What Is a Business Proposal?
A business proposal is a strategic document that presents an idea, product, or service to potential partners or stakeholders. It outlines how your offerings can address their specific needs and provide value. A good business proposal can lead to successful business contracts, partnership agreements, purchase orders, consulting agreements, and bidding opportunities.
Business proposals can be solicited (answering a request for proposal) or unsolicited (started by the proposer). Proposals show that you understand the potential partner’s needs and offer a custom solution. A good proposal is a tool for business development, client acquisition, and relationship-building.
Business Proposal vs. Business Plan
A business proposal targets external parties to secure specific opportunities, while a business plan focuses on company-specific goals.
Proposals persuade clients, partners, or investors to take specific actions, such as signing a contract. On the other hand, a business plan serves as a detailed outline of a company’s strategy and goals. It guides the business internally and attracts potential lenders.
Business owners create simple business proposals when pitching new ideas. They can edit proposals for different clients or projects, but they’re usually for one-time ventures. A business plan is helpful when a company is first starting or wants to grow since the plan will be a roadmap for the company’s future. As a result, a business plan will receive regular updates to reflect changes in market trends or the company’s goals.
Furthermore, a business proposal presents a solution to a specific problem and shows how the business can meet a partner or client’s needs. Meanwhile, a business plan covers broader topics like financial projections and long-term goals.
| Factor | Business Proposal | Business Plan |
|---|---|---|
| Purpose | Persuade a client or partner | Serve as a roadmap |
| Audience | Clients, partners, & investors | Investors and lenders |
| Update frequency | For one-time opportunities | Receives regular updates |
| Level of detail | Less detail | More detail |
| Focus | Specific project | Company overall |
How to Write a Business Proposal
A clear business proposal format helps you present your ideas effectively and explain how your offerings meet your client’s needs. Follow the below business proposal format and refer to the examples to find inspiration and create a polished proposal.
1. Create a Cover Page
Create a strong cover or title page so the client or partner knows where the proposal is coming from. Title the document “Business Proposal” and write the date to provide context. You can specify the type of proposal for greater clarity.
Include your company’s street address, city, state, and zip code. Provide an email address and phone number so the collaborator can easily contact you to follow up with the work proposal.
Example
Greenleaf Cafe
PARTNERSHIP BUSINESS PROPOSAL
December 20, 2024
992 Leonard Street, Suite 400
Seattle, WA 98101
(206) 555-1234
[email protected]
2. Provide a Project Overview
Provide an informative overview of the proposed project. Begin with the names of the document preparer and recipient. Explain how the business will support the partner or client’s goals by:
- describing the products or services the company offers
- stating the challenges they face
- explaining how the business will address their challenges
Conduct research on the specific client or partner to determine their pain points. Tailor your business proposal to emphasize why you’re the right business for their needs.
Example
Prepared by: Greenleaf Cafe, located at 992 Leonard Street, Suite 400, Seattle, WA 98101
Prepared for: John Smith, Partner, located at 422 Scott Street, Suite 900, Seattle, WA 98105
Here’s how the Greenleaf Cafe will support your business growth and goals.
Service/Products Details:
- fresh, organic coffee sourced from sustainable farms around the world
- gourmet sandwiches and salads made with locally grown produce
- seasonal specials and smoothies to attract diverse customer tastes
- vegan and gluten-free options to meet dietary preferences
We recognize the following challenges:
- high competition in the cafe and restaurant industry
- maintaining quality and service consistency across multiple locations
- building brand recognition in new, untapped markets
Here is how we can address these challenges:
- comprehensive training programs for all franchisees to ensure consistency in service
- robust marketing campaigns to build brand recognition in new locations
- local partnerships with community organizations to establish a loyal customer base in each new area
3. Write an Executive Summary
An executive summary is a brief overview of a business proposal. It presents the key points and gives readers a quick understanding of the content and your value proposition. It’s important to make your executive summary enticing and informative, as it will often determine whether the reader proceeds with the rest of the document.
You can also use your executive summary to highlight your company’s qualifications and expertise. Show your past successes to prove that you’re the right business to work with.
Example
Greenleaf Cafe is a top supplier of organic, sustainable cafe products and is ready to grow even more. With over 10 years of experience and loyal customers, we’ve shown we can provide high-quality food and drinks in a welcoming environment. Now, we’re planning to expand into new areas through franchising. Here are some statistics that highlight our success:
- 10 years of successful operations
- consistent 15% year-over-year growth
- proven operational systems and supply chain management
- customer satisfaction ratings averaging 4.8 out of 5 stars
Greenleaf Cafe invites Mr. Smith to join as a strategic partner to help expand into new locations through franchising. This partnership will let us share resources, skills, and ideas to reach our growth goals. By using our strengths, we can create a successful and beneficial partnership. The business proposal outlines market analysis, operation plans, and expected project returns.
Whether you’re writing a partnership proposal or a client proposal, its executive summary will include elements like the company’s background and the document’s goals.
4. Include a Scope of Work
Dive into the details and outline how your solution will address your client’s specific needs. Create an action plan that explains what you’ll deliver, how you’ll do it, and when they can expect results.
Start by describing the solution clearly and in detail. Be specific about what’s included in your scope of services to set clear expectations from the beginning.
You should also include a rough project timeline. Let your client know when key project milestones will be reached. If possible, add projections or measurable outcomes, like how your solution will improve efficiency or solve their pain points. The more detailed and organized your scope of work documentation is, the more confident your partner will feel.
