Strategy Startups and RFPs. Is it a waste of time?
So you have come across your first RFP as a startup … (Request for Proposal in case you are wondering). Maybe a customer sent it to you after some Google searches or perhaps one of your new sales guys stumbled upon it. Here is a quick lowdown of what you need to know about RFPs for a startup…
What is an RFP?
RFPs are used by bigger companies as a way to formalize the evaluation and purchase of new software. They get the stakeholders together (sometimes from different teams or departments) and list all their requirements typically with a “Required” or “Nice to have” preference. They then determine a strict timeline for sending out the RFP to vendors, answering questions from vendors, receiving completed RFPs back along with pricing, selecting vendors for a demo/trial and ultimately choosing a winner.
Do I get paid for the time/effort to complete the RFP?
No and they will typically take many hours to research and complete (usually 10-50 page document). If you respond to many RFPs over the years, you may even hire dedicated people to respond to RFPs, create template documents to copy and paste answers from, etc. There are even commercial software solutions for helping you to manage the RFP response process!
Is it worth responding to RFPs as a startup?
Probably. They will help you understand what customers are looking for in a product in your space. Pay attention to the “required” features (obviously) but also the “nice to have” features as they will often indicate the direction that your industry may be going. It will be time consuming and you may have little chance of winning the deal but the experience and learning may be worth it.
Track your results! Make sure you keep track of how many RFPs you win or lose … and most importantly why.
Aren’t some RFPs just a waste of my time?
Yes, unfortunately some customers put out an RFP to meet their own requirement to get 3 different bids but they already know who they want as the winner. It is hard to spot these RFPs from others but some warning signs can be:
- Using a particular vendor’s terminology a lot (this can be an indication that they are the favored solution)
- Asking for features that seem to favor a particular vendor
- Not responding when you ask questions to clarify certain requirements
There is a way to get out in front of this problem. Some vendors prepare a sample RFP for their particular space – something that customers can download and edit for their requirements. This is a good way to promote your particular differentiators and win them over to the merits of your solution. If you are already speaking to a potential customer and they need to do an RFP process then having a template can give your solution a better chance in the bidding process.
RFPs are typically pedantic and may be very particular about dates for response, fonts used, spacing and other details. Make sure you treat them seriously and get all the criteria right. There is no point spending all the time to complete an RFP only to miss the cutoff date.