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27
May

6 Ways to Determine Whether or Not to Respond to an RFP

Receiving an invitation to create a proposal for an RFP can be an exciting proposition. The opportunity to respond could bode well for increasing the scale of business without having the need to focus on company growth. But responding to an RFP can also be stressful and potentially produce undesirable results. That’s why it’s important to establish consistent decision processes to stay afloat.

How to establish a go/no-go decision process to reduce response volume and increase sales

For the companies that do rely on the RFP as a means to gain new contracts, careful consideration should be given to every RFP. Reducing the number of RFP proposals should result in an increased success rate for proposals. It should also reduce the costs of business operations and increase profitability. That is if you can properly determine whether or not to respond to an RFP. 

Follow these simple steps and it should become much easier to customize a go/no-go decision-making process to determine how you can reduce the number of RFP proposals and increase the number of bids your company wins.

1. Is there a potential for repeat business from the proposal?

A government-sponsored project request may require a new RFP to be issued for individual aspects of the projects. However, some companies that issue an RFP will look for individual proposals to assist them in scaling up their business operations without increasing their costs of business. 

For the one-off RFP, there will not be any potential for repeat business. In other instances, there could be a potential for either long-term operations that will increase the overall profitability of your company or provide you with some influence and preferential consideration for any RFP that may be submitted in the future. 

2. Is there a reduction in profit margins in the proposal?

When private companies invite proposals through an RFP, they are very likely shopping for the best cost. In the case of a proposal with long-term gains, a small reduction in profit margins may be an acceptable trade. 

To what extent can those costs and profit margins be reduced in your proposal? Will creating that single proposal threaten additional operations with a need to constantly reduce prices in order to remain competitive? 

Determine the potential for long-term gains in contrast to any potential short-term reduction in profits. There are circumstances where a slight reduction in profits can enhance the profit margins, and if this is the case, it is an indication that the proposal may still be very profitable and beneficial for the company. 

3. Does winning the RFP require you to compromise on quality or cost?

Production and resources are notable expenses that need to be considered if you are expecting to win with your proposal. Would an acceptable bid or proposal force a compromise in quality or production costs? Can your company remain competitive while reducing the overall cost of your proposal? 

4. Is there political influence that may prohibit your proposal from winning?

It is not very likely that you will have information revealing all of the potential bidders when responding to an RFP. It should be possible instead to determine what the past history is and if there are companies that have consistently won bid proposals. This is a common practice in industries where the RFP is more a formality than an actual means to determine contracts. 

5. Do you have the proper personnel to complete the proposal? 

Writing a complete proposal in response to a government RFP can be challenging, even for experienced proposal writers. If your company is consistently bidding and writing proposals, you may already have a team in place. While automated programs designed to assist in the RFP proposal writing processes are preferential, the process does still require a proposal writing team in most cases. 

Do you need to bring in outside personnel in order to complete the proposal? 

If outside experts, writers, or other people necessary to complete the proposal writing process, what are the costs of hiring these people? What is the potential for lost production or delays in other projects in the event that you are using the expertise of personnel already employed by your company? 

Any potential disruption to current operations could be detrimental to your bottom line and should be taken into consideration. It is also important to note what the costs of hiring third-party professionals for writing a successful proposal will cost.

Determine if the additional costs would prevent the bid proposal from being equally profitable or otherwise beneficial in the event the bid was won. More importantly, you must determine if the costs would disrupt or threaten current operations in the event that you don’t win the bid proposal — that’s a worst-case scenario you don’t want to risk.

6. What is the potential harm or benefit of winning the proposal?

In most cases, writing a bid proposal in response to an RFP should focus on the potential for financial gain. There are other factors that may also need to be considered, however; not least among these is any potential for gains that are not financial in nature. 

Business experts used to say that no publicity is bad publicity, but this is not necessarily the case anymore. Conversely, if the bid proposal in response to the RFP can generate a positive response, it should indicate that the RFP may be worthwhile. 

Can positive public relations result from winning the bid proposal? Will new jobs be created that can be used to encourage local businesses and even the government to view the company more favorably? Are there any potential gains such as tax breaks or other benefits? 

On the other hand, what are the potential negative consequences associated with winning the bid proposal? Will it require the transportation or storage of hazardous wastes or other toxins that may cause concern within the local population? Will it disrupt the local citizenry in any negative light? 

Conclusion

The steps included herein are generic but should give your proposal writing team the opportunity to develop an effective decision-making process for determining whether or not to respond to an RFP. Reducing the volume of RFP responses should allow your company to devote their time to fewer bid proposals, and increase their success rate when responding to the next RFP. 

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