by Brad Hosmer, CMC

Most of us have received RFPs (Requests for a Proposal) or RFQs (Request for a Quote) in the mail. They come from all kinds of prospects: Government Agencies, Divisions of Fortune 500 firms and organizations one has never heard of. Sometimes they are boilerplate prepared by a purchasing department with no understanding of the needs of the real prospect. Occasionally they are sent out to fatten up a bid list and make the preferred consultant look better. Not infrequently the objectives are a bit devious; the issuer hopes that, among all the proposals received, enough information will be supplied to enable the prospect to solve the problem without assistance. And once in a while the RFPs and RFQs go out because the prospect doesn’t know how else to find the consultant who can help solve the problem.

Some times, however, the inquiry comes in as a simple letter, a phone call or an e-mail message. The inquiry is the result of a referral from a client or a trade association. Recently, one of us received an e-mail inquiry from the president of an organization who had searched web postings for qualified consultants. Of 169 possibles, three consultants were selected as being probable and a discussion was opened with each of them.

Since all effective proposals begin with a discussion between prospect and consultant of the prospect’s needs and goals and even budget, it is prudent to ignore those situations in which a face to face meeting is impossible.

Throughout what follows, we refer to the person and organization we want to convert to a client as the prospect. When we says client, we refer to a person and an organization with whom a professional and business relationship has already been established.

The Initial Meeting

The beginning of an effective proposal is an initial meeting with the prospect. The result of that meeting should be a preliminary agreement on the content of the proposal. Unless the consultant is familiar with the prospect, a full day should be set aside. A common technique for making the most of this meeting is to spend the morning reviewing the prospect’s situation and aims and meeting all those in the decision making process. At the conclusion of this meeting the consultant finds a quiet place to work and roughs out a preliminary proposal using a PC or an easel pad.

When the rough is finished, the consultant meets again with all those involved in the decision making process. At this second meeting the consultant should smoke out the resistances and objections the group has to the proposal as outlined, handle them on the spot and make necessary adjustments in the outline proposal. Of course the ultimate goal of such a meeting is to gain general agreement that the proposal, as modified by the group, is on target.

If there is a long history of working with the prospect and many proposals have been submitted and accepted, this initial meeting may be unnecessary. However, things always go better if there is a meeting with the prospect before the proposal is prepared.

Occasionally, the distance between you and the prospect presents a problem. Unless your travel budget permits such trips or unless you have sufficient frequent flyer miles, you may have to forego the trip, the meeting and the engagement. Often, though, it is possible to contribute the day or two necessary for the meeting at no charge if the prospect covers travel expenses.

Closing

A second meeting with the same group is equally necessary when the proposal is finished. The purpose at this time is to identify any further changes that should be made and get acceptance of the proposal as submitted. Often it is a good idea to present and review a clearly marked DRAFT PROPOSAL. This tactic signals to the prospect that the proposal is not yet cast in bronze and makes it easier for the prospect to offer new information or otherwise to suggest change. Few prospects will abuse the opportunity.

In any case, the proposal should not be mailed to the prospect. It can be lost, mislaid, or read by the wrong people. Occasionally, when the relationship with the prospect is of long standing and many proposals have been submitted and accepted, mailing a proposal may be safe but it is not preferred.

Charging for a proposal

Occasionally, the question arises about charging for a proposal. Some people do it, claiming that it eliminates prospects who should not be taken seriously. However, it is not common practice as is, for example, the practice of surgeons to charge for the preliminary examination before outlining the necessary surgical procedure. Charging for a proposal may create the impression of niggardliness or being broke.

Occasionally, preparing a proposal is a major undertaking, the equivalent of a small engagement for which fees would be charged. In such situations the prospect is aware of the effort that will be required to prepare a proposal and will expect or can be persuaded to pay.

The Law
Proposals are legal documents.

They are an offer to provide a product or perform a service which will produce defined results at a stated cost. Once a proposal is accepted, it becomes a contract which the consultant is obliged to complete unless a subsequent agreement cancels it or changes its terms. The provider needs to be sure he or she can meet those terms.

Proposal Structure

Most proposals consist of nine parts which are presented in an almost traditional order. Special situations, and these include the creativity of the consultant or special knowledge of the prospect’s preferences or ways of doing business, may permit this traditional order to be changed or some parts to be omitted or combined. However, in the absence of these special circumstances, the standard order should be followed.

Preparing a proposal is a lot of hard work. Unfortunately, only some of it may be boilerplate which can be slightly edited to match every prospect’s situation. These sections have been indicated thus (BP) and in two cases acceptable boilerplate has been provided.

I. Table of Contents

If it is a big proposal with many pages, a formal Table of Contents is necessary. Even with a small proposal, two or three pages, it is a simple courtesy to alert the reader to what's coming. In this case, a short paragraph will suffice.

II. Executive Summary

This also is not only common courtesy but serves a tactical purpose. It lets the prospect know what the proposal is all about. Lets the prospect know that the proposal will cover what's already been discussed and agreed upon, alerts him or her to any changes in the initially agreed upon content, and presents costs and terms in plain English.

III. Summary of the prospect’s situation and goals

This is where you feed back to the prospect your understanding of the situation ( it may be a problem to be overcome or it may be an opportunity to be seized) and the goals and targets to be achieved. The aim here is to get the prospect nodding in agreement and saying to himself or herself that "This guy really understands our situation and what we need to accomplish."

Often new information or another point of view may suggest that a different approach to the situation or other goals may be in order. These new possibilities should be presented here. To illustrate: often a prospect’s view of a situation is quite narrow and so are the goals he hopes to achieve. With a slightly different approach, it may be possible to accomplish a great deal more. Calling this to the attention of the prospect constitutes added value — something most prospects are happy to receive and pay for.