Example
The project will be completed as follows:
- Franchise Location Setup: Site selection and store build-out will be completed within three months.
- Franchisee Training Program: Develop training materials for franchisees within two months.
- Marketing Strategy Implementation: Launch localized marketing campaigns. Initial launch within one month of store opening.
- Franchisee Feedback & Adjustment: Collect feedback from franchisees to refine operational processes. Ongoing.
5. State Your Goals & Objectives
Don’t forget to explain the target market you’re addressing. Highlight who will benefit from your solution and why they’re an ideal audience. This will help the client understand the potential reach and impact of your proposed work. By setting clear goals and objectives, you show that your proposal is focused and results-driven.
Example
The target audiences for the business include:
- urban professionals and busy commuters looking for quality, quick meals
- health-conscious consumers who prefer organic and sustainable food options
- millennials and Gen Z individuals who value eco-friendly brands
The products and services will be marketed as follows:
- Social Media Marketing: Use platforms like Instagram to engage with eco-conscious audiences.
- Partnerships with Local Farmers: Highlight our commitment to local sourcing in marketing materials.
- Loyalty Programs and App: Encourage repeat business through loyalty rewards and a mobile app.
6. Provide Financial Details
A financial proposal outlines costs and potential returns to help your partner understand its value. Start with the big picture—your projected revenue, profits, and key expenses. Include a timeline for breaking even and reaching ROI.
Clearly explain payment structures, such as upfront costs, recurring fees, or profit-sharing. Highlight financial benefits with specific details like annual ROI or profit distribution terms. For instance, “Partners will receive 15% of net profits, paid quarterly.”
Transparency in your financial details builds trust and helps clients see the value of your proposal.
Example
Below is a detailed outline of the proposed pricing information and payment terms offered by Greenleaf Cafe:
The company expects to make $2,500,000 in yearly revenue and $400,000 in net profit. Fixed costs, including office space and equipment leases, are $5,000 monthly. Regular monthly expenses are around $50,000, covering employee salaries, inventory, and other costs.
As a partner, Mr. Smith will get 15% of the net profits as described in the partnership agreement.
Detailed Financial Proposal:
- Initial franchisee investment per location: $250,000.
- Estimated break-even point per location: 12 months.
- Projected ROI per location: 20% annually.
- Franchise fees and royalties: 5% of monthly revenue.
7. Provide Terms & Conditions
The terms and conditions section outlines the rules and expectations to prevent misunderstandings. Define the relationship’s scope, roles, responsibilities, decision-making, profit sharing, and support.
Include operational details like timelines, confidentiality, dispute resolution, and consequences for unmet obligations. For partnerships or franchising, address investment, shared responsibilities, and ongoing support. Clear terms build a solid foundation for the relationship and ensure the parties’ alignment.
Example
This business proposal outlines the terms of the agreement between Greenleaf Cafe and Mr. Smith. Both parties agree to the terms in the business proposal and act accordingly.
☑ (Check if applicable). Greenleaf Cafe and Mr. Smith agree to the following:
- The partnership will define each person’s roles and profit-sharing methods.
- Both partners will collaborate on strategic planning to support the franchise expansion.
- Greenleaf Cafe will assist franchisees with operations, while Mr. Smith will provide insights.
8. Collect Signatures
You can sign the document as the proposing company or individual. Allow the proposal receiver time to review the document before signing. Depending on the proposal’s terms, signatures may lead to the start of work or funding.
Tips for Writing a Strong Business Proposal
If you’re wondering how to draft a business proposal for a new venture, you’re in the right place. Crafting a strong business proposal for clients can unlock new opportunities. Below, we’ll share helpful tips for creating a compelling business project proposal.
Stay Consistent
Keep your messaging clear and consistent. Highlight the reliable services your company excels at. This way, you can focus on explaining your value without overpromising.
Make Your Proposal Clear and Succinct
Keep your proposal professional and focused. This approach allows you to highlight what you offer and have your message take center stage.
Personalize Your Proposal
Research your proposal’s recipient to understand their unique challenges and needs. Personalize your proposal to show how your solution addresses those issues. This way, you can stand out from your competitors and explain how you prevail.
Conduct Quality Control
Before you send your proposal, you can check that it:
- meets the recipient’s needs and expectations
- includes your value proposition
- is easy to read/skim
- complies with regulatory, ethical, and legal requirements
Incorporate a Call to Action
Include a clear call to action (CTA) to guide the reader through the next steps. A well-placed CTA helps ensure that your proposal leads to action. The action may be signing an agreement or getting in touch for more details. Your desired CTA depends on your proposal’s nature, so ensure you know your end goal before writing it.
Add a Table of Contents
If your proposal is long, a table of contents can make it easier to read and organize. It helps readers find important sections quickly, saving them time. Plus, this addition makes your proposal look more professional.
Other Documents Related to a Business Proposal
A business proposal is the first step in attracting a party’s interest in a company’s services. It serves as a one-way communication from the proposing party, giving the recipient the opportunity to respond. If the proposal is persuasive, it may lead to the creation of a letter of intent (LOI) or a memorandum of understanding (MOU).
While neither an LOI nor an MOU is legally binding unless explicitly stated, they serve different purposes. An LOI is generally a more formal expression of intent. It outlines the key terms of a potential agreement and sets the foundation for detailed negotiations. On the other hand, an MOU is typically less detailed and acts as a preliminary agreement. It provides a roadmap for future collaboration between the parties.
Sample Business Proposal Template
Explore a simple business proposal template to guide you in crafting your own. This template helps you structure your proposal and present your ideas with impact.
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