A good number of small businesses find it challenging to survive in a competitive market for several reasons. Firstly, they need more finances to implement sophisticated processes that can better operations and attract customers. Secondly, customers tend to shun such businesses due to a lack of confidence in the brand. Potential investors also fear doing business with such companies because of the high chances of failure. The good news is that small businesses can position themselves well by purchasing surety bonds. Surety bonds are particularly essential for businesses operating in the construction industry. Read on to learn more.
Surety Bonds at a Glance
Before you get into any contract with the government, you need to have surety bonds for your business. This is a binding agreement, more like an insurance policy, that protects the government from any financial losses you cause during your contract. For instance, if the government contracts you to renovate a public park, the surety bond will cater to the resulting financial damages if you fail to honor the terms of the contract. Surety bonds typically protect the government and the public.
Surety Bond Benefits
Surety bonds can benefit your business in the following four ways:
- Enhances Brand Credibility
Every legitimate construction business is eligible to work on government construction projects. However, the government will only settle for a credible business; one that seems able to deliver as expected. Although your business history will count significantly in vetting, having surety bonds is a must. Surety bonds will build people’s confidence in your brand.
- Opens Door for Business
While almost every construction business can offer its services to the government, only a few get the chance. When awarding tenders, the government focuses more on a company’s ability to fulfill the terms of a contract. Having surety bonds is one way to prepare your business for government projects. In other words, surety bonds open more opportunities for your construction business to work on government projects.
- Gives You a Competitive Edge
Large companies get a chance to work on government projects due to their popularity in the industry. Since the government will consider your ability to complete the project, having surety bonds will give you a competitive edge. Your business will also be able to compete for construction tenders, just like the large ones. This is because, with surety bonds, the government has an assurance that they will not suffer losses even if you fail to complete the project.
- Saves Your Business from Lawsuits
Every party in a contract must honor the terms of the contract. In case of breach of contract, a lawsuit may result. If, for example, the government contracts your business to perform a project, you must honor every term stipulated in the contract, lest you receive a lawsuit. Surety bonds shield you from such just in case you cannot complete the construction project assigned.
Need Surety Bond Benefits? Contact Pittman Insurance!
Overall, a surety bond benefits small businesses, especially those operating in the construction industry. To know more about surety bonds that can help your business thrive. Contact us at Pittman Insurance Group. We have the expertise to help you decide which types of bonds suit your business.