IV. Qualifications

Here is where you blow your own horn. You may recount similar and successful experiences with clients or describe special skills or procedures which enable us to accomplish more with less effort. You may summarize your education or special certification. In fact, anything that supports or underscores your qualification to undertake the project and bring it to a successful conclusion. In preparing this section relevance and brevity are the watchwords.

There may be a temptation to use boilerplate here. But if it is used, it will require heavy editing and rewriting for it must address the specific needs of a very specific prospect.
A client list may be in order here but not references.

V. The process, how you plan to carry out the engagement.

What’s important here is to provide the prospect with a series of benchmarks or milestones so he can track progress of the engagement towards its final goal. Among those milestones should be several where progress should be formally evaluated by the prospect and the consultant and, if necessary, changes made either in the direction of the effort or its intensity. Often, during the course of a project, conditions change or new information is uncovered that dictates that a change is required.

For example, in many survey type engagements, it is customary to summarize and review findings when a third or a half of the research has been completed. This provides an opportunity to change the direction of the survey or alter its scope if the preliminary results suggest this. The preliminary results may even indicate that no further research is necessary or that the project will not succeed and should be cancelled.

There is one further advantage to this. It gives the prospect something to focus on besides money and makes him an active contributor to the success of the project.

Also, this part of the proposal should discuss how you would follow up after the main objectives had been achieved. The goal, after all, is to convince the prospect that the consultant’s interest in the successful outcome doesn’t end with ‘delivering the final report,’ as important is successful implementation.

VI. Costs and Payment Schedule (BP)

There are two schools of thought about presenting costs.

One holds that to keep the prospect’s mind and emotions focused as much as possible on what the project will accomplish for him or her when completed, costs should be distributed over the benchmarks or milestones. You spend so much and you get all this and so much more gives you all that. Presenting costs in this way also makes it easier to determine what’s owed in case the project is cancelled.

The other school holds that costs should be presented as a single lump. This helps prevent nit picking.

The payment schedule should be tied to major milestones in the project. Prospects find this to be a comfortable arrangement since it ties payment to accomplishment. It is always wise to get as much as possible up front so that implementation is financed with the prospect’s money. A typical proposal for a survey would bill one third up front, another third when the research is done, with a final payment due when the project is finished and the prospect has accepted the results. Any adjustments in the amount to be billed should be made in the final invoice. And, of course, the proposal should clearly state that all invoices are due and payable when presented.

Unless other arrangements have been made, this portion of the proposal should also make it quite clear that expenses will be billed separately as they accumulate – biweekly or monthly as the case may be.

There are two other items that are generally included in this part of the proposal.

One concerns cancellation. Covering this in the proposal cuts out a lot of fuss if the prospect stops work on the project before it is finished. If costs are tied to milestones, this is easy to do. Should this happen the prospect should be expected to cover the costs for the work completed plus any accrued expenses. There should also be a fee to cover the costs for putting files in order so that the project can be easily resumed if and when the prospect’s situation changes.

It is also a good tactic to include the costs of the follow-up work you propose to do to insure the successful implementation once your work is finished and the prospect has accepted the results. (With domestic appliances, this is the overpriced service contract dealers try to sell.) However, in our kind of business the prospect wants the assurance that the consultant will not disappear as soon as the final payment clears the bank.

VII. What the prospect must do to assure success

In every project, success depends on the cooperation of the prospect. Information must be made available in a timely fashion. Personnel must be made available for interviews. If progress reviews are necessary at definable intervals, they must be completed on schedule and, of course, payments must not be delayed. These considerations will vary from project to project. but whatever they are, they must be clearly understood by the prospect and summarized in the proposal.

VIII. References (BP)

References should not be included in the body of the proposal. Instead, there should be a simple statement like this: "When your decision to proceed with us on this project hinges solely on a check of references, we will be happy to provide the name of executives who are familiar with our work."

Too many people understand mistakenly that no one ever checks references. Therefore they liberally sprinkle names and addresses throughout their proposals. This is not wise for a couple of reasons. People do check references, especially for projects of major importance. Further, the longer one can postpone providing references, the more familiar one becomes with the prospect and the easier it will be to build a short list of really relevant references. Also, this tactic signals to the prospect that his or her name will not be used indiscriminately in future promotional efforts.

IX. Getting started (BP)

The final section of the proposal should state plainly what the prospect must do to get the project underway, what he has to do to cease being a prospect and to become a client. Typically, a simple statement like this will do the job: "We can begin work on this project upon receipt of a countersigned copy of this proposal and your initial payment. However, if company policy requires another procedure, we’ll be happy to accept whatever agreement your purchasing department prepares so long as it reflects the essence of this proposal." Let the prospect prepare the new but necessary paperwork.

Of course, this final section of the proposal should close with a signature block:

Approved and accepted for
_____(Client’s name)_______
By:______________________
Title: _____________________
Date: _____________________

One final note: The purpose of a proposal is not to let the prospect know how wonderful you and your organization are. That’s the business of advertising and sales promotion. The purpose of the proposal is to convince the prospect that you understand his or her needs, are prepared and qualified to satisfy them and should be engaged to do so on your terms.
For these reasons it is prudent to have a knowledgeable but disinterested third party review the proposal in draft form to make sure that ‘value to the prospect’ is what stands out and not mere "Ain’t we great" rhetoric.

Bradley E. Hosmer, CMC, heads The Beta Consulting Group in Concord, NH, specializing in improved sales, marketing and new business development for generating profitable growth. He is immediate past president of IMCNE.
Email: . Website: www.betacg.com.

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