How to write an effective business proposal in 2021
Learn the essential elements of an effective business proposal and how to craft a compelling document that gets your potential clients to say Yes.
March 29 · 10 min read
No doubt the end of a successful business proposal will bring in lots of money. But starting one can be downright intimidating. You’re basically asking someone to choose you and your company to solve a problem that they’re currently facing.
The key to writing an effective proposal is being able to convince the recipient that your company is the perfect choice to provide the said solution. This means articulating your comprehension of your potential client’s needs, as well as outlining clear reasons why your company’s proposed solution is the best way to go.
Everything needs to be just right. You’d be surprised how many well-crafted solutions get rejected just because the proposal was subpar.
At the end of this guide, you’ll know the essential elements of an effective business proposal and how to craft a compelling document that gets your potential clients to say Yes.
Business proposal overview
Business proposals are a proven tool for acquiring new clients and scaling your business for better profitability. More importantly, they help set the tone for a deeper customer relationship compared to leads acquired through other lead generation methods such as cold calling and paid ads.
For a more formal definition, a business proposal is a formal document containing your well-thought-out proposed solution to a potential client’s problem. Your business pitch must be well structured, detailed, and your branding must shine through without sounding too salesy.
A winning business proposal is one that speaks directly to the prospective client’s pain points. This means taking the time to put in some serious research. The good thing about a business proposal has a singular purpose — to procure new business. That means you’re either getting it right or you’re not.
Business proposal vs business plan
It’s easy to get confused between the two. Both terms start with “business,” after all. A business proposal is completely different from a business plan. The latter describes a business, its objectives, and how it intends to achieve its goals. It’s like a formal roadmap of a company from operational, financial, and marketing standpoints.
The business proposal is similar to a cover letter for a freelancer. In both instances, you’re introducing yourself, highlighting your skill sets, and giving examples of when and where you used these skills to provide quality solutions.
However, where a cover letter tends to be written for a general audience, business proposals are more targeted and usually addressed to a particular individual or office within the company. Also, business proposals typically include cover letters.
Two main types of business proposals
Business proposals generally fall into two main categories — Solicited business proposals and unsolicited business proposals.
A solicited business proposal is when the prospective client sends your company an official request for proposal (RFP). It can be of two types:
- Formally solicited proposals — A formally solicited proposal is sent in response to a formal RFP from the potential client. In some instances, the request includes specifics of what kind of solutions they’re looking for and how much resources they’re willing to commit to the project.
- Informally solicited proposals — This type of proposal is sent in response to an informal conversation. Perhaps you and the prospect got talking, and it turns out your company could help address their pain points. They could ask you for a general overview of your services so they can evaluate and decide on it later.
An unsolicited business proposal is one that you send to a potential client even though they haven’t sent you a formal RFP. Here, you’re making the first move and letting the client know that you understand their current challenges and you have the solution.
How to prepare for writing a winning business proposal
As mentioned before, you need to do some quality research before you start writing your business proposal. This applies whether you’re writing from scratch or using a business proposal template. There are four main prep steps you should complete to ensure that your proposal hits its mark.
1. Understand the client
See things from your prospect’s perspective — how would you react to reading a business proposal that displays a lack of understanding of your company’s actual challenges? Most people would just toss the document aside because it’s simply not worth their time.
Make sure you have a solid grasp of your potential client’s problems and their end goals. Find out what they’ve done in the past to address these challenges and what they are currently doing. Impress them with your understanding of their needs. This makes them more willing to pay attention to your proposed solution(s).
2. Be knowledgeable about the industry
The person reading your business proposal should be filled with confidence by your understanding of the industry and target audience. Research current statistics, benchmarks, case studies, and other factual information that you can use to drive home your points.
3. Be sure of your relevant experience
Don’t go promising what you cannot deliver. Perform a self-audit of your skills and experience, and be honest with your level of expertise. Nothing’s worse than failing to fulfill your proposed deliverables because it turns out you didn’t have the requisite skills or qualifications to execute them.
That being said, if you do possess extraordinary proficiencies in relevant fields, be sure to highlight them in the proposal.
4. Take note of resource requirements and other costs
Make sure you have the resources required to pull off the project without hitches. No one likes excuses, especially when you’re the one who offered your services in the first place. Factor in any additional costs too.
You don’t want to overpromise in the proposal and then end up messing up the deliverables in one way or another. This step is also helpful in setting up the pricing tables for your proposed services. Knowing exactly how much it would cost to execute the project means you can include the amount in the pricing to recoup it.
Structuring your business proposal
There’s no one standard way to structure your business proposal. Remember, you’re crafting it based on solving your potential client’s needs, so the structure and approach will often differ. However, some fundamental elements are included in any successful business proposal.
Let’s walk through them.
The title page should be professionally designed and contain relevant information about your business — company name, contact information, logo, date, the potential client’s name and company, etc. This is your first opportunity to make a compelling first impression so put some thought into how you want to approach it.
A cover letter is an avenue to introduce yourself to your prospective client properly. The title page already gave them a general idea, but now’s the time to delve a bit deeper into what makes your company the best choice to execute this project.
Give some background information about your company and brush on how your project proposal can benefit the potential client. Keep the tone friendly yet professional. Encourage them to reach out to you should they have any follow-up questions. End the letter with a thank you, then your name and signature.
