sales

An Explanation of the Different Types of Business Proposals

July 19, 2016

A business proposal is a document written to persuade a potential client or investor to buy a particular product or service. That’s all there is to it- an offer from a seller to a targeted buyer (https://www.inc.com/encyclopedia/business-proposals.html). If you jot down a relatively short (a few pages) letter or a 50-page document to convince a client that whatever you’re selling is the best solution to their business problems, you’ve written a proposal, or for the former, the germ of a proposal.

Sounds interesting? It can be, if pitched properly. Like several other important things in business, the principle of form versus content applies (https://www.inc.com/encyclopedia/business-proposals.html). Different circumstances call for different types of business proposals. Before you go and start writing a proposal, you must first understand the various types of business proposals, and their differences. Understanding these differences will help you match its intended use.

Types of Business Proposals

There are generally two distinct categories of business proposals (https://www.inc.com/encyclopedia/business-proposals.html).

The first is the solicited proposal; it is submitted in response to a specific request from a prospective client. The client may either ask for it verbally or issue a request for proposal (RFP), request for quotation (RFQ) or a request for information (RFI).

The second is the unsolicited proposal; it is sent to a client who has not requested for it. It is always generic, with no direct connection between the prospect and the specified requirements. You can send an unsolicited proposal to introduce a product or service to a customer and try to convince them to hire your business.

We are going to break these two types down even further:

Solicited Proposals

As described above, solicited proposals are sent in response to an RFP, RFQ or RFI. Sometimes, the client may also give you formatting instructions or the evaluation criteria that will be used when making a selection (https://en.wikipedia.org/wiki/Proposal_(business).

Let’s take a closer look at these three types of requests. You will notice we added a short description of how to respond to each so you can get a general feel of what is required.

1. Request for Information (RFI)

An RFI is issued when the customer thinks they know what they want, but they need more information from you. It is usually followed by an RFP or RFQ. When a potential customer sends an RFI, they basically want to get information about what products and services you are offering.

How to Write a Proposal Responding to an RFI

An RFI gives you an opportunity to show the customer that you are not only qualified but also responsive. Even though it does not result in a contract, it gives the customer enough information to subsequently issue an RFP. As such, you should be particularly careful when responding to it because it shapes the final solicitation and determines whether the customer will go ahead and release an RFP (https://en.wikipedia.org/wiki/Proposal_(business).

2. Request for Proposal (RFP)

An RFP is issued when the customer knows they have a problem, but they don’t know how to solve it. In this case, they write a detailed description of it and issue it as an RFP. Oftentimes, this request is issued when the customer wants something that is too complicated to be met with generally available products.

How to Write a Proposal Responding to an RFP

When responding to an RFP, you should develop a proposal that details the ability of your company to provide the product or service, as well as the estimated costs and delivery dates. Your proposal will act as a sales pitch that competes with other applications. Therefore, you should stick to the structure of the RFP as the customer will assess your proposal based on the RFP they sent to you (https://www.entrepreneur.com/article/276352).

3. Request for Quotation (RFQ)

An RFQ is typically issued when the customer knows what they want but need more information on how their requirements will be met and how much it will cost. Most customers will send you an RFQ when they want to buy significant amounts of a certain commodity. In this case, price will not be their only consideration. Other factors such as availability, service and delivery may come into play.

How to Write a Proposal Responding to an RFQ

RFQs are usually very detailed, so the proposals responding to them can be lengthy although generally much shorter than RFP proposals (https://en.wikipedia.org/wiki/Proposal_(business). They consist primarily of cost data, delivery details, quality assurance requirements and a sample contract.

Unsolicited Proposals

An unsolicited proposal must be particularly convincing because it is sent to a customer who has not anticipated, planned or budgeted for it. With this type of proposal, you run the risk that the prospect won’t even bother to read it, as they didn’t ask for it. However, the absence of competition often makes up for the risk (https://writingaproposal.net/3607/5-keys-using-unsolicited-proposals-grow-your-business).

Since they are not anticipated, you only have a single chance to capture the interest of your prospective client. Unlike a solicited proposal where the customer is aware of the need, your unsolicited proposal needs to convince the customer that they have an unidentified need and that your company is the best to deal with it. For this reason, you will have to be methodical in your approach.

The proposal should take into consideration specific customer’s needs and concerns. It needs to be very detailed as to address the needs of the organization you are targeting. Generally, unsolicited proposals contain a description of the products or services you are offering, buyer’s specific needs and how they will be solved, the cost of providing the products and services, a delivery schedule of the products mentioned and a proof of capability i.e. customer testimonials to convince the customer that they should hire you (https://writingaproposal.net/3607/5-keys-using-unsolicited-proposals-grow-your-business).

If you send the same proposal to many customers, what you are sending becomes a brochure and not a proposal. Brochures do not align with what the customer wants and often have lower chances of winning a contract. (https://www.captureplanning.com/articles/13597.cfm).

In Conclusion:

Your business proposal is your compass (https://www.entrepreneur.com/article/21834). It maps out a new course for your business and carves out a path through an uncharted territory. Whether you’re writing a solicited proposal or an unsolicited proposal, you can be sure to win if you stick to the points we have provided in this article.

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