UPDATE: This business proposal post was first published on 4 June 2019 and updated 27 May 2022.
Business is all about persuading someone to purchase the product or service you’re offering. In some cases, that means you’ll need to write a business proposal that is compelling enough to convince your prospective client to buy from you.
Most people starting a business don’t know how to write a good business proposal. In fact, far too many imagine some document of hundreds of pages, thinking this the only type of business proposal that exists.
A business proposal is a document that persuades an investor or prospective client to work with you.
Many business proposals are produced as a result of a Request For Proposal (RFP), which often means that you have a list of high points your proposal should hit.
Today I’m going to show you how to gather the information you need to write a good business proposal and then what the four key sections of a winning proposal are.
4 things to put in your next business proposal
Here are the four sections that every effective business proposal includes at a minimum.
- Current problem.
- Project goals.
- How will we gauge success?
- Options and timeline.
Before we jump into the elements of a good proposal, let’s talk about the crucial first step that too many overlook.
Get the information you need
One of the first mistakes that many business owners make is to assume that an RFP has every detail they’ll need to generate a winning proposal. While an RFP may have decent technical detail, it’s often missing the root problem the purchaser is trying to solve.
One RFP I received was thick with technical detail, but when I got on the phone with the prospect to talk more about their needs, I realized that the big problem was all the manual work their website currently took. Armed with the knowledge that automating basic tasks would be valuable to them, I was able to build a winning proposal.
Never take an RFP at face value. The first thing you need to do when faced with an RFP is to get on the phone with your prospect.
Always find out who the purchaser is so that you can talk directly to them. Usually the purchaser of a project is going to be the one who has control of the budget, so make sure you’re talking to someone who could approve the project right now. If there is a committee that is making the decision about the purchase, there is almost always a single person that has the most pull. Make sure you are talking to that person before you write your business proposal.
Your initial conversations are about building trust with the prospect because people purchase from other people that they trust. If you just fire off a business proposal based on an RFP, don’t expect to have a very high success rate.
The parts of a good proposal
Many of the articles you’ll read on writing a good business proposal will wax poetic about your introduction … and they’re right because most businesses don’t spend time digging in deep with their prospects. That’s not you though, because you followed my advice above and got to know your prospect.
Nothing in your written business proposal should come as a surprise to your prospect.
They should know what you’re going to do and about how much it will cost and how long it will take. If you think there are potential bombs in the business proposal you’re going to submit, then you haven’t spent enough time talking to your prospect.
Once you know there are no surprises, you’re ready to write your business proposal. A winning proposal should have four main sections in it.
1. Current problem
The first section of your proposal should describe the problem that your customer has. Not the technical details, but the problem that you will be solving.
For the client I referenced above I spent time talking about how much manual work was currently being done. I described each step of his most painful and time- consuming processes with the goal of showing that I understood what was wrong.
This is why I record the conversations with my customers (with their permission). When it comes to writing the proposal, I can refer back to them and use their language to describe their problems.
2. Project goals
The second section is all about showing your prospect that you can bring them a future that doesn’t have their problem in it. This is not a long list of everything you will do, but a description of the amazing outcomes that your work will bring to their business.
Again, going back to the client that had all the manual site work; I talked about how the new system would take away a bunch of mindless administrative tasks that they currently had to deal with.
3. How will we gauge success?
Part three is all about taking the dreams of part two and showing how you’ll realize them using numbers. If you’re automating a bunch of tasks for a client, then talk about the hours they’ll save.
Remember, you should have discussed this already. Your prospect should have verbally agreed that they’ll save 10 hours if you automate a task. They should not look at your numbers and think you’re crazy, they should remember the deep conversation you had when you both came up with the amount of time saved.
4. Options and timeline
The final section of a good proposal is pricing and timelines. It’s generally best to include three options for pricing with their corresponding timelines.
Option No. 1
The first option should be the base project, with everything they need to move forward. If you’re building an eCommerce store based on WordPress, that means option one includes the store, not just WordPress.
Option No. 2
Your second option should be the base items plus a few of the extra things that your prospect thought it would be nice to have. This is possibly their “ideal” solution
Option No. 3
Your final option should have something aspirational in it. For my client who was doing manual work, I found three other things to automate that weren’t even on the RFP.
That meant I quoted about 10% above the maximum budget the client had for the project. They took my third option because it spoke to the root pain they had with their site. This extra work was the most profitable part of the project for me.
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Types of business proposals
One way to become efficient at creating business proposals is to have a solid grasp on the various proposal types.
Once you create a few, writing a business proposal becomes second nature.
You’ll instantly know what needs to be done — and the idea of creating one becomes a little less intimidating.
There are five different types of business proposals:
- Formally solicited
- Informally solicited
Let’s break down what each type means so that you have all the information you need to create an amazing proposal.
Formally solicited proposal
You’re probably most familiar with this type of proposal. It’s the most common, after all. The good thing is, it’s also the easiest to write because the company seeking proposals knows exactly what they’re looking for. In their request description, they tell you exactly which details to include.
Think of the formally solicited proposal like a job application where there are parameters.
The client has a clear set of expectations. These details are included in the company’s request for proposal (RFP).
While every RFP is different, there are some commonalities, such as details about:
- How your company can provide services the client needs
- Projected costs and delivery dates
- Value-added benefits your company can provide that may go above and beyond what the RFP is seeking
One of the biggest fears people have when writing a business proposal is that they’re going to miss critical criteria. Formally solicited proposal requests often include an outline to guide your proposal creation process. If you follow the instructions, you won’t miss a beat.
Informally solicited proposal
There’s one key difference between the formally solicited proposal and the informally solicited proposal, and that’s the outline. When a solicited proposal is informal, it means that the client is keen on what you have to offer but hasn’t specified the framework for the proposal in an official document or a carefully crafted RFP.
