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Business Plan vs. Business Proposal

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 27, 2023 Updated on December 11, 2023

Business Plan vs. Business Proposal

A business plan and a business proposal are similar documents. In fact, in some cases the terms can be used interchangeably, such as when both aim to attract investment. 

But generally speaking, a business proposal tends to have broader scope, and this handy guide lays out precisely how these two common terms differ. 

  • What is a Business Plan?

A business plan is a detailed document laying out how the business will function and develop in its first few years. The key is the “plan” part of the name, as it will specify how you will launch, gain customers, operate, make money, and, with any luck, expand. 

Yet what many first-time business owners seem to forget is that a business plan is not a static document. The initial version is based largely on assumptions, supported by research. But as you run your business you’ll learn what works and what does not and make endless tweaks to your plan.

Thus, creating a business plan is not a one-time action – it’s a dynamic and continuous process of crafting and adapting your vision and strategy. 

Components of a Business Plan

A business plan is generally much more detailed and broader than a business proposal, and has several elements :

  • Executive Summary  
  • Company Description/Overview
  • Products or Services Offered 
  • Market Analysis 
  • Marketing and Sales Strategies
  • Operations and Management  
  • Financial Plan
  • What is a Business Proposal?

A business proposal is created in connection to a specific business deal being offered by one party to another. As mentioned, when you take a business plan to an investor, you’re proposing a business relationship, so in this case a business plan and a business proposal are much the same.

But a business proposal could also be for others purposes, including:

  • Bringing on a partner
  • Proposing a management contract to a person you want to hire 
  • Proposing a business relationship with a potential customer 
  • Proposing a partnership with another company
  • Suggesting a deal to a member of your board of directors

A business proposal may offer specific terms for the potential relationship, or it may be just about the benefits the relationship will bring, with terms to be negotiated later. Essentially, it’s a sales tool to get people or companies to do business with you in some way. 

Business proposals can be structured in various ways, but usually, they’ll include a summary of what your company can offer, a scope of the work to be done together, and sometimes, a price quote or a proposed structure of the business relationship.

Clearly, a business plan and a business proposal are similar – and can even be one and the same. At the same time, they can also serve very different purposes. Unlike a business plan, a business proposal can have a variety of aims and thus does not have a “one size fits all” structure. 

Whichever one you need, be sure to take your time with the research and writing so your business has the best chance for success. 

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Business Plan vs. Business Proposal: Everything You Need to Know

what's the difference between business proposal and business plan

“Ok, so you sell things.”

Well, honestly, I wasn’t surprised or peeved at the half-baked knowledge of my friend’s father when he made a snap judgment and conveniently labeled my marketing profession as sales.

After all, this wasn’t my first time when someone tagged me as a salesperson. So, I took a deep breath and explained to him how sales are different from marketing.

We, humans, dwell in a herd mentality and hone our word skills from our surroundings. Sometimes, we are simply careless, sometimes oblivious, but most of the time, we actually don’t know that the word has a different meaning.

This can be ignored in a casual conversation, but using the wrong words in a business space can change the implied meaning and lead to miscommunication. For example, cost vs. price , digitization vs. digitalization , warranty vs. guarantee , machine learning vs. artificial intelligence , etc.

“Don’t use words too big for the subject. Don’t say ‘infinitely’ when you mean ‘very’; otherwise you’ll have no word left when you want to talk about something really infinite.” – C. S. Lewis

This Process Street guest post untangles the confusion between two crucial terms – business plan and business proposal. These are used interchangeably in the business world, but their meaning and application are pretty different.

Words are the building blocks of communication. There is a French phrase for using the right word – le mot juste .

Let us strive for le mot juste !

Hop on and be a part of this fantabulous journey.

What is a business plan?

What is a business proposal, business plan vs. business proposal: what are the differences.

  • Bonus: How to make ‘wow’ business plans and business proposals?

Winding-up: Key takeaways

Here we go!

A business plan is a formal guide that acts as a blueprint, deciphering every root and branch to make a business successful. It is a written document that provides insights to internal and external stakeholders on business vision, goals, and strategies to achieve those goals.

“Without a plan, even the most brilliant business can get lost. You need to have goals, create milestones and have a strategy in place to set yourself up for success.” – Yogi Berra

A business plan, at its core, is an explanation of the below questions –

  • Who are we?
  • What are our offerings?
  • Who are our customers?
  • Who are the competitors?
  • What is our competitive advantage?
  • What are the business projections?
  • What is the roadmap to achieve the goals – marketing, operations, research and development, manufacturing, and financial plans?
  • What are the funding/investment requirements?
  • What is the return on investment?

Why do you need a business plan?

A business plan is not a bag of puffery statements. It is a document with factual information necessary for the survival of a business. You can create a business plan with the right tools or opt for a good business coach to get you started.

Let’s see what Tim Berry , business plan expert, founder and chairman of Palo Alto Softwar and bplans.com , has to say on business plans.

