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How to Write an Effective Proposal for Business Deals

written by: N Nayab•edited by: Linda Richter•updated: 8/25/2011

A business proposal is a written offer from a seller to a prospective buyer in a formal and structured way. The basic structure of a business proposal includes the title page, executive summary, introduction, problem/need, objective/solution, work plan, staffing, budget, evaluation, and conclusion.

  • slide 1 of 8

    Title and Executive Summary

    Structure of a Business Proposal The title of the business proposal should identify what the proposal is about in clear terms.

    The executive summary provides basic information regarding the project, such as project objectives, solutions, costs, and methodology. This section has two aims:

    • Attracting the reader's interest to the details that follow.
    • Providing an orientation for the reader to delve into the finer points.

    The executive summary, though placed first in the proposal, is drafted last, for it provides a gist or an overview of the report that follows. Ideally it should be limited to two or three pages, and not more than ten percent of the total report length.

  • slide 2 of 8

    Introduction

    The introduction component of the business proposal structure ideally covers:

    1. The business entity in terms of company, partnership, proprietorship.
    2. The major activities of the business entity.
    3. A brief history of past relevant accomplishments.
    4. The values and the ethical standards adopted in dealings with stakeholders.
    5. The purpose of the proposal.
    6. Credits, including the author and external sources who helped prepare the proposal.
    7. Concise personal profiles (not resumes) of key people who would drive the project.
    8. The contact details of the key person to contact for follow-up on the proposal.
    9. The intended recipients of the proposal and any access restrictions.
    10. The date of the proposal and its validity.

    The best reports confine the introduction to one page, but still cover all details.

  • slide 3 of 8

    Problem/Need Statement

    The problem or need statement is a critical component of the business proposal methodology, defining what the proposal tries to achieve. It sets the direction, tone, and structure of the proposal.

    The major components of the Problem/Need section are:

    1. Statement of problem or need reinforced with facts, statistics, interviews, and comparisons.
    2. The relevance of the need, or why the problem needs a resolution.
    3. Present status, including a history of past performance in graphs and tabular formats, to prove an insight of the extent of the gap between existing state and ideal state, and what is takes to effect the required transformation.

    The optimal length of the problem/need section is two to three pages.

  • slide 4 of 8

    Objective/Solution

    The objective or solution section details the goals that the proposal hopes to accomplish and, ideally, contains:

    1. The goals broken down into small measurable time-bound targets.
    2. Function wise strategies and plans to achieve the objectives and solutions, such as marketing plans, staffing strategy, and related methods.
    3. Projections based on assumption of sales volumes in terms of size, turnover, structure, depth, and breadth of operations at the end of a stipulated period.
    4. Profile of target markets or customers including trends and competition.
    5. A worst case scenario if forecasts fail to materialize.
    6. Product descriptions for proposed products and process descriptions for new or modified processes, including product or process highlights, target beneficiaries, and how the product or process satisfies the need

    Avoid generalized statements such as "we target 10 percent of the 100 million market within three years." Good reports build up the analysis from the present status data given in the problem/need section of the proposal.

  • slide 5 of 8

    Work Plan

    The work plan lists the approach or methodology proposed to attain the objectives or reach the solution. It includes:

    1. A management plan detailing project structure and organization of work with milestones, plus implementation schedule.
    2. A description of each proposed activity with timeframe, including the competence of the person responsible for the activity.
    3. Management structure, including administration and system profiles.
    4. A list of exceptions, or what the proposal does not include, and reasons for such exclusions. For instance, some items listed in the need statement might not find mention in the objectives as the cost-benefit analysis makes fulfillment of such need unviable.

    An important consideration is to set a realistic timeframe for the likely rate of progress, and include provisions for lags.

    One important sub section of the work plan is staffing. This section lists:

    1. Total manpower requirements of the project.
    2. Job descriptions for all staff.
    3. Biographies of key team members listed in the introduction and work plan.
  • slide 6 of 8

    Budget

    The budget section is the most critical section in the structure of a business proposal, for the acceptance of the proposal is usually based or contingent upon financial considerations. This section incorporates:

    1. The costs and pricing for implementing the work plan.
    2. Projections such as proposed cash flow, profit and loss statement, balance sheet, and key ratios.
    3. Cost benefit analysis for implementing the objectives.
    4. Source of funds, for instance, debt or equity.
    5. Tax implications and accounting standards used.
    6. Any funding requests with potential returns on investment.

    The budget should ideally include not just a detailed breakdown of actual figures, but also a justification for the stated amounts.

  • slide 7 of 8

    Evaluation

    Business Proposal Structure The evaluation section reviews the work plan to underscore the strong points. This section usually incorporates:

    • A Strength-Weakness-Opportunities-Threat (SWOT) analysis of the work plan in terms of how the proposed plan builds on key strengths, resolves internal weaknesses, exploits opportunities, and avoids threats related to the business.
    • Issues and risk factors that can derail or hold up the work plan.
    • Contingency plans to deploy when established plans go awry due to internal or external factors. Good reports document everything that may go wrong, and prepare a dedicated plan for each such issue.
    • Case Studies that illustrate successful implementation of similar projects, for benchmarking.

  • slide 8 of 8

    Conclusion

    The conclusion is a review of what the business expects to achieve and strives to reinforce the proposal by restating the problem and solutions as well as possible reasons why the proposed work plan will succeed.

    The conclusion section also contains:

      • Testimonials or references of satisfied clients that serve to add credibility to the proposal
      • Appendices containing lists of tables and detailed information, exhibits, and other important data referred to in the text. The appendices help avoid cluttering the report with excessive detail.

        A carefully written business proposal which adheres to the accepted structure increases the chance of acceptance multifold. Read on for ideas to dress up a business proposal.

      References