Appendix C
BUSINESS PROPOSALS

This appendix will address writing and presenting business proposals. The process is similar to reports and presentations, which were discussed in chapters 5-8. However, proposals have some unique considerations, which will be explained in this appendix.

If you are a management accountant working for a corporation, you could participate in writing proposals for external or internal audiences and, as you advance in the organisation, you could have more authority and responsibility for proposal writing. If you work for a small business, one of your responsibilities could be writing proposals. Conversely, you might assist with, or be responsible for, reviewing proposals submitted to your company by other organisations.

Let’s look at proposals and where you can contribute.

BUSINESS PROPOSAL

A business proposal is an offer to sell something: a service, a product or perhaps an idea. For example, a company proposes to sell a service to another company. An entrepreneur tries to sell investors and lenders on the idea of investing in and providing financing for a start-up company. A small business proposes to enter into a contract to sell a product to a government agency.

Before a company invests the time, money and energy in writing a proposal, it should consider whether to write the proposal in the first place, based on the estimated cost, the resources required, the likelihood of its winning the proposal and other considerations.

Proposals can be external or internal.

An example of an external proposal could be an individual or organisation proposing to sell a service or product to another organisation. The seller could be a corporation, a small business, a professional services firm such as an accounting or law firm, a consultant, or other seller. The buyer could be a corporation, small business, not-for-profit organisation, government organisation or other buyer.

An example of an internal proposal could be someone in an organisation trying to sell to an idea. The CFO tries to sell the CEO on a proposal to sell an operating division. A business line manager tries to sell the CFO on the company’s buying new equipment. A human resources manager tries to sell the CEO and CFO on a plan to give employees more flexibility about when and where they work.

Proposals can be solicited or unsolicited.

A solicited proposal is a company writing a proposal in response to a request. The request could come from a prospective customer or client, or it could come from within an organisation, such as the CFO asking the director of IT to submit a proposal to upgrade the company’s information systems. The solicitation may be in the form of a request for proposal (RFP). By soliciting a proposal, a prospective customer or internal manager shows an interest in buying, although there is no guarantee that a transaction will be concluded.

An unsolicited proposal is submitted to a potential customer or client or internal manager without their having requested it and without any assurances that the proposal will be accepted. The seller may have seen that the customer has an unresolved business problem and demonstrates in its proposal how it could help the customer find a solution. The risk in making an unsolicited proposal is the greater uncertainty about whether it will be accepted.

WRITING THE PROPOSAL

If a company or individual decides to create and submit a proposal, it needs to consider the questions that are common to the writing of any document. These were covered in chapter 5, ‘Write from the Start.’ In addition to those considerations, a few more questions that apply specifically to proposals are as follows:

• Why is the customer asking for a proposal? Or, if the company is submitting an unsolicited proposal, what does it see as the customer’s need? The customer may not have the expertise or the resources to achieve its goal on its own. It may want to draw on the experience and insights of the company that is submitting the proposal.

• What is the customer’s goal? In other words, how can the proposal explain how it will meet the customer’s needs? What is the customer’s goal, and how would it benefit from the proposed product or service? The customer’s goal might be to bring a product to market, and in asking for a proposal, it is seeking advice on how to expedite this process. If the product comes on the market sooner, the customer would benefit from gaining a competitive edge, increasing sales and generating higher profits—profits the customer could reinvest or use for other business purposes.

• Who is the audience? The audience is the customer—whether it is a corporation, small business, or other organisation. But within the customer’s organisation are the people who will make the decision whether to accept the proposal: the CEO or CFO, other executives, a business line manager, or perhaps a committee. What does the company making the proposal need to know about the decision makers? For example, what are the background, profession and business experience of the decision makers? What are their positions in the customer’s organisation? What is their management style? How receptive are they to a proposal? Did some people in the organisation favour requesting a proposal, whereas others were opposed or only lukewarm? The company can learn about the decision makers from reading an RFP, background research and speaking with them.

• What does the audience want to know? What does the customer want to know about the company making the proposal? The customer wants to know that the company has the knowledge, experience and competence to complete the project, that it is a financially sound organisation, and that it is trustworthy. The company will have to prove its experience, competence and trustworthiness, along with other attributes, to the customer. Most important, the company must demonstrate a clear understanding of the customer’s organisation and its project requirements.

• What is the process for completing the project? If the company’s proposal is accepted, what are the steps for it to deliver the service, provide the product, or suggest ideas? What is the timeline for completing the project?

• What are the metrics for evaluating the company’s performance? How will its progress in completing the project be measured? How will its performance be evaluated? How will the customer determine that the results of the project are satisfactory?

• What is the company’s obligation once the project is completed? The customer wants assurances that once the project is completed, the company will help to provide any advice or assistance or resolve any problems or issues concerning the project.

LEARNING FROM THE RFP

An organisation that wants to buy a product or service can write an RFP or a solicitation to prospective suppliers to submit proposals. Reading the RFP should be your first step when writing a proposal. The RFP includes information about the customer: its history, business goals, products and services, background of its senior executives, and other details, as well as specifics about the product or service requested. The RFP also requests information about a company submitting the proposal: company history, business goals, financial information, experience providing the product or service the customer wants, professional backgrounds, and its executives’ experience and so on. Some RFPs may ask for only general information, leaving it to the company to provide details. Other RFPs may require a company to follow very specific requirements for writing and submitting a proposal, and a company must adhere exactly to those requirements, otherwise, it might be at risk of having its proposal rejected. If you are submitting an unsolicited proposal or do not have an RFP, try to find out the same information from another source.