“What I love most about business plans is the business planning: like walking, it’s constant correction and review and revision. Planning, done right, is steering a business, managing growth, aiming the business towards the right future.” – Tim Berry ,  Small Business Trends

According to a study done by Palo Alto Software, those who create business plans double their chances to succeed in business .

Let us get down to brass tacks and understand why a business plan is super-duper important.

business plan

Record and present business information The primary intent of a business plan is to record and communicate information. It must document the business goals and the methods to attain those goals in a structured manner. It keeps businesses on track with their objectives.

A blueprint for seeking business investment ️ Whether you are a fledgling start-up or an established business seeking expansion or diversification, writing a winning business plan acts as a magnet to attract investors. It builds confidence and trust among investors about the lucrativeness of a business idea.

Lay down the right path ✔️ Not everything discussed verbally at an ideation stage transforms into reality in a pragmatic environment. Jotting down a business plan differentiates achievable from impracticable based on market dynamics, opportunities and threats, and company’s strengths and weaknesses. It sets the right track for business growth.

Establish short-term and long-term goals A business plan sets down short-term and long-term goals and the direction to accomplish them, right from baby steps to giant leaps. It becomes a basis to revisit the goals from time-to-time and make iterations depending on the present scenario.

“Any business plan won’t survive its first encounter with reality. The reality will always be different. It will never be the plan.” – Jeff Bezos, CEO of Amazon

Get clarity on your business A frequent question that pops-up in business discussions is: “Are we doing it right?”

A well-articulated business plan brings insightful knowledge on each aspect of a business – from what it has to offer to how to market the offerings.

Make informed decisions A business plan is a reality check to track what is being fruitful and what is causing hindrance. It paves the way to make a business sustainable.

Predict future financial performance Financial projection is the spotlight of a business plan. It’s the carrot that captivates the eyeballs and tickles investors to fund a new business.

A promising business plan talks about the company’s future financial performance – expenditure, profit, revenue, etc.

Explore new business opportunities A business plan is a flexible document that enables learning on the go. It bolsters research and infuses businesses with new and more feasible business opportunities. It gives organizations a fresh outlook and ushers them to be a howling success.

How to prepare for a business plan

Now that we have answered the ‘what’ and ‘why’ of a business plan, let us move forward to solve the next riddle – how do you prepare it?

business plan preparation

Identify your company’s vision, mission, and values Start by answering and figuring out your business personality:

  • What do you desire to be?
  • How do you want to be perceived?
  • What values put your business in motion?

This is your organization’s compass that acts as a foundation for the succeeding steps.

Know your target audience ‍ Dig deep into:

  • Whom are you going to cater to?
  • What is your target market?
  • What is the size and potential of the target market?
  • What are the needs of a prospective customer?
  • How are the needs addressed presently?

Learn market trends Identifying market trends keeps businesses ahead of the game. Analysis of industry data leads to business growth and profitability in the long run.

Weigh in the impact of unforeseen circumstances From financial turbulence to natural calamities and pandemics – a lot can go wrong in the future and leave a business shaking. Expect the unexpected and gird your loins for these testing times.

How to write a business plan

Creating a winning business plan increases the chances of success and spurs investors to fund your business.

According to a study published in Small Business Economics , entrepreneurs that create a plan are 152% more likely to start their business and appoint a registered agent and 129% more likely to push forward with their business beyond the initial start-up phase and grow it.

Here are the key components of an excellent business plan:

Executive summary First impression is the last impression!

An executive summary is a crucial part of this document. It provides the essence of the whole plan:

  • Company details;
  • Size and scope of business opportunity;
  • A description of your offerings and how it will solve the problem;
  • Growth projection;
  • Financial requirements.

It should be informative and able to spark readers’ interest to know more about the business plan.

Overview of the business This section lists down information on:

  • Your business;
  • Your target market;
  • Description of your products/services;
  • Why and how your offerings are a great fit for prospective customers;
  • Your capabilities to handle the demands;
  • Your value proposition and competitive advantage.

…and all other related details.

Market analysis and strategies Put forth a strong case built on the solid rock of data analysis and statistics – present data on target market size, industry trends, sales forecasts, and marketing strategy.

Operating plan The operating plan highlights the operational requirements for the smooth functioning of a business. It includes facilities, supply chain management, inventory, manufacturing, shipment, logistics, staff management – everything under the sun that covers capital and expense (CapEx) requirements.

Growth plan This section answers the question: “Where do you see the business going in the next few years?” It provides visibility to investors on the milestones and how you will make money in near future.

Marketing plan Thee marketing plan section describes how to market the offerings to create and fulfill customers’ needs (who are the customers, product positioning, pricing policy, and promotional strategies?)

Management plan This section outlines how your organization is structured and basically how strong you are together. It describes the skills, background, and responsibilities of the management team. It builds conviction that the business is in good hands and has a proficient human capital.

Financial plan and projections This is the part where numbers become the king.

It draws up deets on inflow and outflow of money, sales forecast, profit and loss statement, balance sheet, cash flow statement, and budget expense. It discloses and forecasts the company’s financial goals, profitability model, and charts a course for the coming years.

