What Is a Business Proposal and How to Create One?

What Is a Business Proposal and How to Create One?

Deskera
Deskera
Table of Contents
Table of Contents

A well-written business proposal can often mean the difference between making or breaking a deal with a potential client. It’s extremely important that you create a proposal that is engaging, clear, informative, and properly outlines your values as a business.

But, how can that be done? What different types of business proposals are there and what do they need to include? How long should a business proposal be, and when should you send it?

That’s exactly what this guide will be covering, along with everything else you need to know to write a business proposal that closes deals, and wins over loyal clients.

Read on to learn more about:

What Is a Business Proposal?

By definition, a business proposal is a formal document that suppliers send to potential customers in hopes of securing a business agreement or winning a project.

Usually, the aim of a business proposal is to answer the following questions:

  • Who you are and what does your business produce?
  • What’s the problem or need your buyer has?
  • What solution can you offer to mitigate the clients’ problem?
  • What steps will your business take to implement the solution effectively?
  • What’s the estimate of the costs and resources required to offer the solution?

Business Proposal vs Business Plan

A business proposal is often considered or confused with a business plan, yet, the two couldn’t be any more different. While a business proposal is a focused sales document that aims to solve a prospective client’s challenges, the goal of a business plan is to outline your business’ vision, and the steps you’ll be taking to achieve that vision.

A business proposal will include details about your project, what services and products you’ll deliver, the costs of delivery, and completion dates and timelines. Whereas a business plan is a way broader document that encompasses your business model, financial projections, and marketing strategy.

If you don’t know how to get started with your business’ marketing, head over to our small business guide for 75+ marketing ideas for 2021.

Types of Business Proposals

We divide business proposals into two main types: unsolicited and solicited.

1.  Unsolicited

The goal of an unsolicited proposal is to introduce a new product to a client. You want to outline why they need the product or service that your business is offering - your client hasn’t anticipated, planned, or asked for the proposal. So, the budget for it hasn’t been set aside yet, and you’ll be indirectly catering to a customer’s needs.

Before making an unsolicited business proposal, you must first determine whether your customer accepts them. Some businesses accept and evaluate them on a regular basis throughout the year. Others set submission deadlines and publish timetables detailing when they acquire and review unsolicited proposals. Typically, these insights are published on your client’s company website.

What’s important to remember about unsolicited proposals is that they’re not anticipated, so you need to put in an extra effort to capture the interest of your lead. You’ll need to figure out an attractive and innovative way of presenting the customer with their needs, and the corresponding solution your business offers.

If you want to learn modern and powerful sales tactics you can use to effectively nurture leads, and close deals faster, check out our guide on proven sales tactics for your small business.

2.  Solicited

Solicited business proposals are created when customers themselves request a proposal. They announce their requirements to you verbally or through media outlets. Usually, these types of proposals come with formatting instructions, selection criteria, and pre-made descriptions of what the client wants.

We divide solicited proposals into three main categories: Invitation For Bid (IFB), Request For Proposal (RFP), and Request For Quote (RFQ).

An invitation for a bid is a call to contractors and suppliers to submit a proposal for a specific good or service. Similar to all other calls for bids, an invitation to bid is usually granted to the contractor who offers the lowest bid.

With a request for a proposal, the client doesn’t clearly know what solution they’re looking for. The client announces a project, describes it, and solicits bids from qualified contractors to complete it and apply.

A request for a quote is a demand for a sales quote; the customer needs to find and choose the best pricing of the product or service that they’re looking for.

How to Write a Business Proposal (Step-by-Step)

Before beginning to write your business proposal, it’s important that you understand the business you’re writing to. If they’ve sent you an RFP, make sure you thoroughly read it so that you address exactly what they’re looking for. It can also be beneficial to have an initial phone call or in-person meeting with the potential client to ensure that you’ve fully grasped their issue.

Once you’ve completed your research, you can begin writing your business proposal.

Although there’s not a one-size-fits-all approach to every business proposal (considering the different types of proposals, and customer desires), we’ll be taking a look at some of the elements a proposal usually includes.

1.  The Title Page

You only get one chance to make a good first impression, and with business proposals, that’s your title page.

A title page is where you introduce yourself and your business. A compelling title page could make the difference between the client opening and reading your proposal, or stacking it on top of the pile of unread proposals that will be thrown away.

So, consider placing a few visuals and graphics to set the tone for the rest of the proposal. With this being said, don’t go overboard with complicated designs and logos on this page. Stick to a simple and familiar design that’s soothing to the eye and incorporates your brand colors.

