Requests for proposals (RFPs) sometimes present significant revenue opportunities for small and medium-sized businesses (SMBs). The instinct of many SMB owners may be to respond to every RFP opportunity that crosses their desk. However, RFP responses take time and resources, so you should carefully and strategically evaluate opportunities first to determine whether the RFP aligns with your company’s goals and capabilities.

Factors to consider in evaluating an opportunity

When evaluating an RFP, you should examine a multitude of factors to determine whether the time and resources required for a response will be well spent. What follows is a checklist of questions to determine the fit of the opportunity to the organization.

1. Is this prospective client compatible with your target market?

Determine if the prospect and its industry are within your target market. You have a defined target market, and you understand the specific needs and pain points of that target market and industry. If the company does not fall within your target market, or you are not knowledgeable about its industry, you may lack a thorough understanding of its needs. As a result, your RFP response may miss the mark—wasting your time and effort. Also, consider whether your business capabilities match the requirements of the project so that you can deliver a quality outcome. Two other articles in our collection—“Market Research” and “How to Understand the Key Priorities of Large Companies”—may be of further help to you in assessing whether to pursue new opportunities.

2. Do you have existing relationships with the corporation that issued the RFP?

Likely, the prospect has relationships with some of the RFP recipients. Without a relationship, your company will be at a disadvantage. Your time may be better spent building relationships with companies within your target market that may issue RFPs in the future than responding to an RFP from a company whose needs you don’t understand and whose decision-makers you don’t know.

3. Who are your competitors and how well are you positioned against them?

Sometimes, RFPs are issued with a preferred provider already in mind. The language in the RFP itself may indicate this with reference to specific product or service details of the preferred provider. In this case, the RFP may only have been issued in order to meet internal process requirements.

4. Do you have the time and resources to allocate to this process?

If you have not responded to RFPs in the past and do not have an efficient response process in place, you may struggle to meet the deadline with a quality response. Do you have a dedicated team that will manage the proposal process?

Consider whether you have the time and resources to prepare a quality response without negatively impacting your business. If the response is going to take time and resources away from other revenue-generating activities or does not fit into your sales cycle, a response may not be worthwhile.

5. Do you have access to unique expertise?

Often, access to additional expertise can give you a competitive advantage. This may involve access to subject matter experts (SMEs) and additional resources, whether they are internal or external. How would you rate your own qualifications?

6. How good of an overall fit is this opportunity for you?

Consider how well your business offerings match the requirements of the RFP. This should include your product-solution fit, your pricing, your resources to complete the project on time, your experience with similar projects and your ability to provide references from past clients.

7. What is the opportunity cost vs. reward?

After you have evaluated all other factors, you need to determine if the potential revenue from the project is worth the time and resources it will take to create your proposal. Also, based on all factors, determine your chances of winning the project. If winning is a long shot, your time and resources are likely best spent elsewhere.