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Business Proposal or Business Plan – Which Document Do You Need?

business plan vs business proposal

Most people use the words business plan and business proposal interchangeably, clearly think the two documents are the same. Although they have similar characteristics, they are very different documents. They can help you grow your business in very different ways.

A business proposal is usually used as part of your sales process to new clients who accept or reject your proposal. 

A business plan is a written document detailing a company’s marketing and management objectives and strategies, typically concerning an established goal or organisation structure. 

Let’s dig into the details.

What Is A Business Proposal?

The purpose of a business proposal is to submit a bid for a project or a continuous service. Most of the time, this is for a new client where you havent established a business relationship.

A business’s proposal is often in competition with bids from other similar companies. Therefore the purpose of a business proposal is to highlight your company’s unique selling point (USP) to differentiate from the competition.

Your unique selling point could include demonstrating how you’ll save your prospective clients time or money or even help them make more money.

Many service-based small businesses rely on proposals to sell their services and bring in new work. A business proposal is sent from a service provider to a potential client to win a specific project.

Types Of Business Proposal

Business proposals can be  solicited  or  unsolicited .

Solicited Business Proposals

Solicited business proposals occur when a company or organisation explicitly requests service providers’ proposals. This could be done verbally, via email or formally through a “request for proposal” (or “RFP”) document.

An RFP outlines explicitly what product or services the company requirements and will set a deadline for proposal submissions. They may also invite the business to offer unique solutions to complete the project.

An RFP means that the potential client is actively seeking a supplier. The service providers job is to write a proposal that helps them choose your business by showing you understand their requirements and provide unique solutions.

Vendors responding to RFPs should always follow the buyer’s preferred, stated format with the proposal. Common elements requested, which can also be used in unsolicited proposals, often include:

  • Cover letter
  • Executive summary
  • Table of contents
  • Overview or summary of the problem or need
  • Strategy or approach to solving the problem
  • Representative tactics
  • Company qualifications

Unsolicited Business Proposals

An unsolicited proposal is when a service provider sends a company or organisation a proposal highlighting the services they offer and how they can solve a particular problem. This is very similar to a sales presentation and has a lower success rate because you have no idea if the company is seeking a solution.

What Is A Business Plan

A business plan documents the roadmap to start a new business or grow how to an existing one. A business plan outlines the business goals and details how the business will achieve them. This includes what market you are going after, as well as how much funding it’s going to take for your company to survive until it can become profitable. 

While a business plan is primarily for internal purposes, it may also be presented to investors and lenders to help raise funding for your business.

All businesses should have a business plan. It is an essential document that provides a description and framework of your business’s future. 

At its most basic, your business plan outline should explain what you intend to do and how you will do it. It would help if you outlined your strategies across the business, including financial projections, marketing and operational plans.

Contents Of A Business Plan

Typically, the business plan structure contains the following ten components:

  • Executive Summary
  • Business Description & Overview
  • Market Research & Analysis
  • Customer Analysis
  • Competitive Analysis
  • Marketing Strategy & Plan
  • Operations Plan
  • Management Team
  • Financial Projections & Plan

A business plan is recommended to be updated annually to adjust for changes in the industry trends and the business itself.

Types Of Business Plan

Startup Business Plan

Startups should detail their first steps with a startup business plan. This document typically includes sections describing the company, the product or service your business will supply, market evaluations and your projected management team. 

A startup business plan should answer two primary questions about a proposed business venture: who, if anyone, will purchase the service or product a company wants to sell, and if the venture can turn a profit. 

Startup business plans include but are not limited to sections describing the need for the product or service, target demographics and required capital. A feasibility plan ends with recommendations for going forward.

Potential investors will also require financial analysis with spreadsheets describing financial areas, including Sales Projections, Profit & Loss, Cash Flow Forecast and a Balance Sheet.

Internal Business Plan

An internal business plan targets a specific audience, such as the marketing team evaluating a proposed project. This document will describe the company’s current state, including operational costs and profitability, then calculate if and how the business will repay any capital needed for the project. 

An internal plan specifies implementation markers and deadlines for the coming year. Internal plans provide information about project marketing, hiring and tech costs. They also typically include a market analysis illustrating target demographics, market size, and its positive effect on the company income.

Strategic Plan

A strategic business plan provides a high-level view of a company’s goals and how it will achieve them, laying out a foundational plan for the entire company. While the structure of a strategic plan differs from company to company, most include five elements: 

  • Business Vision 
  • Mission Statement
  • Critical Success Factors 
  • Strategies For Achieving Objectives 
  • Implementation Schedule

A strategic business plan brings all levels of the business into the big picture, inspiring employees to work together to create a successful culmination of the company’s goals.

