Write an Appealing Business Proposal

One of the most critical business skills is the ability to write an effective business proposal. Your proposal needs to provide a clear and cost-effective solution to a client's problem. Many industries use a Request for Proposal (RFP) system to find vendors that will provide a product or service. If you can present a great proposal, you can win the business and outperform your competitors.

Steps

Determining Your Company Bid Policy

  1. State what products and services you will provide to customers. You need to decide what products and services you’ll provide, so you know which projects are suitable for your firm. You can use that as a template to either bid on work or not bid.[1]
    • You need to decide what skills sets you’ll provide to clients. Say, for example, that you manage a roofing company. You put roofs on houses and also install gutters. Some clients ask you for landscaping help. Based on your skill set, you decide not to provide those types of services.
    • If you were to provide landscaping services, you would have to hire and train staff to provide those services. Someone would need to manage the crews that provide that type of work. Your firm would need to buy equipment to perform the landscaping projects. You decide that the time and effort invested would be greater than the profits you might earn. You decide not to do landscaping work.
    • A bid policy should consider the size of the jobs you’re willing to take on. Assume that you have three crews of roofers who can complete up to 10 residential roofing jobs a week. You decide not to do commercial roofing jobs for apartment buildings. You don’t have the staff to get those jobs completed in a timely manner.
  2. Identify your ideal customer. Every business should identify their ideal customer. The ideal customer represents all of the traits shared by your best customers.[2]
    • If you sell to individuals, those traits may include, age, gender, occupation and income level.
    • Assume that you're a mountain bike manufacturer. Your ideal client may be a male between the ages of 25 years and 45 years old. The client rides a bike on the weekends, and has an upper level to a high level of income.
    • Your ideal customers want a bike that will hold up during rough trail rides. They are willing to pay more for a bike that is of high quality.
  3. Choose products that will appear to your ideal customer. The mountain bike company has collected some good information about their ideal customer. They can redesign products to give customers what they want. The firm may be able to create new products to satisfy the needs of their clients.[2]
    • You make bike design changes to meet the needs of your ideal customer. For example, you add a small metal box on the frame of the bike to store a cell phone. These clients want to carry their phones when they ride, and they don't want them damaged.
    • You also extend the hours of your customer service department on the weekends. Most of your clients are using their bikes on the weekend.
    • A firm that sells to other businesses may have an ideal client in a certain industry. If you provide commercial flooring, for example, you may sell and install high-quality flooring primarily for hospitals. Your ideal customer may also include a certain size of project. The flooring company may prefer jobs between $1 million and $3 million in sales.
  4. Determine the profit margin you’re willing to accept. Profit margin is defined as (net income or profit) / (sales in dollars). Net income and profit mean the same thing for this discussion.[3]
    • Assume that a project generates a profit margin of ($10,000 profit)/ ($100,000 sales) = 10%. Does that level of profit justify taking on the business?
    • Your investors may insist that your firm generate a minimum profit margin percentage on business. If the projected profit margin falls short, you don't take on the project.
    • Will taking the order potentially result in more business later? You find out that a new client frequently buys product from a competitor, for example. Investors may be willing to accept a lower profit margin, if the customer is likely to shift more orders to your firm.
  5. Think about the impact on your cash flow. Increasing sales is important. However, a customer’s large order will require you to spend more cash. You’ll increase spending to make the product or service and deliver the large order.[4]
    • Every business needs to forecast cash inflow and cash outflows. As your business grows, you'll spend more cash to sell your product or service.
    • Your cash forecast requires you to estimate when customers will pay you cash for their orders. You need the cash inflows to operate your business.
    • Assume that, based on past experience, you expect the customer to pay you cash 20 days after the product is delivered. Is that fast enough? Can you operate your business on your remaining cash balance? If not, ask the customer for a cash deposit when they place the large order.

Learning Everything You Can About The Client

  1. Study the requirements of the Request For Proposal. Most clients will put out a formal Request for Proposal (RFP). This document provides detailed instructions of the product or service the business needs. The RFP is a tool the company uses to evaluate bids for a project.[5]
    • Make sure that you understand the client's goals, budget, timeline, and the reason they are putting the project up for bid.
    • In many cases, a company will hold a meeting or a conference call to explain the RFP. Attend those meetings and ask questions if something isn’t clear.
  2. Decide if the project fits your resources and expertise. This is a key decision to make before responding to an RFP. Decide if your business has the capability to provide a cost-effective solution to the client's problem.[6]
    • Make sure to look beyond whether or not your business can simply solve the problem for the client and create value for him. Does the project also make sense strategically for your business?
    • Say, for example, that you’re a small commercial property management company that is trying to expand into construction. You respond to an RFP for a lower paying construction project. The client has extensive construction needs. While you’ll make a small profit on the project, your work may lead to other jobs with that customer.
  3. Speak with the client and learn everything you can about the project. If the project meets your expertise and needs, do not hesitate to contact the client and ask about the project. This step shows that you're serious about meeting the client's needs.[7]
    • Before contacting the client, learn about their business. Learn what their products and services are and how long they have been in business. Find out how the firm ranks among their competitors.
    • When you speak with the client, ask them how they evaluate proposals. This will help you to learn exactly what the client needs so you can better sell the proposal.[8]