As far as the title page content goes, some important elements you should always incorporate include:

  • Your name and your business’s name
  • The name of your potential client, or their business
  • The date when you’ve submitted the proposal

2.  Table of Contents

Creating an accessible and well-organized business proposal starts with the table of contents (ToC). A ToC will let your client know exactly what to expect from your business proposal, and where each section can be found.

The element isn’t always necessary, but it can make the proposal much easier to read, as it will be passed around to all stakeholders and other appropriate parties.

Pro Tip: If you’re sending the proposal virtually, you can create a clickable table of contents. This way, the client can easily revisit different sections of your proposal without having to navigate through multiple pages.

3.  Executive Summary

The executive summary is the section of a business proposal, where you introduce yourself and summarize the contents of future pages, before diving into the project specifics.

The goal of the executive summary is to sell your solution to the customer’s issue. It should be persuasive, specific, focused on results, and outline why your business is the right choice for the customer.

Here are some components of a good executive summary:

  • An eye-catching and compelling opener. This can be done by putting the focus on the issue and the solution, in a direct and concise manner.
  • Demonstrate your industry experience. Include personal research, or a case study from your business’s experience, dealing with a similar situation or issue. Outline how the client would benefit from your solution to their issue - what will change, and what are some positive outcomes.
  • Talk about the solution. This is where you give an overview of the solution you’re proposing, and why it will work.
  • Discuss your implementation. In a paragraph or two, describe how the benefit or solution will be delivered to the client. Answer questions such as “What technology is being used?”, “How many members are on the production team?”, “Who is coordinating and leading the process?”
  • Explain why you want to work with them. A little flattery can go a long way into bringing a client close to a sale. Talk about their potential as a company, and how, as partners, you will lead a road towards success.

4.  Problem Statement

Now it’s time to state the exact problem that your prospective customer faces.

In this section, research, critical thinking, and extra analysis are key. You need to show that you’ve done research on their business and their issue, and even try to anticipate their questions by pointing out problems your client might not be aware they have. Then, develop an urgency for a solution - one which you can and will provide.

5.  Proposal & Solution

The proposal and solution section dives into the specific, custom-made solutions your business has drawn up for the prospective client. This can also fit onto the problem statement, but if you have a more comprehensive solution or prefer to get into specifics, a separate proposed solution section can be a great idea.

Feel free to provide as many details as possible about the solution you will provide, how you intend to implement it, an approximated timeline for when they can anticipate your solution, and any other useful information.

6.  Pricing

Transparency is key when it comes to pricing. You need to create a pricing table that classifies each product or service and pair it with the most reliable pricing estimation you can provide.

More specifically, your pricing table can include headers such as:

  • Name of product/service
  • Item price
  • Quantity
  • Subtotal for each item line
  • Ending total

If you charge hourly, the quantity line becomes the estimated number of work hours at a predetermined price rate. Whereas for recurring payments, you’ll need to schedule your pricing table in a way that corresponds to your monthly workload.

7.  Share Your Qualifications

No business proposal is complete without proof of your past successes, awards, and jobs well done.

Otherwise, your customer won’t be able to trust you with their issue or feel that they’ll be in good hands. It’s your job to highlight your authority and nurture them into purchasing.

This can be done by mentioning your years of work experience, awards, accreditations, client testimonials and success stories, and/or short case studies.

If you want to learn how you can build trust, arouse curiosity, and build credibility with your customers, check out our guide on sales psychology for tips on understanding customers in 2021.

8.  Terms and Conditions & Signature

Disclaimer: if you’re simply sending a business proposal with the purpose of providing an estimate of costs or to familiarize the customer with your service, then skip this step altogether. Adding in legal language and/or a signature box can turn the document into a legally binding contract, which may not be what you’re looking for at the moment.

However, if you’re ready to start working immediately, and don’t want to further negotiate the terms of the contract, then it’s acceptable to include terms & conditions, and an acceptance space.

The terms and conditions in a business proposal are similar with the seat belt to your car ride, the helmet to your motorbike, and the cover to your iPhone. Without them, you’re legally unprotected in case a client underpays you, refuses to pay, requests more products than agreed to, or faces any other potential issues.

More specifically, some of the basic elements you need to make sure to address in your terms and conditions include:

  • Project timeline from start to finish
  • Payment methods and payment schedule
  • The specifics of what is/isn’t included in the project or service
  • Overview of liabilities and other legal points

When writing these terms and conditions, consider consulting with a lawyer to ensure no critical points are missing, and that you’re following the laws in accordance with your particular country or state.

After you’re done with the terms, add in a small section for the acceptance.

Include as many approval signature boxes as the proposal requires, and make sure to also add your contact information in case of any issues or questions.