Key Differences Between Business Plans and Business Proposals

A business proposal is essentially a sales document. The sales team typically work with the customer to tailor an attractive business proposition to both parties in a business proposal. This usually comes in a written document detailing the services and costs of fulfilling an offer or request,

A business proposal may include more service details. It does not include information about the company’s operations or future plans outside of the specific project. 

In contrast, a business plan describes your company on the executive and operational levels aimed at investors to raise financial support or other stakeholders to facilitate long-term growth. For example, an investor will want to know how different departments within your business interact with one another. 

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Boxlight Electronics Business Plan Proposal Outline (Term Paper Sample)

As an entrepreneur, you want to start a business. You know that the first step is to consider drafting a business plan proposal to organize all of your ideas. For this assignment, you will be submitting a business plan proposal outline for your imaginary business. For research purposes, you can choose any state for the location of your business. Your business plan outline should include the following: Introduction of the proposed business (200-300 words) Description and explanation of the type of business entity that is best for your business (200-400 words) Your business should be a partnership, corporation, or another type (For this assignment, you should not choose a sole proprietorship for your business entity.). Provide an explanation for your choice of business entity (advantages or disadvantages of the selected type of business entity). Description of the specific steps that need to be followed to successfully and legally start the business (500-700 words) Steps will vary depending on the type of business that you choose. Good sources of research for this area include the following: Textbooks State statutes (e.g., Chapters 47 and 48 of the South Dakota Codified Laws include information on the business formation process.) The Small Business Administration Web site will be helpful because it includes information on how to start a small business. A draft of a valid contract with a vendor, supplier, customer, and so forth that illustrates all elements of a contract and takes into consideration some of the topics discussed in the contract chapters

Other Topics:

Difference Between a Business Plan & a Business Proposal

Why Create a Business Plan?

How to rescind a business letter, 6 types of business plans.

A business plan and a business proposal are very different documents, with different purposes and goals. A business plan is a factual broad description of a company on the executive and operational level. A business proposal is a focused sales document intended to describe how a company will approach a project, state the value of the project to the client and solicit the client's business. A business plan is a written presentation of fact. A business proposal is a quote and call to action.

Reasons for a Business Plan

A business plan documents your vision for your business and how you intend to achieve that vision. It contains financial projections of what the business will cost to develop and operate plus an estimation of the revenues to be generated. Its purpose is to provide a reasonably detailed explanation of your business for use by potential investors, suppliers, prospective employees, accountants, attorneys and other people who need a quick but comprehensive understanding of what your company does and its potential for success. The primary reason for a business plan is to record and convey information.

Reasons for a Business Proposal

Proposals may be unsolicited business ideas presented to a potential customer or partner, or they may be answers to requests for proposal submitted to your company by a potential client. They are limited in scope to a particular project or need. A business proposal also generally has a specific audience. The primary reason for a business proposal is to solicit or develop a business opportunity.

Business Plan Structure

A business plan has three elements: description of the business model, the marketing model and financial projections. It consists of informative sections, including the executive summary, business description, marketing model, analysis of industry competition, build-out plan, operations plan, introduction of management, and a discussion of financial issues and projection of results. It is introduced by an executive summary, which can be a dense abstract or a longer marketing tool to attract interest in the business plan. The business plan is an informational document designed to factually display your company's operations and potential.

Business Proposal Structure

A business proposal written in response to a Request for Proposal (RFP) should follow the format requested in the RFP. Generally, this involves a quick description of your company's services and products that are relevant to the goals of the RFP, a reiteration of the scope of work, answers to specific questions posed in the RFP and a quote detailing materials, tools, labor, delivery and other elements of the cost of the project.

An unsolicited business proposal intended to create and develop a business opportunity follows essentially the same format but anticipates questions the potential client might have. A proposal is more of a marketing document, designed to convince the audience to do business by presenting a value proposition and a call to action.

Victoria Duff specializes in entrepreneurial subjects, drawing on her experience as an acclaimed start-up facilitator, venture catalyst and investor relations manager. Since 1995 she has written many articles for e-zines and was a regular columnist for "Digital Coast Reporter" and "Developments Magazine." She holds a Bachelor of Arts in public administration from the University of California at Berkeley.

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You can read the full story on how Infiniti’s risk assessment solution helped the client overcome these challenges here .

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About Infiniti Research

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Infiniti Research Anirban Choudhury Marketing Manager US: +1 844 778 0600 UK: +44 203 893 3400 https://www.infinitiresearch.com/contact-us

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Infiniti Research has announced the completion of its latest success story on risk assessment solution.

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