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Proposals are Hard!

Proposals are really hard at first but I promise they will get easier.

Proposals are hard!

I remember my first proposal. It was for a 100-hour market research project and it took me 40 hours to write the proposal! 40 hours to write a proposal for 100 hours of work??? Houston, we have a problem…

Proposals are really hard at first but I promise they will get easier. It’s worth investing time at the beginning and then you can draw on the early work for later proposals. I’m lucky in my practice because I write proposals for less than 10% of my projects.

I typically provide quite a bit of detail in my proposals. It is an opportunity to demonstrate the quality of my work. I also provide quite a bit of detail in my fees. I want the client to have confidence that I really understand what they need and can deliver results.

First determine the activities required to accomplish the engagement objectives.

  • Outline the required activities. You may need to do a little discovery work with your prospective client in order to surface these.
  • Determine hours and due dates for milestones. I usually do both a bottom up and top down version. A little juggling will make everything come together nicely. Using both approaches forces you to consider different details which results in a more complete proposal.
  • Try to do something measurable within the first 30-60 days. This is especially important with a first-time client. Once you deliver something concrete, everyone relaxes and then it’s easier to crank out the work.

Next you need to decide how to structure your pricing.

  • Will your proposal be time and materials, fixed bid, not to exceed or some combination?
  • A “not to exceed” clause says that if the project will take longer than the estimated hours for unexpected reasons or scope changes then you will revisit the budget and timeline. I also tell the client that “not to exceed” pricing means that if the project takes less time than estimated then they pay less. This way the cost/benefit swings both ways.
  • Can you structure some or all of the compensation as value pricing?
  • I did an inventory reduction project with a colleague. We structured part of the compensation as a percentage of the inventory reduction. We made far more than our usual hourly target rate but the client also won.
  • Can you include a performance bonus to share the risk and increase your upside?

Other financial considerations

  • Will you require some of the project fees in advance?
  • On a fixed bid project, I typically request 25-50% of the project cost at kick-off
  • I sometimes require a retainer for a time and materials project. It depends on the client and relationship. I typically request a retainer equivalent to one month’s hours.
  • Will you invoice once a month or every two weeks? I work with a lot of start-ups so sometimes every two weeks makes the invoice dollar amount easier to swallow. I have learned that $10,000 is a magic number for smaller companies so I try to keep invoices under $10,000 for these clients. This may mean invoicing more than once a month. Larger companies may dictate monthly invoicing.
  • Will you take a portion of your pay in equity? I rarely take more than 30% of my fees in equity but it can have some nice upside.
  • Will you defer a portion of your fees for a start-up awaiting funding? I don’t risk a lot of money on this but it can be a great way to build client loyalty. I won one of my best clients because I deferred a couple thousand dollars until he got funded. Just be careful about the partners you choose for this.

Remember that your proposal is

  • First, a sales document
  • Second, the beginning of your project should you win the engagement
  • Third, the basis of your contract

Deliver a professional product
Now that your business card no longer says, “Hewlett Packard,” it’s more important than ever before to be professional. You must create a high-quality proposal worthy of the best consulting firm in the world. This Billable with Baby® proposal template will allow you to deliver a beautifully professional proposal.

Free Billable with Baby® Proposal Template

Originally published at www.billablewithbaby.com

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