The Skinny on Letter of Agreements and Business Proposals: What You Want to Include in them

These days, I have numerous people bringing up the subject of letters of agreement, business proposals, and large-full scale business proposals that consist of capture plans, proposal strategies, and win themes that are intended for government, state, or large corporate submissions.

My post today discusses the first two types of agreements that small and medium sized business owners need to write. The large-scale proposals are another matter entirely, and will not be discussed in this post. I thought I would share my experiences with both letters of agreement and small business proposals (to differentiate them from large scale proposals).

Letters of agreement and proposals are based on an agreement between you and a prospective client. It describes what you expect to be accomplished, the details of how it will be accomplished, when it will be completed, and who the people are who need to approve the completed project.

What’s a Letter of Agreement all about?

Small Agreements

Small projects may not require a full-blown contract, but you want to get all the details in writing.  This is especially good for your current clients where you want to write up the facts to ensure your work is just what they have in mind. It’s key to include all of the important terms and conditions of the agreement. Here are the main items that you want to have:

  • Description of the project and the work you believe needs to be completed. This description outlines the project going forward, and how your client will benefit from the work you will do. Letters of agreement are about your client, and are not about you.
  • Value the project will bring to your client
  • List of specific dates for project start and completion
  • Payment terms, with invoice details
  • Your responsibilities
  • Your client’s responsibilities
  • Your email letter of agreement needs to end with a request from your prospect stating your prospect agrees with all the terms of your letter, and sends confirmation back to you.

Formal Letters of Agreement

Often, it’s important to have a full and encompassing written document from you, the seller, to your prospective customer. Your main purpose is to fulfill the requirements of a client, to include all the fine points of your agreement, and to have all the wording describing the full agreement you and your new-client-to-be have worked out together.

You’ll have the same content as your more informal agreement. Additional sections to include are:

  1. Unanswered Questions.If you feel there is anything that may be unanswered you will want to include that section. For example, you may not know who will be part of the project, and who is part of the review process.
  2. Signatures. Include a section with your business information, and your signature. You’ll need the same for your client.
  3. You may also want to include these definitive statements:

“Either party may terminate the relationship upon providing written notice.”

“The terms of this Agreement are valid for the next xxx days from the date noted on this letter.” (This caveat is helpful for anyone coming back to you in a year, asking for the work to be done at that time. It’s possible you will be unable to do the work at the same price or with the same set of responsibilities).

“This contract can be extended if both parties agree that an extension is desirable.”

“This letter of agreement is a proprietary document and cannot be re-distributed without permission.”

4. Include a section with your business information (name, address, telephone number), and room for your signature, as well as your client’s business information, and their signature.

Formal Business Proposals

At some time, you may get a request for a formal business proposal from someone who has not worked with you before, someone that is not in your immediate vicinity, or for a project that is large and complicated.

You’ll need to consider this proposal as a full-blown effort at writing a document that indicates you are completely aware of the needs and requirement of your prospect. The proposal needs to define and describe your client’s business, and their challenges.  You’ll probably have to do extensive research, and/or interviewing with them before you write your proposal. You also want to be well aware of their competition, and what their unique selling proposition is. See for more about USP’s.

You want the focus of your proposal to be on your client’s business problem and your solution. Your laser beam is going to highlight:

  • the items previously discussed above
  • the solution you will provide with your products and services
  • the business outcome you expect to offer to your client, and the value you intend to your project to bring. It’s crucial to discuss what benefits your client will receive, and not about what you will do for them.
  • The success factors for the project, which can include higher profits, greater sales, higher productivity, increase in business,  or promoting better credibility. Alan Weiss of Summit Consulting goes into some detail in his blog on 6/24/2012 about metrics.  See, “Refresher for Consultants.”
  • Your company profile, which defines your credentials, past projects that are related to the work you will do for your client, and any certifications, awards, or honors you have received. As part of your profile, define your mission and the goals that align with your new customer’s.
  •  Options available for your client. Alan Weiss suggests offering 3 different options.
  •  Testimonials you think will explain your expertise, and demonstrate your abilities are an added bonus.

Tip: Let your letter of agreement or proposal sit for 24 hours if at all possible. You want to make sure you haven’t forgotten anything, and also to re-read it again. It’s amazing to me how often I need to tweak and change a few items because of my carelessness or tired brain before sending these out.

Please share what you like to include in your LOA’s or business proposals!

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