Every successful business throughout history started off as a solid idea. But rarely has a successful business been just a solid idea. It takes grit and perseverance to get from idea to execution, and oftentimes an original idea changes course multiple times on its journey to becoming a true business.
With that in mind, one thing that most successful entrepreneurs have in common is that they took the time and effort to craft a business proposal.
In this article, we’ll explore what a business proposal is, why business proposals matter, and how to write a winning business proposal.
What is a business proposal?
A business proposal is essentially a detailed document that thoroughly describes the products and services that your business will offer.
The purpose of a business proposal is to create a connection between an entrepreneur or business owner and their potential clients. When done right, proposals help businesses attract investors, clients, and partners.
Attracting investors is an important part of starting a business. It is common for entrepreneurs to need capital to get their businesses off the ground and, often, those start-up funds need to come from venture capitalists or angel investors, who can provide significant investment.
Without a proper business plan, investors will not be willing to take a risk on a new business venture.
In general, a proposal should get specific about:
- A business’s value proposition (in other words, what will attract customers to the business)
- How the business will be different from other competitors on the market
- How the business will solve a problem for its intended audience
What is the purpose of a business proposal?
As mentioned, a business proposal helps an entrepreneur secure funding and establish important partnerships.
Armed with a well-executed proposal, an entrepreneur can:
- Win new projects
- Differentiate themselves from competitors
- Secure funding from viable investors
- Establish partnerships with vendors, clients, influencers, and more
In addition to laying out a plan for external parties, a business proposal can help guide an entrepreneur and their daily operations.
It’s one thing for an entrepreneur to know where they want their business to end up and what their goals are, but it’s another thing to know the steps to take to achieve those goals. Having a business proposal on hand can help an entrepreneur stick to a timeline and work towards their goals in a logical, manageable sequence.
Types of business proposals
There are two main types of business plans to be aware of: Unsolicited business proposals and solicited business proposals. We’ll explain the differences between each one.
Unsolicited Business Proposals
As the name implies, an unsolicited business proposal is one that is sent to a recipient who has not requested it. Think of it as a salesperson making a cold call.
An entrepreneur may send an unsolicited business proposal to several recipients, with the intention of getting something in return, such as funding, a contract securing a partnership, a sale, or something else which will benefit the business.
Solicited Business Proposals
Solicited business proposals are requested by the person or company receiving them. A common way to think of this is when a client submits a Request for Proposal (RFP) to multiple advertising agencies to discover who is best suited to represent their business.
An entrepreneur with a novel product offering or service may be solicited by a company who wishes to break their contracts with existing partners or who is seeking new services.
This is an opportunity for an entrepreneur to make a lasting impression via their business proposal and win a new client.
How to write a business proposal: The key components of business proposals
Entrepreneurs should not take the task of writing a business proposal lightly. Most of the time, this is their first opportunity to make an impression, which could have a significant impact on the success of the business.
Every well-prepared business proposal should consider the following 7 components:
Title page for impact
The title page is the very first page of a business proposal and the first opportunity to make an impression.
This page introduces the business and the business owner (or the writer of the proposal). It includes the company’s name, the proposal submission date, and the name of the person or company receiving the proposal.
This page will set the tone for the entire proposal. Formatting, layout, and design should be considered.
Executive summary: Unveil your purpose
The executive summary should provide a generalized overview of what the rest of the proposal will cover. If the person or company receiving the proposal should only read this section, they should have a clear understanding of what the offer or partnership would entail.
The executive summary should include the benefits of the products or services being offered and how these products/services can potentially solve the recipient’s problem.
In short, the person receiving the proposal will ask themselves, “What’s in it for me?” and the executive summary should clearly answer that question.
Define the problem or challenge
This section should be used to go into more detail about the existing problem impacting the potential partner or client.
If the proposal is meant to secure funds, then this section should include a summary about the general challenge in the market and how the product or service offered will address that challenge.
This section is an opportunity for the entrepreneur to demonstrate that they understand their industry’s landscape and have created a solution that meets the needs of their intended audience.
Present the winning solution
If a business proposal had a money shot, this would be it.
This is the entrepreneur’s chance to make their product or service shine. Describe the solution in detail and how it will impact the person receiving the proposal.
This section should be customized for each recipient, tailored to their specific needs. If the proposal is going to an investor, it should be clear how that investor will profit from their commitment to the business. If the recipient is a potential vendor, this section should detail what that partnership will look like, including relevant deliverables and timelines.
Be specific and detailed.
Showcase qualifications and proof of concept
A proof of concept can be an incredibly influential selling point. In this section, an entrepreneur should walk the walk instead of just talking about the impact they can make. In other words, put words into action.
If the product or service has undergone beta testing, detail the results. If the business owner has already assembled a team, introduce each team member, list their qualifications, and showcase how they will work with the recipient. If funding or important partnerships have already been secured, highlight those relationships.
Recipients of a business proposal want to collect as much information as possible before making a decision to invest, collaborate, or walk away. The business proposal is the best opportunity to lay all the cards out on the table and set realistic expectations.
This section should highlight the cost of the proposed services or products. With a solicited business proposal, it’s often easier to give specific and accurate pricing, since the solicitor will often include parameters such as budget constraints. When sending an unsolicited proposal, it might be better to include more general information with the caveat that specifics will be provided once conversations continue.
