A Small Business Guide to Winning Quotations, Proposals and Tenders

Author: Peter Gaunt, Chartered Marketer, Small Business Ambassador, CIM North West. Peter is currently Relationship Manager for Greater Manchester’s Business Growth Hub, and has worked with small businesses for most of his career. Peter is an author of eBook, Sales for Engineering Companies.

Once a customer has analysed their problems and started to research potential solutions the final stage is to decide on who might provide the best solution, usually through a quotation, proposal or formal tender.

Principally, the customer’s aim at this stage is to minimise any potential risks in the purchasing and, for complex sales, a formal tender or procurement process can facilitate this. For small businesses these final stages of the sales process can often be the most challenging.

Different types and detail of commercial response might be relevant to an enquiry, depending on the complexity and the nature of your relationship. Typically, there are three types of commercial response covering different scenarios:

•          Quotation: Informal responses to an opportunity. Quick and simple.
•          Proposal: Structured responses to a request from the buyer.
•          Tender:  Commercial and technical responses to a formal invitation to tender.

There are a number of differences between quotations, proposals, and tenders.

Informal quotations

Informal quotations are the least complex of proposals. You might send an informal quotation by email or, possibly, letter, but nothing more sophisticated and on 1 or 2 sides of A4. A typical proposal format might include:

• Introduction. Thanks customer for the meeting and the opportunity to work together. This needs to be concise and explains the need for the offer detailed in the proposal.  
• Scope. Basically, a list of services or products and might include a brief method approach.
  
• Timescales. Delivery dates and schedules
  
• Costs. A costings schedule, with commercial terms.

Informal quotations often conclude with a request for approval or authorization. You might be in competition with other suppliers for all three types of commercial response, but the formal tender process is the most complex and needs a strategic approach to be successful.

Formal tenders

Formal proposals differ from informal proposals not as much in style but more terms of in size and format. Formal proposals respond to the need for big projects and may range from five to 200 or more pages. To facilitate comprehension and reference, they are organised into many parts, usually to a format decided by the customer.  They often contain some or all of the following parts:

•          Letter
•          Executive summary
•          Copy of the Request for Proposal (RFP) or Invitation to Tender (ITT)
•          Form of tender
•          Approach / methodology
•          Team / staffing / resources
•          Pricing schedule
•          Timescales
•          Credentials
•          Table of figures
•          Appendix (possibly several appendices)

Large scale and many public-sector contracts are awarded after a multi-stage process: 

1.      Expression of Interest
2.      Prequalification
3.      Invitation to tender

Expression of Interest

The Expression of Interest (EOI) is often a short response (maybe a letter or online expression) from a potential supplier to an opportunity. 

Pre-qualification stage

Pre-qualification questionnaires (PQQs) are usually sent to all those who have expressed an interest in supplying products and services.  PQQs form part of the restricted tendering procedure.

The purpose of a PQQ is to allow the purchaser to assess

•          Supplier’s economic or financial standing
•          Supplier’s technical, delivery and professional ability
•          Whether the supplier should be rejected because of fraud, bribery, insolvency etc.

A typical pre-qualification questionnaire might include standard documentation on subjects such as:

•          Full company contact details
•          Evidence of relevant previous work
•          Accounts & financial assessment
•          Insurance certification
•          Quality, safety and environmental policies 
•          Equality & diversity policies

The above tend to be mandatory requirements.  However, many PQQs include questions that are weighted. 

Invitation to tender

The Invitation to Tender (ITT) is an invitation sent to a shortlist of bidders selected through the prequalification process. ITTs are often quite prescriptive in either or both of

•          The detailed requirements of supply
•          The results to be achieved.

Tenders in the public sector are usually subject to a detailed scored evaluation. Traditionally, this would have focused on scoring for price, and a score for quality or how closely the response meets the technical specification.

Increasingly, however, public sector procurement focuses on other factors that can make a real difference between success and failure to secure a contract. Greater Manchester Councils, for example want to ensure suppliers contribute as much as possible to the wellbeing of residents and include social value as part of the procurement process. Over the past few years tenders have been assessed 40% price, 40% quality and 20% social value.

Negotiating

Once a proposal is submitted the next stage is negotiating the deal, and, with challenges such as Brexit, negotiation is very much in the news. It’s a challenge for all business people, and particularly for small businesses. This will be the subject of the next blog