WRITING THE PROPOSAL

Chapter 5, ‘Write from the Start,’ examined the process of creating a written document, and this process can be applied to writing a proposal. The proposal will include the following:

• Executive summary. States the theme, key messages, purpose, scope and context of a proposal, details of the product or service to be delivered, and the cost. Written for the decision makers in the customer’s organisation who will decide whether to award a contract and who might read only the executive summary. Designed and written to entice others in the organisation—including those who would be involved in managing a project if a contract is awarded—to read the entire proposal.

• Introduction. Describes the customer’s issue or problem and history of the problem. Elaborates on the purpose and goals of the proposal. Describes how the company submitting the proposal will solve the problem, and why it is best qualified to solve the problem. Demonstrates a clear understanding of the customer’s needs. Transitions to the body of the proposal.

• Body. Amongst other information, the body describes

  • how the solution to the customer’s problem can be achieved.

  • steps to achieve the solution.

  • benefits of the solution.

  • how to measure progress toward the solution.

  • products or services to be provided.

  • scope of the project.

  • detailed descriptions and specifications of the product or service, including the costs.

  • qualifications of the company making the proposal and its key executives.

  • company’s history and experience in its product or service line.

  • timeline for completing the project.

  • management: Who in the company is responsible for what aspects of the project? Who in the customer organisation is responsible for managing the project?

  • the process for evaluating the outcome of the project and other information.

  • case studies, testimonials, success stories and other supporting material.

  • charts and graphs to capture key themes, summarise details and facilitate understanding of complex questions.

• Summary. This is a restatement of the theme and key messages of the proposal. The emphasis is on succinctly describing the client’s problem or issue, how the company making the proposal can solve the problem, why it is best qualified for the project, and the benefits to the customer.

• Call to action. Finally, the proposal concludes with the company’s request of the customer. It may ask that the customer hire the company to work on the project. It may request for a meeting to discuss the project in further detail before the customer decides whether to hire the company. Whatever the request, it is a call to action: The company wants the customer to make a decision.

PRESENTING THE PROPOSAL

In addition to submitting a written proposal to the customer, companies will often make a presentation of the proposal to the customer. The guidelines for planning, preparing and delivering a presentation were covered in chapters 7 and 8. Besides those general considerations, a few specific details to keep in mind for presentations of proposals are as follows:

• Determine the purpose of the presentation. The company’s goal—its end game—is to win business from the customer. The presentation is a means to that end. How should the presentation be structured to help the company achieve that goal?

• Know the audience for the presentation. The decision makers in the customer’s organisation who are managing the process of soliciting proposals would attend the presentation, but are there others in the organisation who might also attend? Is so, what influence will they have on the customer’s decisionmaking process? If they are influential, how can the presentation be structured to persuade them, as well as others, in the audience to accept the proposal?

ROLE OF MANAGEMENT ACCOUNTANTS

As a management accountant, you could apply your financial, communication and other skills in helping your company to consider whether to submit a proposal, and, if it decides to go forward, to write and present a proposal. Conversely, you could assist your company in reviewing a proposal and deciding whether to purchase a product or service. Below are some specific areas of proposal-making where your expertise could be valuable:

The Money

At every step of the proposal process, there are money questions you could help your company address, including the following:

• What price should the company ask for the sale of a product or service?

• What would be the costs in labour, materials and other expenses in selling the product or delivering the service (the project)?

• What profit does the company want from the project? Can it meet its profit target?

• Is the company able to incur the costs of writing and presenting a proposal, and, if it wins a sale, carrying out a contract to complete a project?

• What is the budget for the project?

• How would the company track project expenses to ensure the project stays within budget?

The Customer

You could assist your company by

• researching the customer to determine whether it is a stable, financially sound organisation that the company wants to do business with.

• meeting with the customer to discuss the customer’s reasons for wanting a proposal, what problem it wants to solve, how it expects to solve the problem, and how it will benefit.

• answering any of the customer’s questions or addressing any of its concerns.

Researching and Writing the Proposal

You could help your company by

• analysing the risks of entering into a contract, for example, the company might underestimate the time to finish the project.

• mitigating the risks, for example, by building sufficient time for the project into the proposal and having a system for managing the risk to ensure it is completed on schedule.

• planning and writing a presentation, for example, by helping to prepare financial information about your company, participating on a team that writes the presentation, or helping to ensure that your company has met all the requirements in an RFP.

Evaluating a Proposal

You could also help your company evaluate a proposal from an organisation to sell a product or service to your company by

• researching the organisation’s history, principals, markets, financial information, qualifications, experience in providing the product or service and other information.

• participating in meetings with the organisation’s executives to discuss your company’s reasons for asking for a proposal, the problem it wants to address, possible solutions and how the company can achieve them, and other topics.

• analysing the proposal, including whether the company has provided all the information required, whether it has demonstrated an understanding of your company’s needs, whether it has shown that it can meet those needs, whether the price for the product or service is acceptable, and other information.

• making a recommendation about whether your company should accept the proposal and agree to buy the product or service.

If you are at an entry-level position in your company, you may not be directly involved in writing or reviewing proposals, but you could become more involved as you advance in the organisation and assume more responsibility. And if you advance to a senior executive position, such as CFO, or a managerial position, such as manager of a business unit, you could have a leadership role in planning and writing your organisation’s proposals and presenting them to customers or in reviewing proposals made by other companies and helping your company decide whether to buy a product or service. So, if you have an opportunity to get involved in the proposal process in some capacity, you could start to develop skills in managing proposals.