Knowing how to write an effective business proposal is one of the most important skills to be successful in the business world. The proposal must offer a clear and profitable solution to a customer's problem. In many industries, a system called "Request for Quotation (or Offer)" is used to search for companies that provide a product or service. If you can come up with a good proposal, you can convince the buyer and beat the competition.
Steps
Part 1 of 5: Determine Your Company's Offering Policies
Step 1. Define the products and services you will provide to customers
You need to establish your offer in detail, in order to understand which projects are best suited to your business. You can use these guidelines as a reference when deciding whether or not to bid.
- You need to determine what skills you will offer to customers. For example, imagine you run a company that installs roofs and gutters. Some clients ask you for help designing gardens. Based on your established skills, you decide not to provide this type of service.
- If you want to provide garden design services, you should hire and train competent staff. Also, another employee should manage the teams that deal with this type of work. Your company should buy equipment for landscaping projects. After this analysis, you realize that the time and effort invested would far outweigh the profits you would earn. You therefore decide not to offer this service.
- Bidding policies should consider the scale of projects you are willing to accept. Imagine having three teams able to install 10 detached house roofs in one week. Given this resource, you decide not to accept building roofing work for buildings consisting of multiple housing units. You don't have the right staff to complete these jobs on time.
Step 2. Identify your ideal customer
Every self-respecting company should make an analysis of its ideal customer, which contains all the characteristics shared by the best customers.
- If you are selling to individual buyers, these characteristics can include age, gender, profession, and income level.
- Imagine making mountain bikes. Your ideal client would be a man between the ages of 25 and 45. He rides his bike on weekends and has an above average income.
- Your ideal customers want a bike that can withstand even the toughest of trails. They are willing to pay more for a high quality product.
Step 3. Choose interesting products for your ideal customer
The mountain bike company mentioned earlier has gathered a good amount of information on its ideal clientele. It can therefore redesign products to give buyers what they want. It is able to create a new offering to meet the needs of the customers.
- The company must therefore change the design of the bicycles to meet the needs of the ideal customer. For example, add a small metal container to the bike frame so that you can store your cell phone. Customers want to have their phone available when they pedal and don't want it to get damaged.
- In addition, the company extends customer service hours so that it can be tracked even on weekends. Most of the customers use their bikes on weekends.
- A company that sells to other companies can identify an ideal clientele in a certain sector. For example, a commercial flooring company can sell and install high-quality flooring with a focus on hospitals. The ideal client could also be the one who commissions projects of certain entities. Still considering the example of the flooring company, the company may prefer jobs that generate revenues of between one and three million euros.
Step 4. Determine the profit margin you are willing to accept
It is calculated like this: net income or profits / sales in euros. Net income and profits are used interchangeably in this case.
- Imagine that a project generates the following profit margin: € 10,000 in profit / € 100,000 in sales = 10%. Does this percentage justify the acceptance of the project?
- Your investors may require the company to generate a minimum profit margin. If what you've calculated isn't up to par, don't accept the project.
- Could accepting a project allow you to do more business later? For example, you have discovered that a new customer frequently buys a product from a competitor. If the customer is willing to place more orders on your business, investors may be willing to accept a lower profit margin.
Step 5. Think about the impact on cash flow
Increasing sales is important. However, a large order or commission will force you to spend more. To offer the product or service and complete the assignment, the investment will have to be higher.
- Every business must foresee the income and expenses. As your business grows, you need to spend more to sell the product or service.
- When you make these predictions, you need to calculate when customers will pay you for your orders. The revenue is needed to make the business operational.
- Based on your past experience, you calculate that the customer will pay you 20 days after the product is delivered. Are these times fast enough? Can you manage the business with the remaining credit balance? If not, ask the customer to make a deposit when placing the order.
Part 2 of 5: Inquire about customers
Step 1. Study the requirements indicated in the Request for Quotation
In fact, most customers prepare a formal request. This document offers detailed instructions on the product or service the client needs. It is a tool used by the company to evaluate offers from commission agents.
- You have to understand the objectives, the budget, the timing and why the client wants this project to be completed.
- In many cases, companies organize a meeting or conference call to explain the Request for Quote. Attend the meeting and try to answer your doubts.
Step 2. Find out if the project is feasible in light of your resources and skills
Before responding to a request for a quote, this analysis is essential. Determine if your business has the ability to provide an efficient and profitable solution to the customer problem.
- Don't just consider whether your business can solve the customer's problem and create value for them. Does the project also make sense at a strategic level for your business?
- For example, you have a small commercial property management firm and are looking to break into the construction industry. You decide to respond to a request for a quote for a construction project that will not allow you to have a lot of income. The client has detailed building needs. While the project will make you a small profit, your work may open other doors for you with that client.
