The following is a sample of a written proposal. It is intended to help you understand what one is like. Please note that the analysis in the budget section is suited for this particular proposal, but would need to be different for your writing assignment. Also note that the subheadings in the “Current Situation” section make sense for this sample proposal but probably will not make sense for the proposal that you are writing for the assignment. One approach for your assignment would be to have the budget section take the basic format of an income statement that shows sales revenues, costs, and profits (margin). Be sure to show the total profits (margin) after discounts and allowances for the proposed order. Show profits in dollars and as a percentage of sales.
Ronneez Systems
Proposal for
PRO PRINTING COMPANY
January 3, 2000
Ron Pimentel Account Executive
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EXECUTIVE SUMMARY Through conversations with company personnel, and personal observation, we identified some challenges for Pro Printing Company. Several different information systems operate in the company, each independently of the others. Customers become concerned, and are often lost, when a new salesperson is assigned to a territory. Sales representatives serve as the primary point of contact for customers, but they are often difficult to reach, or are away from needed information. Also, the sales manager has little idea of the activities of the salespeople on a day-to-day basis. Ronneez Systems is proposing an integrated computer system to manage account information, accounting, and production tracking. This will allow for easy access of information to facilitate efficiency and to answer customer questions. The proposed system includes 8 desktop computers, 2 laptop computers, 14 copies of the software, cabling, installation, training, and technical support. The use of the system will result in greater efficiencies, which will enable Pro Printing Company to retain more existing customers, increase sales to both existing and new customers, and increase profitability of all sales. Gross margin is projected to increase by 36% ($594,000) the first year after implementation. It will take less than two months for the increased margin to pay off the initial investment in the system.
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CURRENT SITUATION Pro Printing Company currently has no standardized method for managing accounts. Each salesperson devises his or her own method. There is no integration between the salespeople’s systems, company bookkeeping, and company operations systems. This has created a number of difficulties and inefficiencies for the company. The following is a description of some of these difficulties as determined through our discussions and my observations of your operations. Transitions Although Pro Printing Company has a good record for retaining sales people, difficulties arise whenever a salesperson needs to be replaced in an area. A substantial amount of vital information about customers exists only in the memory of the departing sales person. Additional information may be on sticky notes, or in various sorts of paper files or computer files. As a consequence, whenever a new salesperson assumes a territory, he or she must redevelop much of this information. Many customers find this disconcerting and some switch to other printers at that time. Customer Service The salesperson is the primary point of contact for the customers within his or her territory. Unfortunately for customers, the salesperson is often away from the office, taking care of the needs of other customers. They can often be reached by pager and cellular phone, but they are away from needed information that exists back at the office, such as the current status of a specific printing job. As a result, it often takes several phone calls and a fair amount of time to get questions answered. Sales Management Sales people tend to have independent personalities. They are appropriately focused on closing sales and satisfying customers. Because of this, it is difficult for sales managers to get them to take time to complete needed sales reports, or to attend meetings.
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PROPOSED SOLUTION The answer to many of Pro Printing’s account management difficulties is an integrated system for managing accounts, accounting, and production designed and implemented by Ronneez Systems. We propose the following: 1 central desktop computer for the system administrator 1 desktop computer for accounting 1 desktop computer for purchasing 5 desktop computers with hand-held scanner, one each for pre-press (and production manager), stripping, printing, bindery, and shipping 1 laptop computer for the sales manager 1 laptop computer for each of the five salespeople 14 seats of software (account management, accounting, production management) Cabling and installation Initial training for 16 people Ongoing technical support and training
The System Administrator will manage the system, serve as an inside salesperson, and act as a liaison between the sales manager, comptroller, and plant manager. When a salesperson obtains a new lead, it is entered into the account management system. Brief notes are made about each contact with the lead. As the lead is qualified, the salesperson indicates (by point and click) which of the criteria for qualification are met. Brief notes can be made about those that are not met. The advantage is that there will be easily accessible records of each lead that was ever considered. The benefit is that there will be a reduction in duplicated effort. Other members of the company can access the information, and no one will need to start from scratch with the qualifying process. Once a sale is made, the order is placed using the salesperson’s laptop and then transmitted to the main computer where it is assigned an order number. The main computer transmits the information to the accounting computer to establish an account. Information is transmitted to the company purchasing agent to start the process of buying stock and ink for the job. The information is also transmitted to the plant manager to facilitate scheduling of presses and operators. When the camera-ready artwork arrives, the order number is attached to it. This number is read by hand-held scanners at each point of production (pre-press, stripping, plate burning, press check, printing, bindery). Notes about the project, especially any concerns or delays, can be entered at each point. The advantage is that the current status of every job is available to anyone. The benefit is that when a customer calls with inquiries about the job, anyone can access the information and quickly answer the customer’s questions. These high service levels will improve the customer’s confidence in Pro Printing. When the job is complete, the needed information is received by the shipping department. At the same time, the accounting software generates an invoice.
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When a new salesperson takes over a territory. All the information about current and past customers, prospects, and leads is available in the account management system. The salespeople will schedule their work on the system. The sales manager will be able to access this information in case a salesperson needs to be located, or a meeting needs to be scheduled. At the end of each month, the sales manager can pull up reports of the activities and results of each of the salespeople and have commissions automatically calculated. Essentially, the system will allow for better customer service, greater efficiency, and better control. Companies who have allowed us to help them implement such systems have enjoyed an average increase in repeat business of 30%. In addition, sales to new customers per salesperson has increased an average of 20%. This means that you can maintain your current level of sales with fewer salespeople, but we propose that you increase your sales considerably with your current salesforce. Either way will increase your profitability.
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BUDGET ONE-TIME INVESTMENT Hardware 8 Desk top computers @ $2,100 5 Hand-held scanners @ $75 6 Laptop computers @ $2,400 Cabling and installation Software 14 Seats of combined programs @ $1,800 Initial Training 16 People @ $500 Total ANNUAL INVESTMENT Additional Personnel 50% of the time of one individual as system administrator @ $60,000/year Ongoing Technical Support and Training 12 Seats of combined programs @ $150/year Total ANNUAL BENEFIT Sales in 1999 (last year) To existing customers To new customers Costs in 1999 (last year) For existing customers For new customers Gross Margin 1999 Projected sales for 2000 To existing customers 130% x 2,500,000 To new customers 120% x 1,500,000 Projected costs for 2000 (greater efficiencies reduce costs/sale by 3%) For existing customers For new customers Projected Gross Margin for 2000 Increase in Gross Margin Contribution Margin (594,000-31,800) Payback Period (68,800/562,2000)
$16,800 400 14,400 4,000 25,200 8,000 68,800
30,000
1,800 31,800
2,500,000 1,500,000 1,375,000 975,000 1,650,000 (41.3%) 3,250,000 1,800,000
1,690,000 1,116,000 2,244,000 (44.4%) 594,000 (36.0%) 562,200 0.122 years = 1.5 months
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