How Does a Business Proposal Work?

Function

If you need to present a business idea for a product or service to get capital or customers, a business proposal is the best format to use. By laying out the who, what, when, where and whys of your idea, any potential buyer will have all the information needed to make an informed decision.

A business proposal not only gives your prospect needed information, but you as well. Once completed the proposal can act as a guideline when it comes time to put your idea into action.

Features

The key points developed within a business proposal cover every aspect of your idea in step-by-step detail. Areas to cover are

- Main goals of the business idea
The main goals of your business idea will incorporate your vision for the idea and the mission, or purpose, it serves.
- Products, and/or services offered
Provide a clear depiction of what you're offering and how it will benefit the customer
- Market analysis and marketing strategy
Break down who and where your target market is, along with their likes and dislikes, and how you plan to reach them
- Operational components of the business idea
List all aspects from start to finish of what is needed to put your idea into action. This includes buildings, production needs, marketing methods and inventory needs
- Financial plan
Based on listed operational needs, the financial plan forecasts how much money is needed, when it will be needed and how will repayment be made

Identification

Before starting a business proposal, two issues that you'll want to be clear on are the mission and vision for the business idea. Composing both a mission statement and a vision statement to start is a good way of focusing in on the strength of your business idea.

The vision statement will describe exactly what your idea will look like in 5, 10 and 20 years. It's an inspirational depiction of the business idea that should jumpstart your creativity and focus your plan. The mission statement is more so a statement of purpose explaining what needs your business idea will serve, who it will help and how.

If your prospect has made it this far through the proposal, there's a good chance she's interested in the idea. The products or services portion of your proposal can make or break the deal. Product features and customer benefits should be described in clear, concise words from the customers' point of view.

Effects

How your products/services will affect a particular target population is what the market analysis and marketing strategy portions of the proposal will cover. Presenting the likes and dislikes of a target population in relation to how your product/services will meet a need lays out the business potential of the idea for your prospect. The marketing strategy will then map out a plan on how you will reach this target population.

The remainder of the proposal is the nuts and bolts portion of your idea, listing in verbatim, every material and service that will be needed to get the business off the ground and the overall cost to accomplish it.

When done right, an effective business proposal engages the right prospect and leads him to a logical conclusion. Any questions, doubts or concerns the prospect may have are covered in a well crafted business proposal.

Resources

• Small Business Administration
• Center for Business Planning