Business Proposals Law and Legal Definition
A business proposal is a written document sent to a prospective client in order to obtain a specific job. Proposals may be solicited or unsolicited. A client may simply request a proposal on a project in the course of a sales call by saying: "You know, that sounds interesting. Why don't you send me a proposal on that." In other cases the proposal may be a formal solicitation, usually called an RFP (request for proposal). RFPs are almost always documents, too. They specify the product or service to be provided, the qualifications sought, and the deadline for submission. Solicited proposals, obviously, mean that the client has already decided to make a purchase. Only the selection of a vendor remains to be done. An unsolicited proposal, by contrast, is often a sales presentation dressed in another cloak—but the proposal is specifically aimed at a well-defined and limited activity. An example of an unsolicited proposal is the submission of the outline of a book to a publisher arguing the popularity of the subject, the novelty of the approach, and the merits of the author.
Business proposals must be distinguished from estimates. In many fields where small business is active, estimates serve the same purpose as a proposal. They are the document that clinches the sale of a roofing or a paving job or a monthly house-cleaning service. But where estimates are used, the qualifications of the seller and his or her method of accomplishing the job are also established, but by other means—typically by an interview or sales call. Sometimes the seller is assumed to fit the job because the business already enjoys a good reputation. Proposals, on the other hand, usually involve complex or unusual one-time services like landscaping a park, surveying a market, or building a refinery. In these cases the approach to the job, the design, the implementation, the schedule, and even the aesthetics require more than simply a dollar estimate.
Many service businesses operate entirely on the basis of proposal. In other cases a proposal is sometimes required, sometimes not. In highly technical fields, the proposal may be filled with dry listings of engineering specifications and/or process details. But it is vital to remember that proposals are always first and foremost sales documents.
ELEMENTS OF THE BUSINESS PROPOSAL
In most industries proposals have a well-defined format specific to the field. Examples might be providing electrical wiring services to a major high-rise or pouring foundations for a suburban development. In such cases the bidder should first obtain old proposals and follow the structure typically used by his trade in that market. In professions such as architecture and landscaping a visual presentation, sometimes even a model, is central to the sale. The same holds for an advertising proposal. In these three areas—there are others as well—the actual presentation is usually a meeting. Any document is supplemental and tends to summarize the presentation with additional so-called "boiler plate," i.e., administrative details.
What follows here is a discussion of more general proposals, usually associated with studies, surveys, or service activities (e.g., protective services for a warehouse complex). In such proposals the following general structure applies.
All proposals have at least two distinct pieces: a cover letter and the proposal document itself. In addition, sometimes, one or more appendices may be provided with charts, graphs, photographs, maps, and so on. Brief proposals, also sometimes known as "letter proposals," combine the first two pieces into a single submission usually of a maximum of six to eight pages.
The cover letter serves as a transmittal document. Many bidders also use the cover letter to provide the essence of the proposal in very abbreviated form, highlight the bidder's qualifications, name the price, and ask for the order.
The proposal document usually has the following structure:
- Title Page. This part typically includes your name and the name of your company, the name of the person or company to whom the proposal is submitted, and the date of submission.
- Table of Contents. While usually not necessary for shorter proposals, these are sometimes used for complex formal proposals. In cases where different departments of the client will separately review parts of the document, the table of contents is a helpful means of rapidly guiding the reader to such topics as Electrical, Structural, Heating & Cooling (in a building project) … or Food Services, Music, Entertainment, Transportation Services (in a project to organize a festival).
- Executive Summary. A summary may be included here or may be conveyed in the cover letter.
- Statement of the Problem/Issue/Job. This section repeats, in a rephrased manner, the client's objectives and goals as interpreted by the bidder. Including this restatement of the issue is valuable in showing the client that the bidder understands the issue correctly.
- Approach. In this section the bidder summarizes his or her proposed approach to solving the client's problem or carrying out the necessary task. The proposed approach is often the key to winning the job—if the price is right—because it shows unique means, modes of thought, or techniques, why they will solve the problem, and why they are superior to alternatives. The section need not be detailed. Details are left to the Methodology. But it presents the strategic elements of the proposal and argues in their favor.
- Methodology. This section develops in some detail how the Approach will be carried out. Level of detail should be just sufficient to convey to the client convincingly what will happen without becoming entangled in minutiae.
- Bidder's Qualifications. The section presents documentation why this bidder should be chosen on the basis of qualifications, past history, and successful accomplishment of similar jobs in the past.
- Schedule and Benchmarks. Major elements of the job are here displayed against a time line. If necessary, specific benchmarks are identified to indicate successful accomplishment of intermediate objectives.
- Cost Proposal, Payment Schedules, and Legal Matters. The bidder concludes by presenting the price in as much detail as required in the RFP. It is always wise to specifically pin-point when the bidder expects to obtain partial payments as the work proceeds. If legal matters are involved, they can be placed here. If they are lengthy, they may merit a section of their own.
Successful proposals are, above all, what clients describe as "responsive," meaning that the bidder has done his or her homework, is thoroughly familiar with the client's needs and aspirations, and has carefully responded to all aspects of an RFP. Responsiveness is ultimately much more important, all else equal, than the visual appeal of the presentation or even the fluidity of its writing. A beautiful and well-written proposal that misses or ignores key elements of the client's project will lose to a dull proposal that is otherwise responsive. Writing in the Los Angeles Business Journal, Sharon Berman noted that "Doing your homework and making the required preparations can make all the difference. This is especially important in light of the enormous time and effort required to craft a professional proposal." Meeting with key decision-makers ahead of time and asking probing questions to determine exactly what they are looking for is minimum preparation. Needless to say, a competitive price is invariably the final determinant between equal contenders.
Berman, Sharon. "How to Craft Business Proposals That Sway Clients." Los Angeles Business Journal. 3 January 2000.
Gilliam, Stacy. "Power up your Proposal." Black Enterprise. June 2005.
Sant, Tom. Persuasive Business Proposals. AMACOM, 1 December 2003.
Hillstrom, Northern Lights
updated by Magee, ECDI
Legal Definition list
Related Legal Terms
- Affected Item of Business
- Affiliated Business Arrangement
- Alternative Fuels Business
- Awarding Agency [Business Credit and Assistance]
- Base Closure Area [Small Business Administration]
- Better Business Bureaus
- Bill of Sale (Business)
- Branch or Additional Business Facility [Agricultural Marketing Service]
- Bureau of Economic, Energy, and Business Affairs [EEB] [Department of State]