Planning For Your Proposal

  1. Create a method for solving the problem. Assume that you've learned everything you can about the client and the project. The next step is to create a method for solving the client's problem.[9]
    • The method covers exactly how you will solve the client's problem, and should outline the exact series of steps you will take to accomplish the client's goal.
    • If you provide a specific solution to the problem and communicate that to the client, they are more likely to hire you. Also, outlining a method will help you work efficiently and generate the profit you're forecasted.
    • It is very important to place your steps on a specific timeline, as well as to provide an idea as to how much each step will cost, and what resources it will require.
  2. Confirm that your method conforms to what the client wants. It is important remember that the client's objectives come first. You should use your research and discussions with the client to make sure your steps meet the firm’s needs exactly. If you carefully put together your proposal, you'll meet all of the client's needs.[10]
    • Assume you own the small property management company. You’re responding to an RFP to do winter maintenance on a large public property. The client's main emphasis is on controlling costs and getting the project done cheaply.
    • Your RFP’s first priority should be cost control. You should design the proposal in the most cost-effective manner. This may include using more equipment to reduce needed manpower or reducing labor costs.
  3. Focus on how your solution can create value for the client. A key way to outshine the competition is to focus on how your specific proposal can create value for the client. Maybe you can save the client more money than the competition, or help increase the customer’s sales.[11]
    • To do this, focus on your strengths. If you are a small business, you may be able to focus intensely on providing excellent service. You could provide a toll-free customer service number that is staffed 24 hours a day, for example.
    • If you are a larger business, you may be able to utilize your size to get favorable costs on supplies or capital, and reduce your costs for the project.

Writing The Proposal

  1. Describe the problem. Begin writing the proposal by describing the problem that led to the RFP. Explain how the problem is affecting the client’s business.[12]
    • You can provide detail about the impact of the problem. Assume that a manufacturing company advertises an RFP for a new factory. The factory will help the manufacturer produce more goods in less time. The design of the factory will reduce the repair and maintenance costs of production.
    • Go beyond what was simply stated in the RFP. Use the information gleaned from your conversations with the client to improve your proposal.
  2. Solve the problem by clearly stating how you will perform the work. By reading the RFP and discussing the proposal with the client, you can provide a set of procedures to complete the work. Tie each step of your process to the problem you are solving.[13]
    • Assume that you operate a trucking company. You are completing an RFP to ship sporting goods equipment from a factory to a group of stores. Your proposal explains exactly how goods will be picked up and loaded into trucks, and how long each delivery will take.
    • Say that you’re bidding to provide leather to make baseball gloves. Your RFP clearly states the type of leather you will provide, and how the leather will be shipped to the manufacturer. You also include a policy for replacing any leather that doesn’t meet the customer’s quality standards.
  3. Outline costs and pricing. Make sure to describe in detail what products or services you will provide. Also explain how the client will be billed. You may include the dates and dollar amounts of each invoice you will send to the customer.[5]
    • Avoid using industry jargon whenever possible. Avoiding jargon will help prevent any confusion about your costs and prices. Stay away from using abbreviations that are used in your industry.
    • Assume that your RFP may be read by a variety of people within the company’s organization. Your proposal needs to be understood by the legal, finance, and production departments, as well as senior management.

Presenting Your Proposal And Follow Up

  1. Plan your presentation. If the RFP process allows you to make an in-person presentation, rehearse the presentation. Consider recording your rehearsals, so you can improve your performance.[14]
    • Be personable. Reinforce the problem the client needs to solve. Use stories to explain how you have solved similar problems for customers in the past.
    • Your presentation must clearly provide a solution to the client’s problem.
  2. Provide concrete next steps for the client. If the customer wants to select your proposal, tell them how they can do that. Ideally, ask the client to follow up with you by phone.
    • Make sure that the customer has a specific way to ask you follow up questions. The most effective way to answer questions is in person or by phone.
    • You should make it a priority to answer the client’s questions as soon as possible. This will help them get closer to making a decision.
  3. Have a plan of follow up. Everyone is busy. Your client may simply lose track of time and not follow up on the RFP they requested.[15]
    • Explain to the client that you will follow up with them by a certain date. When you make the contact, the customer won’t be surprised.
    • Be polite, but follow up frequently. Don’t stop following up until the client makes a final decision. Given all the demands of running a business, the final decision may be delayed.

Related Articles

Sources and Citations

  1. ↑ http://www.juliasilvers.com/rfp.htm
  2. ↑ 2.0 2.1 http://sixteenventures.com/ideal-customer-profile
  3. ↑ http://www.hongkiat.com/blog/calculate-breakeven-point/
  4. ↑ https://www.mindtools.com/pages/article/newTMC_06.htm
  5. ↑ 5.0 5.1 http://www.entrepreneur.com/article/21834
  6. ↑ http://www.complex2clear.com/index.cfm?id=37607&modex=blogid&modexval=10820&blogid=10820
  7. ↑ http://www.onvia.com/business-resources/research-you-need-win-government-bids
  8. ↑ http://www.entrepreneur.com/article/21834
  9. ↑ https://www.mbopartners.com/resources/article/top-tips-rfp-and-rfq-responses
  10. ↑ http://www.captureplanning.com/articles/10639.cfm
  11. ↑ http://www.sophia.org/tutorials/writing-a-winning-business-proposal
  12. ↑ http://blog.valerisys.com/tlt/taking-shots-7-benefits-from-rfp-responses/
  13. ↑ http://www.verasage.com/blog/rfps_and_the_dreaded_winners_curse/
  14. ↑ http://wittcom.com/how-to-plan-an-oral-proposal-overview-and-schedule/
  15. ↑ http://www.writeexpress.com/follow05.html

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