The Expert Podcast

So when you're a construction company, whether it's a general contractor, subcontractor, or even a developer, many times the amounts of money you're talking about in your contracts are very large—hundreds of thousands, millions of dollars. As a vendor to another company, you might not think your risks are that great, but for the customer, their risks are pretty large because they are trusting you to complete a project as bid, on time, and on budget. If at some point during that project development, you fail to come through with the timeline or even the quality of construction, they could have some serious problems.

Whatever project you're working on, whatever building you're working on, is going to be used by your customer or your client for some purpose. Whether it's for their own business to operate out of, maybe it's an investment where they're going to lease it out, and they have certain timelines they have to meet and certain usability functions they have to meet. So in many cases, a construction project is going to require a surety bond.

A surety bond is going to be something that is required in the contract that you have to obtain from a surety bonding company, normally an insurance agency, that will guarantee your performance of that contract. Now, here's the thing: if you are a contractor and you are dealing with a potential client that's not requiring a surety bond, you might think, "I'm off the hook, I don't need to get a bond." However, you could still look at that as an opportunity.

As a sales business development hook, what you do is go and get a quote for a surety bond for that project. You don't have to buy it, just get a quote from a bonding agency, and you see there's a link below of a bonding agency that can help you with this. Include in your bid and your contract the offer to provide a surety bond along with your bid if it's accepted.

Here's why you do it: you might think, "Well, why would I spend extra money for something they're not asking for?" Well, here's the thing: none of the other bidders on that contract will probably include a bond if it's not required. If you include it, your bid now goes to the top of the list because the potential client’s going to think, "Well, wait a minute. Even if this other bid's a little bit lower, this company is offering a guarantee on the performance through this bond," right? And they might be thinking, "Well, maybe that's why it's lower, because they're going to have a harder time completing the project on time and on budget." You can now actually elevate your bid to a higher consideration.

So use the surety bond as a great opportunity to get more business. The fact that many more sophisticated, higher-end clients are requiring bonds means that it's valuable, it's a necessity, it's something that they care about. So if your particular client's not asking for it, maybe they're not aware of it, maybe they're not familiar with the advantages. But once they see it and make sure it's featured prominently in your bid, that could be an opportunity for you to get more business and steal contracts away from your competitors.

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