Advice for Small Business Owners » proposals

Writing Proposals

Elie Kochman — Fri, 27 Aug 2010 11:45:48 +0000

I recently had reason to draft a proposal for something out of the norm for my line of work. I was asked by a family member to assist in writing a formal proposal for an after-school program, with the added twist that the program had already been approved in principal, pending the formal proposal. Not really familiar with how such documents are written and structured, I spent some time reading through templates and examples, and finally assisted her in writing her proposal.

What I discovered along the way is actually pretty simple. There are two parts to a proposal – content, and context.

The content of the proposal is intended to answer a few basic questions regarding what is being proposed. It usually starts with a general summary, followed with some details regarding the proposal itself, some discussion about the benefits to both sides. There will be a section with supporting documentation, and another about the merits of working with this particular provider, along with a summary of the qualifications of the provider.

The content alone is not sufficient to win a proposal, though. The context is also important.

The context is how you present the material. It doesn’t need to be fancy, or presented in a particular style. It does, however, have to impart additional qualifications about the author. A graphic artist would make sure it’s in a style that showcases their skills as an artist. A financial planner might include some portfolio summaries. In all cases, there will be a single page that can be used by all readers of the proposal to find the information they need to make a decision.

One of the suggestions I made regarding the writing of the proposal was to keep the sentences short and the paragraphs simple. There should be frequent headings, and the entire document, in this case, should not exceed 3 pages (not including the cover). The reason is basic – the document became easy to read, thereby increasing the chances that it would, in fact, be read in its entirety. The frequency of headings resulted in the document being easy to navigate – and negated the need for a table of contents.

Do you have any tips for writing good proposals that you want to share?

Conception to Creation of a Business Idea

Elie Kochman — Fri, 17 Jul 2009 17:41:43 +0000

I’ve been exchanging e-mails with a few people about some ideas for new websites. Currently, there are 4 of these ideas that I would categorize as active – several exchanges of information per week on average. When looking at each idea, and how they differ from one another, I realized that there are some people who don’t understand the difference between conceptualize and create.

A successful site will begin its existence as a concept. The designer, or creator of the site has an idea – wouldn’t it be great if there was a site that could provide this service or maybe something along the lines of I can’t stand using this website, but I need the service they offer, and there isn’t a good alternative. Many ideas reach this stage, and a few make it further.

During the next stage, the concept becomes more solid. For example, details of the service could be outlined, or the creator lists out the specific issues they have with a particular site. This part of the process can take minutes, hours, days, or years. The end result, however, is a description of a need, and how it will be filled. (Note that this is not specific to a website, it is the same rule that applies to any business.)

Finally, list in hand, general specifications outlined, the creator approaches the people who can turn the idea into something more concrete, and the work commences. Creation has been reached.

The reason I outline this is because some people do not understand the difference between the first stage (I hate using site qrt.com) and the stage where development can begin. Going to a developer and saying build me a site like qrt.com, but better will not become a success unless you can also specify what it is about qrt.com that you don’t like, and what special features you will offer as an improvement over the competition.

Contract Work and Contracts

Elie Kochman — Tue, 24 Mar 2009 19:58:41 +0000

I do some work on the side for charities and small businesses. Most of this work would be referred to as “contract work” where I am brought in to do a particular task, for a specified amount of money, to be completed by a target date. With some of my clients, I have a formal contract, with others, not.

I don’t always work under contract, although the exceptions to that rule are becoming few and far between. A contract is binding on both parties, and it is in your best interest to always have one. Here are a few examples of how you, as the contract worker, benefit from that piece of paper:

Guaranteed rate: no more arguing about how much you are entitled to
Guaranteed work: no more changing requirements and trying to claim you agreed to do so in the initial work agreement
Guaranteed responsibility: no more wondering about who owns what at the end of the project

From the client’s perspective, a contract is likewise of immense benefit:

Guaranteed rate: no more arguing about how much you owe for the work
Guaranteed work: no more hidden fees for work you asked for initially
Guaranteed responsibility: no more wondering about who owns what at the end of the project

Additionally, a contract can include additional information regarding maintenance costs, support after the project is complete, and dates for completion. As a client, you may want to include information about what happens if a date is missed. As a contractor, you may want to specify what happens if payments are late.