7+ Tips for a Great Business Proposal

#1: Go Visual

To keep your reader engaged, consider including visuals such as photos of your work, infographics, charts, team member headshots, bulleted points, and whatever else feels appropriate for each section of the proposal.

One more thing you can do to make your business proposal appear more reliable is writing it on your business’s stationery, which includes your official business logo and brand colors. You can also number all of the pages and mark them as "confidential".

#2: Include Numbers and Qualitative Data

Instead of simply stating that your customers are happy or that you offer the best service in the market, incorporate measurable results to catch the customer’s eye and earn their trust.

“We’ve helped over 300 companies increase their sales by 45% up to date” is more compelling than simply stating that you’ve helped many businesses grow.

#3: Incorporate Video Proof

If you’re sending the proposal electronically, through email, or on social media, you can include video footage to enhance the experience. You can add a video at the beginning as an intro, or on specific parts of the proposal that may be more confusing to the client. It will make the document appear richer, engaging, and you’ll stand out from the competition.

#4: Keep Things Clear and Simple

There’s no rule of thumb regarding how long a business proposal should be. What’s important is that it conveys all of the information you want to get across, and answers every request and question your customer has asked for.

This said, try to focus on quality over quantity. Keep sentences short, simple, straightforward, and don’t get carried away with fancy business jargon. Try to avoid using humor. While it can create a relaxed and casual environment in conversations, humor may be misinterpreted or appear offensive on paper.

It’s also important that you walk the client through the next steps, and how they should proceed in case they want to accept the proposal. If you fail to do this, they might end up scrabbling around the papers wondering what happens next, or will have to email you for more information.

For example:

  • Step 1: Sign in the signature box by typing your name.
  • Step 2: Pay the deposit on the next page (an invoice will be automatically sent to you).
  • Step 3: We’ll keep in touch to book your consultation.

Now the client won’t be in the dark about what steps come next, and your business can close deals right away.

#5: Always Follow Up

After you’ve completed your proposal and sent it over to the customer, it’s critical to have a follow-up plan for them. This could be done in the form of a call, meeting, or email, where you go over the proposal with them and answer any questions or uncertainties they may have. Give them a few days before following up, though, so that they have enough time to read through the proposal from top to bottom.

#6: Read, Read, and Re-Read

The language you use in your proposal is a reflection of the quality of work that your business will provide in the future. If it’s full of typos, spelling, and grammatical mistakes, or the use of language sounds sloppy, it’s unlikely that they’ll accept it. So, be sure to proofread and double-check each section before you send it.

#7: Customize Your Pitch

Even if you’re sending an unsolicited business proposal, it’s important that you customize your sales pitch to the customer and their particular needs.

After you’ve qualified them, and determined they’re a fit for your buyer persona, tailor the proposal based on the data gathered throughout the lead management process. Try to figure out the problem they’re trying to solve, when they expect to see results, what their budget is, and everything else you need to know to create a full and personalized proposal.

A great way you can automate your entire sales process, and easily tailor business proposals to each customer and their buyer’s journey, is by using Customer Relationship Management (CRM) software like Deskera.

Deskera CRM is an intuitive software designed for startups and small business owners that can help you smoothly run your sales, in a matter of minutes. With Deskera you can manage your customer data across various channels, get real-time insights with automated reports, generate new prospects through email campaigning, and so much more - all in one integrated dashboard.

And you can even give the software a try out right away, by signing up for our completely free trial. No credit card details necessary.

Want to learn how to qualify leads and make sure you’ve investing resources on the right buyers? Then, give a read to our guide to sales qualification for more.

Key Takeaways

And that’s a wrap! The tips and steps mentioned throughout the guide will help you write a business proposal that turns leads and prospects into paying, recurring clients.

For a quick recap, here’s a quick review of what we’ve covered:

  • A business proposal is a formal document sent to a potential customer, that aims to convince them into buying from you, or to accept a project offer.
  • There are two main types of business proposals you can create: solicited and unsolicited ones. With solicited proposals, the customer asks for a specific project, whereas with unsolicited proposals you’re the one introducing the product to them.
  • The main elements of a business proposal include:
    • A title page with your business’s name, your client’s name, and the date of the proposal
    • A table of contents for easy navigation
    • An executive summary that sells the solution and gives an overview of your company
    • The problem statement and other issues the client may face
    • The specific, custom-made proposal and solution
    • Pricing details such as price per unit, quantity, and subtotal
    • A listing of your qualifications to build trust and boost your authority
    • Terms and conditions, in case you’re immediately ready to start the project
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