Table of contents
The typical proposal document consists of multiple pages as you want to be detailed on articulating the problem statement before following with your solutions. Including a table of contents keeps your proposal organized and easy to follow.
Suppose you’re sending an electronic project proposal. In that case, you could make the table of contents clickable so the reader can quickly jump to any section and revisit specific pages without having to click through each page to get there.
An executive summary is a perfect place to explain your “why.” Why are you sending the business proposal? Why to this particular prospect? Why should they spend their time reading it? Why is your company best placed to provide this solution?
This section essentially summarizes the entire proposal but with enough compelling details to make the potential client want to read further. Highlight the value proposition of your services or products concisely. The reader should be able to read through your executive summary and immediately understand why your services are needed.
The client already knows the problem, so don’t spend too much time retelling it to them. Instead, focus on the impacts of these problems. For instance, if you’re writing a business proposal for your web design services, tell your prospective client what they’re losing out on not having a professional website — lost revenue, no online presence, outperformed by competitors, etc.
Sometimes business owners can underestimate a problem. But by drawing attention to how it’s actually impacting the client’s profitability, you’re telling that you know exactly what you’re talking about. Cite relevant case studies and make sure you’re only including factual information. This evokes confidence.
If your reader gets this far, you’re almost on a homestretch. You just need to be able to articulate your proposed solution(s) based on the problems you outlined. Clearly explain your methodology, why it works; describe your deliverables too, so the new client knows what to expect over a given time frame.
This section should also contain a description of the expected outcome after the project is completed. When can they expect to see tangible results? List some metrics for success and identify key milestones. Wrap it up by including one or two relevant success stories. Seeing glowing testimonials from other clients builds trust among your potential clients.
It’s also a good idea to include lots of visual content. It’s 2021, after all. Infographics and charts are basically a requirement in business proposals. Just don’t overdo it. Instead, use them to support your points and emphasize the need for your proposed solutions.
Expertise and experience
Explain your qualifications and why they are relevant to executing this project. Think of it as a technical About Us section. Outline your skill sets, years of experience, industry connections, and any other compelling details about your company.
You can also include profiles of your team members with links to their company profiles. If you want to go a bit informal or your website has no dedicated team members pages, you could include their social media profiles instead.
If you’re a startup or small business, you might not yet be able to charge premium prices, especially if you don’t yet have an active consumer base. Nevertheless, don’t underprice yourself. Decide on a fair pricing for each piece of value delivered.
Suppose you’re using a business proposal template. In that case, you could utilize a responsive pricing table so the potential client can do any quick calculations they need to make without leaving the page. Perhaps she doesn’t want a full package and wants an a la carte lineup of selected projects.
Terms and conditions
Outline your terms and conditions without any ambiguity whatsoever. Be clear on the project deliverables, time frame, milestones, payment schedules, and any other relevant terms. For larger organizations, it would be good to have your legal team go through these terms and conditions to ensure there are no potential cases of miscommunication and confusion down the line.
Agreement and signature
If the potential client agrees with the terms of your proposal, they would indicate by appending their signature. If you want, you can include a friendly prompt or call to action (CTA). Though in reality, if you’ve failed to convince the prospect, they probably wouldn’t bother getting to this section. And even if they do, a few CTA lines are unlikely to change their minds.
Proofread the entire proposal
It would be a shame if after all this work you’ve put in, you end up submitting a business proposal riddled with typos and sloppy formatting. Your proposal writing should be flawless.
Hire a professional writer if you have to. You could also use business proposal software such as Proposify, Pandadoc, and Bidsketch. The advantage here is that you have templates you can easily customize and several cool features, including provision for electronic signatures, tracking, and third-party integrations.
In any case, be thorough with your checks—no sense leaving something so important to chance.
Sending your business proposal and follow up
With your proposal all set, the next step is crafting a great email. Unless, of course, you’re sending the proposal by hand. Make your introductory email count. It’s the first thing the potential client will read before deciding to review your proposal or not. Then again, this mainly applies if you were sending an unsolicited business proposal.
In any case, the key is to remain professional throughout the process. Allow the recipient some time to review the proposal before you do a follow-up. There’s no standard time frame for sending a follow-up email, but most people wait two to three weeks after sending the original proposal.
Planning your business proposal presentation
The most effective business proposals are those that involve a face-to-face presentation. This allows you to explain your ideas in person, include more details, and provide answers in real-time. Thanks to teleconferencing technology, you don’t necessarily have to be in the same physical room as the potential to do a face-to-face presentation.
The best part is you don’t even have to possess expert presentation skills. Most presentation software does most of the heavy lifting, and you might just need to add context to some points every now and then.
Addressing competition in the market
If you were unable to include this under the executive summary of your proposal, you could cover it during the presentation. Describe the state of competition in the market and explain how you can out maneuver them.
At some point, the question is bound to come up anyway, especially if you’re operating in a crowded marketplace. If you can’t satisfactorily explain why your proposed solution is unique and better than other options out there, you’ll struggle to win over your audience.
Be tasteful about it. Focus on the strengths of your business instead of trying to list the weaknesses of your competitors.
Final thoughts on how to write an effective business proposal in 2021
Taking the time to write and present a compelling business proposal will often pay off in the form of new business. Remember it’s all about breaking down your potential client’s problem, proposing your solution, and providing competitive pricing information.
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