Business Plan vs Business Proposal: Which One Should I Use

Business Plan vs Business Proposal Which One Should I Use

Which one should you use, a business plan or a business proposal?

A business plan and a business proposal are two entirely different types of reports with distinctly different goals, purposes and formats.

You don’t want to waste precious time and energy creating the wrong report or mistakenly interchanging the two.

And you certainly don’t want to look or feel like a total moron so read on.

Don’t worry, this won’t get all technical and ugly.

It’s just a discussion.

When you actually start to write your business plan or business proposal, that’s when it will get all technical and ugly.

While both business plans and business proposals are generated for the purpose of obtaining money for your business…

The way that money is obtained is vastly different.

Business plan

What is a Business Plan?

A business plan can have several different purposes, while a business proposal generally has only one main purpose.

Someone starting up a new business usually creates a business plan to obtain funding.

But the smart entrepreneur also creates a business plan when they don’t need funding.

A business plan can should be generated long before launching a new business to determine if the business idea is even doable.

Make sure to make the business plan as accurately as possible.

You want to know before you spend too much money or resources on your idea if there is a market, or enough of a market to sustain your business.

You want to know if you can afford to start this new business.

And if you learn that you don’t have enough cash or access to cash, you need to know if you will qualify for traditional bank loans or if crowdfunding or peer to peer loans are an option.

Business plans are also required if you intend to approach angels or venture capital groups.

And it’s always a good idea to have a formal business plan at the ready if you plan to request funding from friends and family.

They will be much more open to your idea if you show serious intent.

And if you have taken the time and trouble to write a full business plan you are indeed serious!

Business plans should follow the industry standard format put out by the SBA (Small Business Association).

Yes, there are “experts” that insist the traditional business plan has gone the way of the dinosaur or that one-page business plans or “decks” are perfectly acceptable…they are WRONG.

Sure a one-page business plan is fine as a quick, at-a-glance view of your business concept.

But it’s not good for much else.

You certainly could never use it to request funding.

Business Proposal

What is a Business Proposal?

A business proposal is also used to obtain money for your company, but not by way of loans or other such funding.

Instead it is used to win a specific job that generates revenue for your business.

Your business is already up and running and ready to take on clients.

You are ready to compete for available work.

Compete being the operative word.

Generally speaking, you are competing against other companies for the same job.

Such as, your business proposal must knock it out of the park to become the chosen one.

Winning the job can be accomplished by being the lowest bidder or by presenting the best overall plan.

Obviously going in with the lowest bid can back fire and leave your business in a precarious position.

Your costs can easily overrun your expense projections and you can lose money.

A business that automatically chooses the business proposal with the lowest bid can turn out to be a bitch to work with.

Of course that’s a mighty big assumption on my part.

But think about it.

Do you want to work with a possible cheapskate business owner?

Or a company that sees no problem with cutting costs by cutting corners

Such as, skimping on safety?

Creating a solid business proposal includes addressing  the client’s needs as they have outlined in their written posting or verbal discussion.

You need to detail exactly how you intend to meet those needs (milestones timeline, staffing, equipment, contract terms, etc).

And lastly, you need to include how much you will charge for your services.

Business Proposal Format

Business Proposal Format

Some clients use a formal RFP (request for proposal) which in turn requires a formal proposal.

If no formal RFP is used, then it’s basically a free for all.

In other words, you can write up the proposal with no formal formatting as long as you include everything that answers the client’s needs.

Unsolicited Business Proposal

Business proposals can also be submitted to a potential client who has not put out a request for bids; an unsolicited proposal.

If you discover a business with a glaring need for your services, you can certainly submit an unsolicited proposal.

Since the recipient is not actively looking for a fix…

Whether invited or non-invited, your proposal must be well researched, well written and contain a reasonable budget.

Spend time on this document and you will be ahead of the people who threw something together on the bus riding to work

They will either be put off by the implication that they are lacking in some area or they might love your idea and consider you a genius.

So there you have it.

Now you are quite the expert at knowing the difference between a business plan and a business proposal.

You can never do too much research.

Assume that your audience knows nothing about your business or similar businesses and make it simple to understand.

Always present with confidence.

Refer the audience to the printed business plan for additional details that are not key points.

Your presentations should not last for more than 20 to 30 minutes.

If you do not project your own belief in the business or project, others will find it hard to have faith in it.

Business Plan Presentation – How to write a business plan for investors

Have you had to write a business plan or a business proposal before?

Tell us which which one did you needed to write?

Comment and share with us below.

Here is another good blog to read: Business Plan vs. Business Proposal

Read my latest blog on: Business Plan Vs. Marketing Plan: Which One Should I do?

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About Maria Barina

Maria Barina is a mother and grandmother who worked for the NYC Board of Education as Laboratory Specialist Bio/GS for 26yrs till the age of 56. Her husband, after 37 of marriage, passed away from Lung Cancer. She came to myEmpirePRO to seek guidance on how to get freedom that an online business can provide. Freedom to her is being able to do what she wants, when she wants to and to show others they can do the same to. Since she done that she is able to do this by working anywhere she goes and became a mobile-prenuer

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  1. Pingback: Business Plan vs Feasibility Plan | Maria Barina Live

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