Whether you are a rookie or a seasoned entrepreneur, having a basic understanding of the difference between a business plan and business proposal is highly important in running a business. Although a business plan and a business proposal are among the most crucial forms of business documents, there are still a lot of people who do not know the difference between the two business terms.
There are times when people use the terms interchangeably. Even when you search for a business proposal on the Internet, it would sometimes display search results about business plans, adding to the confusion of ordinary people. Nevertheless, you need to keep in mind that each document is used differently and has unique purposes and goals.
According to an article on Wikipedia, “a business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them”.
Whether you are looking to expand your business and make any significant changes or are planning a new business venture, you are required to draw up a three-to-five-year business plan and present it to prospective investors. Your ability to write a good business plan can dictate the success or failure of your company because most investors will examine how they can make a profit from the capital might be investing in your company.
Business experts often view a business plan as an effective decision-making tool. How you present its content and goals can influence the decision of the prospective investor. Remember that a good business plan can make any organization or business look credible and attractive, especially if you are looking for a prospective investor to fund your new business venture. Although a good business plan does not always ensure success, it can still reduce the potential risk of your business endeavors failing.
As a newbie entrepreneur who is seeking funds from prospective investors, you should make sure that you can effectively provide them with clear details not only on how you plan to achieve your goals but also the financial projections and estimated revenues.
Check out this collection of business plan templates to get an idea of how you should draft a good business plan that suits your unique requirements and needs. You can also see the following business plan samples that are provided below:
While a business plan is submitted to potential investors in the hopes of getting funds, a business proposal, on the other hand, is submitted to answer to the requests for proposal set out by another company or propose for a business arrangement. Unlike the business plan that you can send out to numerous investors, a business proposal is submitted to a specific audience or client. Thus, the main purpose of a business proposal is to grow business opportunities for your company.
A business proposal comes in two different types: invited and non-invited.
An invited business proposal is submitted to respond to the advertisement or request from another company or organization.
Let us take for example when a government agency or private company wants to purchase certain goods and/or services from outside source, they will post an invite to potential suppliers to place their bids. The requesting party often sends out a Request for Proposal (RFP) to invite a few chosen contractors.
Once the contractors receive the copy of the RFP, they will have to draft their business proposal in accordance to the format style and requirements set in the RFP.
On the other hand, a non-invited or unsolicited business proposal is submitted to prospective clients despite the fact that they haven’t posted or advertised for a request or bid.
Entrepreneurs usually use unsolicited proposal to suggest to clients to purchase goods or use the services of your company in exchange for funds.
Although it may sound tough, the best thing you can do is to make your proposal successful is to perform a thorough research on the company to get an idea of the products and/or services they might be needing. This way it will be easier for you to convince a prospective client.
Writing a business proposal can be as challenging and overwhelming as writing a business plan. To help you get started, you can follow the business proposal format or download the sample business proposal templates and use them as your reference. You can also get some helpful insight from the templates that are found below:
The effectiveness of your business plan can help you set a solid footing in business. While writing a business plan can be a daunting process, there are certain elements to keep in mind to make it stand out and convince a prospective investor to fund your new business venture. To make things a lot convenient, you can choose to sample small business plan templates. You can use them as your guide but make sure to remember the following tips:
On the other hand, if you want to close a business arrangement or deal with another company, it is important to be familiar with the key elements that would make your business proposal stand out from your competitors.
You may want to also check out these sample business proposal templates in Word.
Although not all business plans and business proposals win at the end of the day, writing a great writing a great business plan or proposal increases your chances of meeting and exceeding an investor’s or client’s expectations. Do not hesitate to check out our article on business proposal writing tips and on how to write a successful business plan.