A business proposal is a written offer from a seller to a prospective buyer. Business proposals are often a key step in the complex sales process—i.e., whenever a buyer considers more than price in a purchase.
A proposal puts the buyer's requirements in a context that favors the sellers products and services, and educates the buyer about the capabilities of the seller in satisfying their needs. A successful proposal results in a sale, where both parties get what they want, a win-win situation.
- 1 Types of proposals
- 2 Components
- 3 Managing business proposals
- 4 Writing proposal
- 5 See also
- 6 References
Types of proposals
There are three distinct categories of business proposals:
- Formally solicited
- Informally solicited
Formally solicited proposal
Solicited proposals are written in response to published requirements, contained in a request for proposal (RFP), request for quotation (RFQ), invitation for bid (IFB), or a request for information (RFI).
Request for proposal (RFP)
RFPs provide detailed specifications of what the customer wants to buy and sometimes include directions for preparing the proposal, as well as evaluation criteria the customer will use to evaluate offers. Customers issue RFPs when their needs cannot be met with generally available products or services. RFIs are issued to qualify the vendors who are interested in providing service/products for specific requirements. Based on the response to RFI, detailed RFP is issued to qualified vendors who the organization believes can provide desired services. Proposals in response to RFPs are seldom less than 10 pages and sometimes reach 1,000's of pages, without cost data.
Request for quotation (RFQ)
Customers issue RFQs when they want to buy large amounts of a commodity and price is not the only issue—for example, when availability or delivering or service are considerations. RFQs can be very detailed, so proposals written to RFQs can be lengthy but generally much shorter than an RFP-proposal. RFQ proposals consist primarily of cost data, with small narratives addressing customer issues, such as quality control.
Customers issue IFBs when they are buying some service, such as construction. The requirements are detailed, but the primary consideration is price. For example, a customer provides architectural blueprints for contractors to bid on. These proposals can be lengthy but most of the length comes from cost-estimating data and detailed schedules.
Request for information (RFI)
Sometimes before a customer issues an RFP or RFQ or IFB, the customer will issue a Request for Information (RFI). The purpose of the RFI is to gain "marketing intelligence" about what products, services, and vendors are available. RFIs are used to shape final RFPs, RFQs, and IFBs, so potential vendors take great care in responding to these requests, hoping to shape the eventual formal solicitation toward their products or services.
Informally solicited proposal
Informally solicited proposals are typically the result of conversations held between a vendor and a prospective customer. The customer is interested enough in a product or service to ask for a proposal. Typically, the customer does not ask for competing proposals from other vendors. This type of proposal is known as a sole-source proposal. There are no formal requirements to respond to, just the information gleaned from customer meetings. These proposals are typically less than 25-pages, with many less than 5 page.
Unsolicited proposals are marketing brochures. They are always generic, with no direct connection between customer needs or specified requirements. Vendors use them to introduce a product or service to a prospective customer. They are often used as "leave-behinds" at the end of initial meetings with customers or "give-aways" at trade shows or other public meetings. They are not designed to close a sale, just introduce the possibility of a sale.x
Formally solicited proposal
- Requirements Matrix, which matches customer requirements with the paragraph and page numbers of where those requirements are addressed in the proposal
- Executive Summary, which outlines the primary benefits of the vendors's solutions to the customer's requirements
- Technical Volume, which demonstrates how each requirement will be met
- Management Volume, which describes how the program will be managed
- Cost Volume, which provides all costing data, as well as implementation plans and schedules
Informally solicited business proposal
- A description of the seller's capabilities or products
- A discussion of key issues
- A description of the buyer's specifications and how they will be met
- The cost of the offering
- A schedule for delivery of the products or services
- Proof of prior experience i.e. Testimonials from previous customers, Descriptions of previous projects
Managing business proposals
Managing proposals presents an enormous challenge for sales and marketing teams. Many established management methods are ill-suited to deal with the broader issues associated with the production and delivery of proposals.
The process of proposal management
Proposal management is an inherently collaborative process. It often consists of the following basic roles and responsibilities:
- Creator – responsible for creating and editing content.
- Editor – responsible for tuning the content message and the style of delivery, including translation and localization.
- Publisher – responsible for releasing the content for use.
- Administrator – responsible for managing access permissions to documents and files, usually accomplished by assigning access rights to user groups or roles.
- Consumer or viewer – the person who reads or otherwise takes in content after it is published or shared.
Increasingly, the term proposal management is being used to suggest that engagement with the proposal process is important to more than just the sales team, and should also affect those working in marketing, legal, and sales.
There is also an increasing trend towards using proposal management software that allows users to quickly and easily create proposals, collaborate with team members, track and analyze customer engagement.
Writing a successful proposal can be made easier through the development of a proposal checklist that contains the necessary standardized information that is typically contained in 80% of all of your sales proposals. This makes it much easier for the proposal writer to build a shell and then research the roughly missing 20%. For example the Company Name, Mission Statement, History, Qualifications should remain the same for most proposals leaving the Pricing section and specific Product and Service options specific to the customer to be customized for the current target customer.
- Baugh, L. Sue; Hamper, Robert J.; (1995). Handbook For Writing Proposals. McGraw–Hill. ISBN 0-8442-3274-2.
- Holtz, Herman; (1998). Proven Proposal Strategies To Win More Business. Dearborn Trade, a Kaplan Professional Company. ISBN 1-57410-088-2.
- Reeds, Kitta; (2002). The Zen of Proposal Writing: An Expert's Stress-Free Path to Winning Proposals. Three Rivers Press. ISBN 0-609-80649-1.
- Ricci, Laura; (1996–2007), The Magic of Winning Proposals (publisher R³) ISBN 0-9657399-1-0.
- Riley, Patrick G.; (2002), The One Page Proposal: How to Get Your Business Pitch onto One Persuasive Page (New York: HarperCollins) ISBN 978-0-06-098860-9.
- "Capture. Deliver. Excel. – Applying the Principles of Business Writing". Ilja van Roon. Retrieved May 7, 2006.
- How to Write The Proposal.com – General business proposal writing advice with links to additional resources.
- What is a business proposal – What is a business proposal and how to write it.