, safety programs, or sustainability initiatives. Even administrative and reporting requirements can be burdensome and stretch your capacity.

What will I need to invest to fulfill this contract?

As the old adage goes, “It takes money to make money.” That is especially true when ramping up your capacity to meet the demands of a new contract. So, there are a few more questions you need to ask yourself:

• Do I have the reserves, or cash flow to fund the working capital needed if contract payment terms are longer than I am used to?
• Do I have funds to purchase enough inventory, increase staff, expand capacity, implement systems and processes, in advance of payment?
• Do I need bonding?
• Where do I get funding if I need it?
• Do I have good accounting systems in place to track what the business needs?

Answering these questions ahead of time will allow you to communicate financial stability and operational systems when meeting with potential clients. This is critical as buyers need to trust your ability to handle large contracts responsibly.

To take a deeper dive into capacity planning, watch “Want to Win a Contract? Develop a Capacity Plan.”