Financial Solutions for Smart,
Low-Risk Job Bidding

Doing business with your existing customer base is relatively low risk. You know the players and have experience with the work. But expanding your business means jumping into the construction bidding game — taking a chance on new projects and organizations. How do you choose future jobs wisely? And how do you grow without overextending yourself financially?
 

3 QUESTIONS TO ASK DURING THE JOB BIDDING PROCESS

1. Does your project align with your capabilities?
   
   If you have the equipment, personnel and skills for the work, great. If you don’t, that doesn't necessarily mean you have to say no. Just be realistic about what it will require — in terms of your learning curve and financial investment — to do the job right. Then decide if the risk is worth the reward.

2. Will the organization requesting the bid be a good client?
   
   It always pays to do some research on any customer you haven’t worked with before. Get online and talk to your industry contacts before you start the bidding process. Check to see if there are any reports of slow or missed payments or other difficulties that might make the job less appealing (and less profitable).

3. Can you make a profit?
   
   Earning money is the goal, so make sure any project you take on will deliver a return. Factor in all your costs — labor, equipment, fuel, materials, maintenance, insurance, permits, project management time and more — so you can create an accurate bid with a built-in profit margin.

DON'T LET THE COST OF EQUIPMENT BE YOUR BARRIER TO ENTRY

Many small contractors run streamlined equipment fleets — operating only what’s needed to get the job done. It’s a smart strategy that helps keep expenses under control, including maintenance and repairs to insurance and storage.

But taking on new projects generally requires investing in new sizes or types of machines and work tools. What if you don’t have the cash to purchase what you need? Or what if you don’t want to risk your capital before you’re confident there will be enough future work to justify it?

There's no reason to let equipment costs stand in the way of your growth. Here are four financial solutions you can leverage during the construction bidding process — and after you win the work:

1. SCALE UP WITH RENTAL EQUIPMENT

Renting equipment is a flexible, low-risk alternative to purchasing it. The upfront investment is much less, and you don’t pay to maintain, repair, insure or store it. That makes expenses more predictable for more accurate job bidding. Plus, you can rent for whatever amount of time a new project requires. If you decide this type of work isn’t for you, you’re not committed for the long term.

Renting can even help you stand out from the competition during the bidding process, since most rental machines are newer, efficient models equipped with the latest technologies. Onboard tools like grade control and on-the-go weighing can help you reduce project costs associated with fuel and materials as well as complete jobs faster — savings that can go right to your bottom line.

For added cash flow benefits, use the Cat^® Card as a flexible, unsecured line of credit to finance rentals from your Cat dealer or The Cat Rental Store.  

2. TAKE ADVANTAGE OF FINANCING OPTIONS

Purchasing equipment can be a great long-term solution. But if you’re just dipping a toe into new work, consider financing as an option to acquire equipment for single projects or short-term use.

Both equipment loans and leases allow you to put a machine to work right away but pay for it over time — a great way to maintain cash flow and simplify budgeting. Loans give you the benefits of ownership and equity, but leases do tend to offer greater flexibility. For example, when you choose one of Cat Financial’s leasing options, you may:

• Pay less per month than a loan or short-term rental

• Have options at lease-end: return equipment, purchase it or extend the lease

• Qualify for monthly, quarterly, semi-annual, annual or skip payments

To factor the cost of financing equipment into job bidding, use the online payment calculator. You can estimate payments over the life of your loan or lease, along with your total investment.

3. USE A LINE OF CREDIT TO PAY FOR PARTS AND SERVICES

Renting or financing a machine can help you keep acquisition costs stable and predictable. But as you use equipment on your new jobs, you’re bound to encounter other expenses. A lack of access to cash could keep you from meeting project goals, hitting deadlines and winning repeat work.

To help ensure you have funds to pay for replacement parts, additional work tools or emergency repairs when you need them, apply for the Cat Card. Just like with rentals, it allows you to spread costs over time to fit your budget. And using the Cat Card helps you build a payment history with Cat Financial, which can be useful as your business grows and you need to acquire additional equipment.

You also earn Cat Vantage Points on every qualifying purchase* made with your Cat Card. (*See cat.com/catcardrewards for eligibility, details, and terms and conditions.) You can redeem your rewards and put them toward future parts and service purchases.

4. REDUCE REPAIR RISK WITH EXTENDED PROTECTION

As you expand your business, you need every machine on the job working productively. There’s no room for downtime. That’s why it’s smart to include an Equipment Protection Plan (EPP) with your loan or lease for added peace of mind for extended protection beyond the standard warranty.  This is important if you’re bidding for new work because you’ll lock in costs as you expand your business.

Extended parts and labor coverage protects you from unplanned repair costs caused by covered defects in Cat material or workmanship. With an EPP in place, your Cat dealer handles covered repairs to help reduce your risk of downtime. An EPP can also help provide a hedge against inflation, because you lock in parts and labor costs up front.