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When is a proposal not a proposal?

People often assume they need to write a proposal when they don’t. This usually happens when:
  • They want to sell something complex
  • They want to start a business
  • They need funding
  • They want someone to agree to their terms
Does Selling Require a Proposal?

When you are trying to sell something, especially something complex, it usually doesn’t start with a proposal. It starts by talking to the buyer about their needs. It starts with a relationship. If you are trying to sell something without knowing who the buyer is, and you’re trying to do it in writing, it’s called a brochure or a sales letter.

Brochures are usually vague and written at a high level because you don’t know anything specific about the customer. Think about all the brochures you have received and how many of them resulted in you making a purchase. Brochures have their uses, but they are not very effective. The more you know about your customer, the more effective any attempt at selling will be.

The sales process may or may not involve a proposal. For a complex sale, it will most likely end with an agreement or contract. A proposal is not a contract, although the two may be submitted at the same time. A proposal is a written document intended to persuade the customer. A contract spells out the terms of the agreement between you and your customer. Depending on your circumstances and ability to persuade the customer, you may just need them to sign a contract without having a proposal in the middle. You only need a proposal if:

  • The customer issues a written Request For Proposals (RFP). If this is the case, there will probably be other bidders and you may not be the one most favored. Even though they’ve issued an RFP, it may not be worth your time to write a proposal.
  • The customer asks for a proposal. If the customer needs a proposal to consult with other people involved in the decision process, you may have to give them one. If the customer is asking for a proposal because they want you to go away, then it will be a waste of your time.
  • The customer needs something in writing to persuade them to sign the contract. Why do they need it in writing? And if they do need it in writing, exactly what is it they need?
As you can see, unless you have to write a proposal, you probably don’t want to. There are many reasons not to submit a proposal and only two reasons to do it:
  1. You have to submit a proposal to get the business
  2. You think you have a significant chance at winning the business if you submit a proposal
Assuming you need a proposal when you don’t, in addition to wasting time and effort, may actually reduce your chances of closing the sale.

Also, there are alternatives to submitting a proposal. You can arrange for a meeting, a presentation, or a demonstration. You can review the terms of the contract with them. You can structure the contract to mitigate their risks and any objections they might have. For example, you might offer a trial period. It is almost always better to discuss and respond to their needs in person.

Sometimes the customer will require a proposal. For example, most large purchases by government require them to issue an RFP, and to do business with them requires writing a proposal. If you can’t convince the customer to try an alternative approach, then you should do everything you can to learn about the customer, their needs, and the competitive environment before you start writing your proposal.

Does Starting and Funding a Business Require a Proposal?

You do not need a proposal to start a business. It’s not like you need to convince someone — you just do it. There might be regulations you need to follow, but they require you to follow procedures, not necessarily to submit a proposal.

If you need funding to get the business started, then you need to persuade someone to provide the funding. If you are seeking a loan, you’ll need to complete an application. If you are seeking something like venture capital, then you may just need a presentation. In some cases, the funding source will want more details and ask for a business plan. A business plan is very different from a proposal. A business plan is an assessment of what will be required in order to achieve your projections. A business plan may be a written document and you may be seeking to persuade the funding source, but it is a special type of document. It is a description of what you plan to do and the results, as opposed to a description of what the buyer will get and the reasons should select you.

Conclusion

  • Don’t assume you need a proposal when you really need a business plan
  • Don’t write a brochure or sale letter and think it’s a proposal
  • Don’t write a proposal if you can close the sale without it
  • Don’t write a proposal to an unfamiliar customer, even if they’ve sent you an RFP, without assessing whether you really have a chance at winning the business
And for those of you who are Government Contractors, if you think this article doesn’t really apply to you, go back and re-read it. Your customer may not always require a proposal to close the sale. There are ways to divert the acquisition process or steer it to favorable contract vehicles. When they do require a proposal, you may or may not want to submit one. And if you do have to submit a proposal, having a relationship with the customer can give you a competitive advantage. Also, the more you know about what they need to make their selection, beyond what you see in the RFP, the better your chances.

 



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By Carl Dickson, Founder of CapturePlanning.com



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