At the end of the business proposal, the entrepreneur has the chance to summarize what they’ve offered and make one last case for themselves. In this section, the proposal should reiterate the customer’s problem and how the offered product or service will address their needs.
If the proposal is to act as an initial agreement or contract, then this is where a signature page would go.
Business proposal examples
In the two examples shown above, the person who has prepared the proposals has taken care to showcase professionalism, attention to detail, and creativity. In addition to showcasing the compelling reasons why a recipient should accept a proposal, the document itself is an opportunity to give a sneak peek into the quality of work an investor or client can expect. This is a chance to show sophistication in wording, design, and organization. Though the content itself is most important, the way it is presented can either entice a prospect to learn more or drive that prospect away.
SignNow Business Plan Templates
When it comes to conducting new business or negotiating contracts, every entrepreneur and business owner knows the value of doing business digitally. The pen and paper days of the past are no longer the only viable option for businesses to scale and grow.
That being said, it is incredibly important to choose a trustworthy and reliable digital partner. Especially with something as sensitive as new business contracts, both business owners and clients/partners/investors need to feel comfortable and secure signing a digital document.
SignNow is trusted by millions of people globally to deliver secure, legally-binding eSignatures. And for entrepreneurs just getting started, SignNow offers business plan templates that make creating proposals a breeze. Access a sample pre-made template to get started or create new templates that can be saved, stored, and reused as needed.
Investors business proposals vs. funding business proposals
There is a difference between writing a proposal for funding and investors. A proposal for funding is typically used to obtain funding for a specific project or initiative, and it is often submitted to government agencies or private donors. On the other hand, an investor proposal is designed to attract investment from banks, venture capitalists, or other potential investors.
The main differences between an investment proposal and a business plan are purpose and audience. A business plan considers what the business is selling and why, while an investment proposal focuses on the customer value proposition, the business scalability, the strategic capabilities, the competitive advantage, and its sustainability – all the aspects that will generate and maintain a return on investment.
The ROI component of a business proposal for investors is critical. Investors like to take risks and gamble on new companies – that’s the whole reason they are in the game – but they always want to have a clear understanding of what’s in it for them. How will their risk pay off? How will they benefit if the company is successful? A path to ROI can be the most compelling way to persuade an investor to sign a business proposal.
Business proposal for investors
In this example, a restaurant owner is seeking investors for a new concept in New York. “Investment Proposal” is written prominently on the cover page, immediately indicating the plan’s purpose to the recipient.
In addition to detailed information about the restaurant and how it would be different from others in the area, there is a financial projections section which lets the potential investor know what kind of earnings they can expect should they decide to take a chance on this establishment.
Business proposal for funding
A common way that businesses seek funding from government agencies is through applying for grants. As previously stated, business owners or entrepreneurs may want this kind of funding for a specific project or initiative, as opposed to needing funding for an entire business.
This example is specific to the Green Climate Fund and one particular project. The proposal details financing information, expected performance, a risk assessment, and more.
Best practices for business proposals
Writing a business proposal can be time-intensive and a bit overwhelming, as the stakes are high. Entrepreneurs and business owners should remember the following best practices each time they craft a business proposal:
- Write an outline
- Starting with an outline helps to keep things organized and on topic
- Use data
- Investors, clients, and partners like specifics – they want proof and they want to see numbers so that they can make the most well-informed decision possible. Using specific data is always a smart idea.
- Add lots of visuals to reinforce the message
- It can be hard to read blocks and blocks of text and truly digest the information that is presented; using images is not only visually appealing, but can also help deliver a message in a more impactful way.
- Use a trusted eSignature partner like SignNow
- Anyone signing a digital document or contract wants to ensure that their data is safe, secure, and protected – SignNow adheres to strict industry standard and is easy-to-use
- Conduct thorough research
- When extensive research is done, it shows in the work produced; investors and partners can tell when someone knows what they’re talking about and is as invested in their own product as they’d like someone else to be
- Proofread meticulously
- Grammar and spelling mistakes are sloppy; we are all human, so it’s normal for one or two things to fall through the cracks, but proofreading a proposal more than once is critical in catching unwanted errors
- Be clear and straightforward
- Proposals are not the time for fluff; instead, being direct, informative, and honest can go a long way in building a trustworthy relationship
Business proposals are essential for entrepreneurs who are launching new ideas or who want to grow and scale their current business. Proposals are used to lure in investors, funding, clients, partners, and more and are an opportunity to make an impression on the market.
Without a well-executed proposal, it is nearly impossible for business owners and entrepreneurs to succeed.
All business proposals must clearly demonstrate the business’s value proposition, how they are different from their competitors, and how they will solve a missing need in the marketplace.
Create business proposals that shine, close deals faster, and obtain secure e-signatures by partnering with a trusted electronic signature vendor like SignNow.
- What is a business proposal?
- What is the purpose of a business proposal?
- Types of business proposals
- How to write a business proposal: The key components of business proposals
- Business proposal examples
- SignNow Business Plan Templates
- Investors business proposals vs. funding business proposals
- Best practices for business proposals