The purpose of a request for proposal, or RFP, is to find the right vendor for your business to complete a specific project or solve a particular problem. RPFs are commonly used by large corporations, nonprofits and government agencies, but they can also be used by businesses of any size. Understand the importance of a request for proposal to see if it’s right for your business.
Importance of an RFP for Your Business
If your business is looking to bring in a vendor to complete a project or solve a business problem, consider using an RFP to find the right solution for your company. There are many kinds of projects where an RFP can benefit your organization:
- Acquire new technology to streamline your business
- Grow your marketing efforts using an agency
- Train your employees on new skills, processes and areas of the business
- Build or redesign new areas of your office space or warehouse
- Integrate new products or services into your business
In order to create an RFP, your business will need to carefully outline the project, figure out what your budget is and establish an ideal timeline toward which you’re working.
Define Your Needs
There are many advantages to using an RFP, both for your business and for the vendor. The main purpose of an RFP is to define your needs for the project you’re looking to complete or the solution you’re looking to bring in house.
The process of writing a request for proposal helps businesses to clearly describe what they are looking for. Sections of an RFP often include:
- Overview of the business
- Details of the problem or project
- Specific requirements you need from the vendor
- Your budget
- Your schedule, including milestones and deadlines
- Questions you want vendors to answer regarding their expertise, experience and qualifications
Having this information up front helps vendors to decide if they are the right candidate for your company. This saves both you and the vendors time because the terms are clearly laid out. Unqualified vendors who do not meet your criteria don’t usually apply, making it easier for your business to select the right candidate.
Find the Right Solution
The importance of an RFP in business is to help your company find the solution for which you’re looking. It’s a critical element that helps your organization as you’re searching for a partner with specific expertise. Businesses that need to solve a problem, such as improving their marketing or branding, for example, put out an RFP so that marketing firms can bid on the project.
The business then sees qualified candidates who know exactly what your business requires. This saves time because the business doesn’t need to sift through dozens of applications and waste time speaking with companies that may not meet the budget, timeline or skills standards.
Keep it Competitive
One of the benefits of an RFP is that the playing field is competitive. Vendors know that other companies are also bidding on your project, so they have to carefully provide a proposal that is competitive in terms of price, scope and timeline. This greatly benefits businesses that put out an RFP because they are able to compare prices, schedules, scope and other criteria from a number of vendors before making a decision.
If you speak with vendors one by one, for example, they may not know you’re shopping around. This could mean they inflate their prices or provide a long timeline to complete the work. However, if vendors are aware that bids are competitive, they will make their best effort to provide you with a price, schedule and scope that they hope will win the contract.
Anam Ahmed is a Toronto-based writer and editor with over a decade of experience helping small businesses and entrepreneurs reach new heights. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing and editing web content for the brand. Anam works as a marketing strategist and copywriter, collaborating with everyone from Fortune 500 companies to start-ups, lifestyle bloggers to professional athletes. As a small business owner herself, she is well-versed in what it takes to run and market a small business. Anam earned an M.A. from the University of Toronto and a B.A.H. from Queen's University. Learn more at www.anamahmed.ca.