How to Start a Procurement Company

by Fraser Sherman; Updated September 26, 2017

Procurement is the formal system many businesses and government bodies establish to buy computer equipment, office furniture, vehicles and other necessities. Rather than expend staff time on market research and negotiating with vendors, organizations often recruit an outside company to handle procurement. If you want to enter the field, first decide the scope of your business: Whether you'll work with government or private industry, whether you specialize and how big a procurement job you think you can handle. You can decide these issues while drawing up the business plan for your company.

Step 1

Contact potential clients and ask about their procurement process. Local governments usually have detailed rules and requirements for selecting contractors, including procurement firms. You may have to submit a proposal bid for each procurement contract, or submit your qualifications to join a pool of companies the organization will contact when it needs something.

Step 2

Talk to suppliers in whatever field -- computer equipment, trucks, construction equipment, school supplies -- your procurement company will be working in. When you bid for a procurement contract, your bid must be competitive but still leave you with a profit. You need to know the market in order to price your bids correctly.

Step 3

Hire the staff you need to complete a successful procurement contract, or else find outside subcontractors to do the job. If your business involves cross-country shipping, for example, you may need to contract a freight broker or a trucking company who can make deliveries on time.

Step 4

Negotiate with insurers or bond companies about coverage, such as liability insurance or a surety bond. Large companies and governments may insist that you have some financial arrangement that will cover their losses if you fail to meet your contract.

Step 5

Watch and wait for procurement opportunities. If you intend to become a government contractor, for example, keep alert for your city, county or state calling for bids or proposals from procurement contractors.

Tips

  • You will need to meet all your state and local government requirements for starting a business. If you intend to incorporate, you'll have to file articles of incorporation with the state. If you want to use a business name other than your own, you'll need to register it. At the local level, you may have to take out a business license with your town or county.

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.