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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.
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:
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