What is a Business Proposal?
A business proposal is a document that’s designed to persuade an organization to buy a product or service.
A proposal is usually solicited or unsolicited – meaning, that the purchasing company is either actively seeking proposals that meet a specific need or is reacting to an offer, often from a sales person, to consider a proposal. For example, an unsolicited proposal might result from a dinner conversation at a trade show where the seller tells a prospect that he has a solution to the prospect’s problem, and says, “Would you like me to submit a proposal for that?”
Solicited Proposal Language
Companies use a range of acronyms when soliciting business proposals from vendors:
- Request for information (RFI) – This screening tool often precedes the proposal solicitation process. It’s designed to help the buyer understand which vendors are in the best position to provide what’s needed.
- Request for proposal (RFP) – In addition to outlining what the customer needs, this document also details not only what it wants to receive from the vendor in the proposal, but also how the proposal information should be organized and presented. An RFP is often used when the buyer needs to evaluate which company is the best vendor based on a number of factors besides price.
- Request for quotation (RFQ) – These are used when price is a primary factor in the purchasing decision, but not the only one. The buyer might need information about product availability, delivery times, and other specifics. Proposals responding to RFQs are often shorter than those for RFPs.
- Invitation for bid (IFB) – IFBs are used to solicit services based primarily on price. Most simply put, they’re a request for a response to the question: “What would you charge to do this?”
Business Proposal Elements
While business proposals can take the form of a less-structured proposal letter, they are often long documents that might include anything from engineering specifications to equipment lists to project staffing, depending on what’s requested in the RFP.
Vendors responding to RFPs must always follow the buyer’s preferred, stated format with the proposal. Common elements requested, which can also be used in unsolicited proposals, often include:
- Cover letter
- Cover page
- Executive summary
- Table of contents
- Overview or summary of the problem or need
- Strategy or approach to solving the problem
- Representative tactics
- Company qualifications
Business proposals can be as short or as long as necessary to communicate required information.