proposal

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.^[1]

Overview

There are three distinct categories of business proposals: formally solicited, informally solicited, and unsolicited. Solicited proposals are written in response to published requirements, contained in a Request for Proposal (RFP), Request for Quotation (RFQ), or an Invitation for Bids (IFB). RFPs provide detailed specifications of what the customers 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. Proposals in response to RFPs are seldom less than 10 pages and sometimes reach 1,000's of pages, with out cost data.^[1]

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 short than an RFP-proposal.^[1] 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 are be lengthy but most of the length comes from cost-estimating data and detailed schedules.^[1]

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.^[1]

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 pages.^[1]

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.^[2]

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.^[3]

The professional organization devoted to the advancement of the art and science of proposal development is The Association of Proposal Management Professionals.^[4]

Components of A Formally Solicited Proposal

1. Requirements Matrix, which matches customer requirements with the paragraph and page numbers of where those requirements are addressed in the proposal
2. Executive Summary, which outlines the primary benefits of the vendors's solutions to the customer's requirements
3. Technical Volume, which demonstrates how each requirement will be met
4. Management Volume, which describes how the program will be managed
5. Cost Volume, which provides all costing data, as well as implementation plans and schedules^[1]

Components of An Informally Solicited Business Proposal

1. A description of the seller's capabilities or products
2. A discussion of key issues
3. A description of the buyer's specifications and how they will be met
4. The cost of the offering
5. A schedule for delivery of the products or services
6. Proof of prior experience i.e. Testimonials from previous customers, Project descriptions of previous projects^[3]

See also

• Bidding
• Call for bids
• Construction bidding
• E-procurement
• Procurement
• Presales

References

Cited references

Other references

• 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 978-0060988609.
• "Capture. Deliver. Excel. - Applying the Principles of Business Writing". Ilja van Roon. http://www.capturedeliverexcel.com. Retrieved on May 7, 2006. 

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