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 seller's products and services, and educates the buyer about the capabilities of the seller in satisfying their needs.
- 1 Types of proposals
- 2 Components
- 3 Managing business proposals
- 4 Proposal writing
- 5 See also
- 6 References
Types of proposals
There are three distinct categories of business proposals:
- Formally solicited
- Informally solicited
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 are generally much shorter than an RFP-proposal. RFQ proposals consist primarily of cost data, with brief narratives addressing customer issues, such as quality control.
Invitation for bid (IFB)
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. But they choose good quality of product."
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 or 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.
Formally solicited proposals
- 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. In these cases, organizations often rely on outsourcing by identifying a proposal manager to support their proposal development needs.
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.
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. At times, the process can be tedious, but the steps are pretty basic. Besides solicited and unsolicited proposals, the others that exist include internal proposals and sole-source contracts.
Internal proposals are ideas or projects that are presented to whomever holds the position of top management in a company. These types of proposals can be written by a particular individual, group, department, or division of a particular company. One example of this is when the manager of a product line writes a proposal suggesting that the company should robotize the production process. Some advantages to this includes easier communication, knowing the client's needs and making fast decisions. Some advantages to this may include competition from other companies and the loss of management champions.
These types of proposals are made when a private firm, government agency, or association negotiates to supply a service or product to a single company and when a company has excellent credibility and a track record of achievements. The standard format for this type of proposal consists of information about a specific product, including the price and delivery schedules. Some advantages to this include not having to have resources to win a contract and the firm or client knows what time the work will be coming.
Proposals are based on research, making it important for the researcher of the proposal to know about their client. The researcher must know the background of the idea that is being presented and show that he or she is well prepared to deal with a problem or situation their client has. The research for a company, institute, firm, etc. is done in advance, thereby increasing the chances of a well done proposal and the reader of the proposal will have a good idea of the outcome from the research that has been done. A general format for proposals includes the title page, abstract, scholarly statement of the problem and the method to solve it, the budget, and biographical information.
As small as it may seem, it is important that the title page be curt and definite. It would be a good idea to use key words for the purpose of indexing as long as it written in a relevant pattern.
This part of the proposal should state the situation, method, goal, scope, and the expected outcome. It usually consists of 200 words. Carl B. Palmer, Chief of Sponsored Research, Grants and Research Contracts, Office Space Science, and NASA says that the summary of an abstract has to be “short, lean, and all muscle.” He also points out that managers usually take a short glance at the abstract and will only concentrate on the proposal itself if a message comes through.
Statement and method
It is important to highlight the main idea that is being presented. First the writer of the proposal should state what the idea is and do something to make it unique. Next, the writer should explain what to do with the idea. Be sure to avoid phrases such as: “No one has thought of doing this before” or “This is entirely original.” Doing so, will make the writer seem dull and inattentive.
The writer of the proposal includes the grant and the total amounts of money it is going to be paid by it. It is stressed that the pay scale must be compatible with the company's scale. The money of researchers is part of a single person's company salary and because of this, a business is required to take away some of the duties of a researcher. The writer includes the estimated costs of disposable materials, equipment, and supplies. This part of the proposal would also consist of travel, publication costs, and direct costs.
This part of the proposal basically deals with proving to the client that the person writing and submitting the proposal is capable of doing the job. Everyone that contributed to the making of the proposal is mentioned, including their achievements. Usually, a proposal uses persuasion to get its audience to buy into their idea. One example is when a proposal tries to persuade one or more sponsors to invest in a project. Another example of using a proposal to persuade a client is when the company writing the proposal is asking for a grant. The categories that can involve grants include social services, health care, religions, philanthropy, economic development, government, and education. Persuasion can only work when these components are involved; sponsor values, applicant credibility, proposal logics, and proposal psychologics. Another way to make proposals persuasive is to connect the ideas of a project to the sponsor's values or problems of interest.
Sponsors or grantmakers main focuses include any specific dilemma, inequities or injustices. Their mission is to fill in the space between the categories of “what is” and “what ought to be.” One example is an organization trying to prevent child abuse called The Prevent Abuse Foundation. Their activities include giving support to families and children and teaching about the abuse and how to eliminate it. In addition to this, the foundation serves grass roots, community-based groups with technical and professional assistance, sharing the best program practices and evaluation techniques.
An applicant's job is to authorize organizational, individual, and project credibility. When an organization is proposing an idea to be presented by a project director, it is important for them to have credibility. Being persuasive is also one of the keys to success. An organization would try to convince its target of how different and unique it is from any other company. One example is a biology department at a university asking for money to do research in genetics. The department may go on to say that it has had 30 years of medical studies in biology and that their research inspects both hormonal and genetic elements that causes gene regulation.
This basically deals with the making of proposal elements that illustrates an identified gap, an improved situation, and resulting benefits to the intended population. Benefits serve as the good things that will happen by completing the objectives that are presented. The components must reflect a relationship between the sponsor values and the project that is being proposed. An exact description of the problem or need is required along with the purpose of the organization, funds and how to complete the objections. It also includes a timeline and a summarization of the intended audience.
Sponsors would usually provide money for both psychological and logical reasons. Proposal psychologics tend to the emotional needs of the sponsor. The components that can be found in a successful proposal include passion, ownership, energy, trust, and commitment. Sponsors use grants as investments. Sponsors need to feel that you are serious about helping them with their problems. One example can be a proposal to a federal agency and a private college that describes its long history of achievement by working with community partners, controlling national programs that helps the intended population, and institutionalizing project activities. The project partners have worked with grant related initiatives which includes a six-year joint teacher education program among the Midwestern Regional College and the College of Native Americans. The ideas the project director has for Native American middle school kids includes Achievement in Math, Math and Science Immersion and Kids Math Camp. As long as a proposal expresses interest and concern for the values and ideal of the sponsor, there is a good chance for success.
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- "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.
- Proposal Toolkit – Project Proposal Toolkit with examples, templates and video guides.
- Business proposal templates – A lot of proposal templates for almost every kind of business.
- Proposal Templates and Data – A visual reference of proposal sections, statistics from 25,000 proposals, and templates.