The reason I occassionally work without a contract is simple. Looking through dozens of templates online, it is difficult to locate the appropriate contract for your location and the specific work you are doing. However, recently, I was sent 6 contract agreements for my current jurisdiction (Ontario, Canada) which cover issues surrounding non-disclosure and release of information. These became the basis of what was to become my set of templates for all contracts.

If you are looking to put together some templates, locate a generic non-disclosure agreement for your jurisdiction. Add a section describing the work to be completed (your requirements section), fees to be paid (including maintenance and expense fees), and dates of all deliverables, and what they are. For each section, ensure you cover in detail what is included, and how changes to that section must be negotiated.

For example, you may be building a website for a client (note that I am not a lawyer, and the following is meant for illustration purposes only):

Requirements: To construct a 6 page website describing the client’s business. The information for each page will be provided in electronic form by the client. The text for each page will not exceed 750 words. There will be 5 e-mail accounts set up for the site. Hosting will be arranged by the contractor through SuperWebHosting.com and the client will absorb all fees associated with hosting the site. Images will be provided by the clientin jpg format, to a maximum of 4 images per page. Graphic design is not included, and all graphic design work will be done by the client.
Fees: The cost to set up the website specified in the requirements is $250.00 and is payable on delivery of the site. Once the text for each of the pages has been provided, one change to each page following publication will be included, provided the change is requested with 60 days of publication. 2 hours of telephone and e-mail consultation is included. Non-payment within 10 business days of publication of the site will result in a $25.00 late fee. Non-payment within 60 days of publication will result in a further $25.00 late fee.
Deliverables: The contractor will provide the client with all files required to publish the site, and all source material created for the purposes of creating the website. This will be completed within 30 days of the client delivering the final wording of all pages to the contractor. The client will provide this wording within 10 business days of the signing of this contract.

Subcontracting: A Middleman's Perspective

Elie Kochman — Wed, 18 Mar 2009 14:52:50 +0000

As a technical consultant, I have worked with several contracts over the course of a few years. In all these cases, I was working directly for the client. However, during a discussion with one of my networking groups last night, we talked about the issues of subcontracting, and the problems they solve and create.

A client, who I’ll call Small Business, needs a custom inventory management system, which links to their website for processing orders. Not being technical, he hires a Consultant who is an expert in inventory management systems, but has no experience with building websites. The Consultant takes the entire job, requiring him to provide both the software and the website. The Consultant puts out an ad and recruits E-Commerce Developer to build the site.

From the perspective of Small Business, he has managed to contain all his technical needs within a single contract, and can keep his maintenance costs down by retaining a single contract instead of two. From the Consultant’s perspective, he has landed a large contract of which he is only doing a portion of the work, and retaining a finder’s fee for the remainder, plus a maintenance contract. The E-Commerce Developer was unable to get the contract on his own, and so is happy for the work, and does not need to deal with the client for payment.

It looks like everyone wins.

However, there are problems with this model. The Consultant, not being a web developer, cannot provide accurate estimates of the costs of that component, leading to possible cost overruns. As well, by acting as a middleman for the Small Business and E-Commerce Developer, the chance of miscommunication has been increased. This is compounded by the fact that any communication between E-Commerce Developer and Small Business must go through Consultant, which means it is slow and inefficient.

The model that we came up with during last night’s meeting aimed to remove these obstacles.

A small group of individual contractors would band together and move into a small office. Each person would have their own office, with some shared resources (meeting rooms, kitchen). The office would share phone lines with an internal automated switchboard and internet access. As well, technical resources would be shared within the group, including access to legal documents, tax advice, graphic design, and a developer pool. Each partner would contribute a fixed sum per month for the upkeep of the office, plus some extra for renovations and unexpected expenses. (An office can be rented for less than $4000 per month including utilities, which, in a group of 10 partners, is only $400 per month for an office with meeting rooms and shared resources.)