In most cases, the client isn’t indicating what their needs are, so it becomes a bit of a guessing game.
You’ll need to roll up your sleeves and do extended research to identify what problems you could be solving for the client.
Don’t let the ambiguity deter you. Think of it as a creative challenge where you can show the client:
- Who you are
- How your company performs
- The breadth of everything you have to offer
It’s your chance to stand out – to shine. So, shine brightly as you try to convince them that your project proposal idea is the perfect fit.
If you’re at the stage where you’re writing a continuation proposal, congratulations! Your proposal was selected by the client, and you’ve been granted approval to proceed with the work.
There may come a time when you need to send a reminder to your client, or maybe the scope of the work has changed, and you need to request permission to continue with the project.
You’re letting your client know what you’ve achieved thus far in your relationship, and then asking for the project to be continued.
It’s important to note that this proposal could become a little more challenging to write if the client requests major changes to your agreement and you’re tasked with expanding your services or modifying your costs. Sometimes a client’s budget shrinks, and your original strategy is no longer sustainable.
Either way, you’re writing a continuation proposal because you want to continue working with your client, and that’s a beautiful place to be. Focus on the positives in your relationship and everything you’ve accomplished.
Projects come to an end. Some, sooner than others due to scope and immediacy. When you wrap up a project with your client, you’ve nailed all the deliverables, and the client is satisfied with the outcome, you may feel like your company has so much more to offer. The project may be complete, but over the course of your partnership you’ve seen the potential for what the project can become.
You may decide to put a little more on the line and embark on the renewal proposal process.
The goal of a renewal proposal is to convince the client about why you should continue working together.
This is where you highlight your achievements and convince them about the added benefit that will come from continuing to work together.
Let’s say you’re halfway through delivering on a project and you discover that you need more resources.
This happens in the construction sector all the time. Extra people may be needed to build infrastructure faster or certain materials become scarce and acquiring rare items puts strain on the budget. Or inflation happens, and your original cost projection is impacted by global matters that are beyond your control.
With a supplemental proposal, you’re making a case for extra project resources and justifying why these resources are critical for a successful delivery.
This will most likely result in you updating your estimate and being fully transparent about what’s needed to complete the project by the established deadline.
Think of it as a professional courtesy. Your client will be happy that you’ve brought forth the challenges and are proposing a plan to resolve the issues.
If you don’t act, it could cost you money, time and resources that would impact your bottom line.
A few business proposal templates to download
Many companies hire a freelance designer to put their proposal together, but if you’re working on a shoestring budget and are looking for templates, Microsoft Word and Google Docs have templates built into their platform. You can also select templates via PandaDoc or Canva.
Business proposals explained
If you take the time up-front to get to know your prospect and understand their problems, then you’re setting yourself up to write a winning business proposal. By restating their problems, showing them the dream of your solution, and then grounding it in numbers they agree with, you can win more projects.
Ashliegh Gehl contributed to this post.
Frequently Asked Questions
How do I write a business proposal?
Every business proposal is composed of common sections which include the following:
- Branded to your company (including your logo and your business colors), this page is often the client’s first impression. Make sure your title page pops and catches the client’s attention.
Table of Contents
- A high-level overview of everything the proposal includes and page numbers connecting to specific content.
- A concise introduction about your company. This includes company history, achievements, mission, vision, and values, and any important goals or milestones.
The Problem and The Solution
- Briefly outline the client’s problem and why you’re the best company to help them find a solution.
- If your company has experience in this area, explain how you have helped other companies solve a similar problem.
- Outline exactly how you’ll tackle their problem, incorporating specific detail about your strategy and methodology. Your approach makes you unique.
- Project management is a critical skill and one that clients like to see demonstrated in a business proposal.
- Outline the project’s timeline to the best of your ability and the key benchmarks you’ll hit throughout the project’s journey.
- What do you need to complete this project?
- Explain the resources you need to solve the client’s problem and meet the deliverables in the timeline.
- Be fully transparent and break down the costs for this type of work.
- Each cost would be its own line item.
- Provide them with payment terms so they’re aware of how your company would like to receive payment.
Terms and Conditions
- Summarize everything you’re promising.
- Outline your process for communicating challenges.
- Be clear about the client’s responsibilities.
Acceptance, Actions and Contact Info
- Should your company’s proposal be selected, what are the next steps? In this section, outline how you’d move beyond the proposal and into your working relationship.
- Describe any actions that you’d like your contact to take if they proceed to work with you.
- Include spots for signatures, should the client choose to sign-off on the proposal.
- Add contact details so their team can connect with you should they have more questions about your proposal.
How do I find out who to submit the proposal to?
Depending on the size of the company, the potential client you’re approaching may have a procurement department. If you can’t find these details on the client’s website, contact the administrative assistant to learn who the best contact would be for your proposal.
What is a request for proposal (RFP)?
An RFP is a document a company issues when they’re seeking specific products or services. An RFP says they’re open to receiving bids and outlines how those bids will be evaluated.
This is usually the first step in a procurement process – which is an open call for bids – and then it’s narrowed to a shortlist until the contract is awarded.
Where do I find RFPs related to my business?
What’s a request for quote (RFQ)?
Companies issue an RFQ when they know what they want but need to collect more information about requirements and any associated costs.
An example of this would be a company that’s seeking to have a video produced or marketing materials created. They know exactly what they want but need to understand production timelines and the resources necessary to create an ad for television.
In some cases, the companies giving a quote will include the price for buying the ad space.
What’s a Request for Information (RFI)?
Potential clients issue an RFI when they’re seeking additional information about your products or services. This is before they issue an RFQ or an RFP. Think of it as a discovery stage where they’re wanting to learn more about you.