Proposal (business)
Encyclopedia
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.
Solicited proposals are written in response to published requirements, contained in a Request for Proposal
(RFP), Request for Quotation
(RFQ), Request for Information
(RFI) or an Invitation For Bid
(IFB). 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 issues 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.
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.
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 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.
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.
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.
The professional organization devoted to the advancement of the art and science of proposal development is The Association of Proposal Management Professionals.
Business proposals are often a key step in the complex sales process—i.e., whenever a buyer considers more than price in a purchase.
Overview
There are three distinct categories of business proposals:- formally solicited
- informally solicited
- unsolicited.
Solicited proposals are written in response to published requirements, contained in a Request for Proposal
Request for Proposal
A request for proposal is issued at an early stage in a procurement process, where an invitation is presented for suppliers, often through a bidding process, to submit a proposal on a specific commodity or service. The RFP process brings structure to the procurement decision and is meant to...
(RFP), Request for Quotation
Request for Quotation
A request for quotation is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. RFQ, generally means the same thing as IFB ....
(RFQ), Request for Information
Request for Information
A request for information is a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes....
(RFI) or an Invitation For Bid
Invitation For Bid
An invitation for bid or invitation to bid is an invitation to contractors or equipment suppliers, through a bidding process, to submit a proposal on a specific project to be realized or product or service to be furnished. IFB is generally the same thing as Request for Quote...
(IFB). 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 issues 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.
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.
Sometimes before a customer issues an RFP or RFQ or IFB, the customer will issue a Request for Information
Request for Information
A request for information is a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes....
(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 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.
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.
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.
The professional organization devoted to the advancement of the art and science of proposal development is The Association of Proposal Management Professionals.
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
See also
- BiddingBiddingBidding is an offer of setting a price one is willing to pay for something. A price offer is called a bid. The term may be used in context of auctions, stock exchange, card games, or real estate transactions....
- Call for bids
- Construction biddingConstruction biddingConstruction bidding is the process of submitting a proposal to undertake, or manage the undertaking of a construction project. The process starts with a construction estimate from blueprints and take offs....
- E-procurementE-procurementE-procurement is the business-to-business or business-to-consumer or Business-to-government purchase and sale of supplies, Work and services through the Internet as well as other informations and networking systems, such as Electronic Data Interchange and Enterprise Resource Planning.E-procurement...
- ProcurementProcurementProcurement is the acquisition of goods or services. It is favourable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location...
- PresalesPresalesPresales is a process or a set of activities normally carried out before a customer is acquired, though sometimes presales also extends into the period the product or service is delivered to the customer.Presales is the name given to a small Spanish boat....
- Bid ManagerBid managerA Bid Manager is responsible for managing bids in response to Request for Proposals from customers. Bid Managers orchestrate the creation of the solution and proposal as ‘Bid Project Managers’ ensuring compliance with customer requirements and highlighting company value proposition.-Bid Managers...
(profession)
Other references
- 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.