The developer pool is what would make this system work. Partners in the group are people who are looking to establish clients and to bid on projects. Each is technically proficient, but they bid against one another for projects, or join together to bid for projects. When a project is deemed too large for an individual, they turn to the developer pool to get the work done. The developer is brought in on the project, and communicates directly with the client for requirements and specifications.

Developers in the pool are people who are looking for occassional work, but do not desire the overhead of dealing with clients and searching for projects. By being in the pool, they can see which projects are available for work (indicating that one of the partners has won a contract and requires particular skills) and which they would like to work on. They will then be able to deal directly with the client once approved by the partner, using standard rates from within the group and paid by the partner (not the client).

We are still in the planning stages, and nothing has been cast in stone yet. But the model is in place, and we are looking to tweak it over the next few months. If you have any ideas or suggestions, please let me know. I’d love to hear from you.

Clever idea… but are you the first?

Elie Kochman — Tue, 24 Feb 2009 00:14:27 +0000

If you are an entrepreneur, then you have likely come across the question in the title more than once when you presented your idea to someone. The question is valid, but, unfortunately, often difficult to answer. I was reading today in the National Post about how due diligence on the show Dragons’ Den failed to reveal in two particular cases that the products under investigation were not, in fact, original. While I will not discuss here the issues in the products mentioned in that article, I will talk about the question that should have been raised.

Has your idea been done, or tried, before?

Often, when you think of an idea that could be turned into a business venture, the first step is forgotten, or given minimal attention. Before you go diving into the work and becoming emotionally attached to the idea, do your own due diligence. Try to locate your nearest competition, and find the pros and cons of their product or service. What advantage do you hold over them? If you cannot answer that question, then your entire idea may be flawed, or based off of out-of-date information.

A common response, though, is: “There is no competition! My idea is so unique and innovative that no one has ever tried it before!”

The answer to that, of course, is that you haven’t looked hard enough. If your idea has never been tried before, then what makes you think it is viable as a business. The competition may be distant, or impractical. It may be expensive beyond the cost of the problem it is supposed to solve.

But it exists.

To start yourself looking for the competition, think about the problem your idea solves. Then look at what other people faced with the same problem do. Do they ignore it? Do they use some roundabout way of solving it? Is their current solution expensive? What are pros and cons of the solutions that are already out there? How does your idea compare?

To make this a little simpler, suppose you had a potential client sitting in front of you. They will give you $100K contract on the spot if you can convince them that your solution is really the best. Of course, you can talk about the problem your idea solves. You can talk about your price versus the price of the competition. But what you absolutely must talk about is how is your product better than the alternatives. That means you need to know your competition in great detail, because if you don’t, you will lose the sale. If your potential client knows more than you about your competition, then they will ask you questions you don’t know the answer to, and then you lose the client.

Business Proposals

Elie Kochman — Thu, 19 Feb 2009 13:00:58 +0000

I have my first business proposal sometime next week. I’m meeting with someone who is a potential client AND a potential investor to describe my idea, the research I have already done into it, and to get buy-in from them. I’m actually not trying to get any money from them at this point, but I’m aware that it is a possibility.

I know that I should ask him to sign an NDA (Non-Disclosure Agreement) and I will, but I’m not sure if he will sign. Probably will, though, as I know this guy fairly well, and it would get back to him if he tried to steal my idea. Also, he’s not technical, and therefore the details of my idea are quite possibly beyond him, so from his perspective, he may as well pay me to develop this idea as well as pay anyone else.

I’m still trying to figure out the pitch, though. I don’t want to go too technical, as that’s not the point. Currently what I need from him is to get access to people that can help me with the research. So he needs to know, in high level terms, what it is I’m thinking of. Since he may become an investor as well, he needs to know what the estimated cost of developing this solution is, and why. Time frames are important, but are hard to judge until the research is complete (I did plan a research period followed by a development period, but currently the time frames for development are completely tentative).

Can anyone think of other aspects of the idea I should probably cover? Also, what format should my presentation be in? I can throw together a document outlining the idea, or I can put together a PowerPoint presentation and bring my laptop (if he has a projector available, since I don’t). However, this is an initial meeting to see if there is interest, and perhaps a presentation like that at this stage is overkill.