Step 3. Talk to the client and find out as much as possible about the project
If the assignment meets your skills and needs, don't hesitate to contact the client and ask him about the job. Taking this step shows that you take their needs seriously.
- Before contacting the customer, find out about their business. You need to know their products and services, know how long they have been in business. Find out what position it occupies among the competitors.
- When you talk to the customer, ask them to show you how to evaluate quotes. This will help you understand exactly what his needs are, so you can better sell him your idea.
Part 3 of 5: Planning the Budget
Step 1. Think of a method to solve the problem
At this point you will have acquired all the necessary information about the client and the project. The next step is to devise a plan to solve his problem.
- The plan must describe exactly how you will solve the customer's problem. It should outline the right sequence of steps to be implemented to allow him to achieve the goal he has set himself.
- If you can offer a specific solution to the problem and communicate it to the customer, you are more likely to be hired. In addition, having a clear plan will help you work efficiently and achieve the expected profits.
- Defining a specific timeline for the operations to be implemented is very important, as is giving an idea of the cost generated by each single action and the resources required.
Step 2. Make sure your plan fits the client's wishes
It is important to remember that your goals are prioritized. You should use your research and discussions with the client to make sure that the operations fully meet the needs of the business. If you carefully prepare the quote, you will completely satisfy the customer.
- Imagine you have a small firm that deals with real estate management. You decide to respond to a Quote Request to take care of the winter maintenance of a large public property. The main needs of the customer? Keep costs under control and carry out the project economically.
- The first priority of the Request for Quotation should be to contain costs. You should package the offer as economically efficient as possible. This can involve using more mechanical equipment to reduce the manpower required or lower labor costs.
Step 3. Dwell on how your solution will create value for the client
One of the secrets to outshine the competition? Emphasize how your specific proposition will create customer value. Maybe you can save him more money than competitors or help him increase sales.
- For this step you need to focus on your strengths. If you run a small company, you can emphasize the excellence of the service offered. For example, you could provide a free 24-hour customer service number.
- If you have a larger business, you can try to use your numbers and dimensions for the purpose of obtaining favorable costs for supplies or capital. This is intended to reduce the costs of the project.
Part 4 of 5: Writing the Proposal
Step 1. Describe the problem
Start writing the document talking about the problem that made the Request for Quotation necessary. Explain why these difficulties adversely affect the client's business.
- You can provide details on the impact of the problem. Imagine that a manufacturing company sends a Request for a Quote for a new factory. The latter will help the company produce more goods in less time. The factory structure will reduce the repair and maintenance costs associated with production.
- Go beyond what was stated in the Request for Quotation. Use insights gleaned from customer conversations to optimize your idea.
Step 2. Solve the problem by clearly stating how you will do the job
After reading the Request for Quotation and discussing it with the client, you can offer a series of procedures to complete the project. Link each step in the process to the problem you will solve.
- Imagine running a trucking company. According to the Request for Quotation, the client is looking for a means of transporting sports equipment from a factory to a group of shops. Your proposal must explain exactly how the logistics will be carried out and how long each delivery will take.
- Imagine applying for the supply of leather for the production of baseball gloves. Your proposal will clearly describe the type of leather you will offer and how it will be delivered to the manufacturing company. You will also describe the replacement policies for leather that does not meet the customer's quality standards.
Step 3. Define costs and prices
Be sure to detail the products or services you will provide. It also explains the billing arrangements. Specify the dates and amounts of money indicated on each invoice you will send to the customer.
- Avoid using industry jargon as much as possible. This way you will prevent confusion about costs and prices. Don't use industry-specific abbreviations either.
- Imagine your proposal being read by several people within the company. It needs to be understood by the legal, financial and manufacturing divisions, but also by senior management.
Part 5 of 5: Submit the Proposal and Implement the Business Relationship
Step 1. Prepare your presentation
If the application process allows you to make a presentation in person, try it out loud. You can record evidence to improve exposure.
- Try to be pleasant. Emphasize the problem that the client will have to solve. Use anecdotes to explain how you have remedied similar difficulties in the past.
- The presentation must clearly provide a solution to the customer's problem.
Step 2. Indicates concretely what steps to take to communicate and start a business relationship
If the client wants to choose your proposal, they must know how to contact you to engage you. It is preferable to invite him to call you.
- The client must be able to ask questions through a specific medium. The most effective way to answer them is in person or over the phone.
- Answering customer questions as soon as possible should be a priority. This will allow him to have all the information he needs to make a final decision.
Step 3. Make a plan to keep in touch with the customer
Everyone is busy. The client could lose track of time and not respond to the proposal he had requested.
- Make appointments to call him. When you get in touch, he won't be surprised.
- Be polite, but get in touch with the client frequently. Do not disappear into thin air until the client has made a final decision. Given all the commitments involved in running a business, the final choice can be postponed.
