Business

EXPERT ADVICE

Business Proposals: Keep Them Simple

A critical path to growth for any company is the creation of business proposals that ultimately are accepted by prospective customers. Unfortunately, it has been my experience that many proposals are poorly prepared and lose site of both their goal (to secure a sale) and their audience (the prospective customer).

This article is based on an actual situation in which I was involved. Let’s use this experience as a case study in business proposal writing.

How It Happened

Here’s how it happened.

A client of mine is the CEO of an energy-conservation company for which I am in the process of doing an initial public offering (IPO). Let’s call him Jack. He is a very bright and detailed-oriented executive. However, his orientation to detail has surprisingly hindered him in creating a high percentage of closures on business proposals.

Jack recently asked me if I would give him an entree to a large company that could use his services. As it turned out, I knew the CEO of this company and was happy to make the introduction.

Submission of Proposal

Jack then prepared a detailed, multi-paged proposal to the prospective customer. He sent the proposal overnight. Not a bad idea — it gives the proposal a sense of urgency.

Jack waited but got no response. After a couple of weeks, he called the CEO, his prospective client, and asked him for his thoughts about the proposal. The CEO said that he was too busy and that he’d get to it at some future point.

Several months went by with still no acceptance of the proposal. In the interim, Jack had been calling the CEO asking about the prospects of acceptance but would always get a polite, “I’ve been too busy to really study it.”

My Revisions to the Proposal

Jack then called me and asked me to look at his business proposal and tell him what was wrong with it and how, if possible, it could be revised.

This is what I saw when I looked at the proposal. It was a multi-paged introductory letter, as well as a nicely bound formal proposal showing exactly how Jack could save his prospective customer hundreds of thousands of dollars over the next five years. Also, there were all kinds of charts and graphs in the presentation package. Though the proposal was technically well prepared, it provided far too much analytical and supportive data to “grab” the attention of the CEO.

Jack asked for my suggestions. I told him that I would be very happy to rewrite it for him. He gave me the go ahead, and here is what I did.

I reduced both the multi-page introductory letter and the formally bound proposal to a one page letter — nothing more. In it, I briefly explained what the annual energy savings would be to the prospective customer based upon the customer’s physical plant and current energy usage.

I also included in the letter a sentence on how rapidly my client Jack’s company could install the energy-saving devices and how effortlessly and quickly it could start saving the CEO’s company substantial dollars. That was it — all on one page.

CEO’s Response

The CEO read the letter and immediately called Jack. He asked Jack to come in as soon as possible with some backup material to prove to the CEO that the savings proposed were doable and realistic.

Jack called me both to thank me and to ask my assistance on the preparation of the backup material. Jack’s idea was to prepare an elaborate Power-Point presentation on the subject and to bring in several energy experts who could assist him with the technical parts of the presentation.

I told Jack that, based upon my acquaintance with the CEO and how busy he was, he should make the presentation far simpler and far more “user friendly.” Jack agreed.

The Presentation

Jack appeared in the CEO’s office with a simple three-page analysis of data to support his company’s claims of energy savings. He also brought one engineer in the event that some really technical questions were asked. There was no Power-Point presentation and he didn’t try to overwhelm the CEO with personnel.

The CEO listened attentively and asked some very pertinent questions. He then called in one of his technical people to see if she agreed with Jack’s presentation and his facts. She did.

Contract Request

The CEO then asked Jack to send him a contract that would memorialize the proposed transaction and address any basic legal questions that could possibly arise.

Again, Jack asked my opinion on the form of the contract. He asked me if he should present the “usual” contract, which was quite boring reading and which had, in my non-legal opinion, a great deal of superfluous data.

I told Jack that he should ask his attorney to draw up as simple a contract as possible so that both Jack’s company’s rights are protected as well as the rights of the prospective customer. I stressed to Jack that the contract should not be one-sided. It should be fair to both sides and provide the same remedies and penalties for non-compliance to each of the signing parties.

Jack’s attorney drew up such a contract and it was presented to the CEO, who then signed it and called Jack to ask when he could start his energy conservation installations. Jack, of course, was thrilled and made the installation a priority.

Moral of the Story

What this situation tells me is that many CEOs and salespeople get overly involved and too elaborate when preparing a business proposal. They are too anxious to impress the prospective client. And, they lose sight of their audience.

I’m normally not in the business of preparing or critiquing business proposals. However, I do think that many executives should re-examine their proposal processes and streamline them as much as possible.

Busy executives don’t have the time or the energy to read very detailed charts, graphs and supporting data. The first goal of the person preparing a proposal is to “grab” the attention of the prospective customer. This is best done, in my opinion, by creating an interesting, accurate, clear and concise business proposal that quickly captures the interest of the readers.

Many prospective sales have probably been lost because of inadequate and poorly prepared proposals. Keep your eye on the goal (to make the sale) and on your customer’s needs, and the odds of closing more sales will inevitably go up dramatically.

And, as always, good luck!


Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which deals in bringing small-cap companies public. He also is a frequent speaker on the subject of financial advice for small businesses as well as the IPO process. He can be contacted at [email protected].


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