Conclusion and appendix Conclude the business plan by succinctly bringing out the key pointers – the business’s vision, mission, goals, strengths, and growth trajectory. Make it compelling and to-the-point. Add relevant appendices to strengthen your business plan.

Pro tip: Use an all-inclusive ready-made business plan template document and Process Street ‘s business plan workflow to create unbeatable business plans.

Business Plan Workflow

Click here to access the Business Plan Checklist!

Types of business plans

There are varying types of business plans depending on the purpose and usage:

  • Business plan for start-ups A winning start-up business plan can be a game-changer to attract funding from investors. It should weave all key components to make it a promising investment – company overview, products/services, estimated costs, market evaluation, competition insights, risk analysis, cash flow projections, marketing strategies, and the management team’s strengths.
  • Strategic business plan It lays down the details of a company’s strategies to fulfill its goals. It outlines the company’s vision, mission, strategy, and goals, the driving force for success, and the timelines.
  • Internal business plan This plan moves the needle and steers focus on in-house planning and growth. It ensures that everyone grasps the company’s overall plan for growth. It prepares organizations to move forward by identifying and removing any blockages and assess and revise the strategies when required.
  • Operations business plan It is an internal plan that maps out the nitty-gritties of a company’s operations plans and activities.
  • Development business plan This is a development or an expansion plan of a business. It is used for both internal and external purposes. An external growth plan is written to attract investment from external sources. An internal development plan counts on its own business capabilities, revenue, and resources. It works as a guide to provide the right directions.
  • Feasibility business plan A company scouts out a feasibility study when it plans to foray into a new venture, new product, or a new market. It articulates: How well will the product or service perform? Is the business promising? What is the expected return on investment (ROI)?
  • What-if business plan At a point where you face unordinary conditions, you need a variation on the existing plan. A what-if business plan arranges to fall back on a contingency plan when things go sideways. For example, an unexpected surge in demand, new competition, drop in market size, etc.

A business proposal is the mantra that draws you closer to win a customer or bag a project.

Generally, it is a formal response to a Request for Proposal (RFP) sent by a prospective client looking for the right solution to their problems. It explains the particulars of a seller’s offerings and convinces the buyer that the proposed solution is the gateway to their business’s success and productivity.

“And, after all, winning business is what writing proposals is all about.” ― Tom Sant, Persuasive Business Proposals: Writing to Win More Customers, Clients, and Contracts

A business proposal comprises of four main points :

  • What are the challenges of prospective clients?
  • How can our solution solve their problems?
  • Why should they choose us over others?
  • What are the best pricing options available?

Why do you need a business proposal?

business proposal

A business proposal is a testimony in itself that asserts, “I am the best you can get.”

Here are the reasons why you should and must make a business proposal :

  • Create or leverage a business opportunity The prime motive is to win, win, and win! It is a medium to encash a business opportunity by putting forward an I-can’t-say-no-to-this proposal.
  • Stand out from the competition It persuades the prospects that you are way ahead of other rivals in the industry in terms of the value you offer.

How to prepare for a business proposal

The heart of preparedness is research and further research. After all, the devil is in the details.

Talk to prospective customers, visit their website(s), read published articles, and be a know-it-all for your prospective clients.

Sort out the ‘who’ First and foremost, dig every possible information about the client:

  • Who is the client (its vision, mission, and goals)?
  • What does it produce?
  • What are its key markets and target customers?
  • What are its business growth plans?
  • Which markets is it presently serving?
  • Also, figure out the kingpins of a proposal approval process. This will help you to create a comprehensive proposal with all the necessary answers expected by the decision-makers.

Understand the challenges Find what’s bothering them and what is causing hindrance to their business success. Learn about their existing solution and its challenges.

Stitch the glitch and offer the best solution After a thorough review of all the points mentioned above, find the best solution to your prospective client’s problems.

List down key differentiators This will help you to beat the competition in the dust. It draws a comparison chart and puts you in a superior position.

According to Gray Mackenzie, founder of GuavaBox ,

“Prior to submitting a proposal, make sure you have clearly defined all the major points verbally with the potential customer. By discussing the scope, cost, timeline, and details prior to submitting a written proposal, you can uncover objections earlier in the process.” – Gray Mackenzie, 10 Sales Experts Share Their Best Business Proposal Tips

How to write a business proposal

Let’s get down to the fundamental elements that form a business proposal. Learn how to create a business proposal that stands out and close sales.

Title page/Cover page The name says it all.

Pretty easy-peasy thing to understand, right? After all, you have been creating the title pages since school days.

Still, make a note: Always write a gripping title that intrigues prospective clients’ interest and urges them to read on.

Other components that should be included on the title page are:

  • Your company name and logo;
  • Prospective customer’s name;
  • Submission date.

Table of contents (TOC) As the name suggests, a TOC is a well-structured layout of the document. It helps to skim and scan and navigate speedily through different sections of a business proposal.

Executive summary It sets the tone for a proposal and makes the reader inquisitive about reading subsequent sections. It sums up the entire business proposal – the purpose of sharing the proposal and why and how your solution is the right fit for the prospective client. Leave no stone unturned to boast about your offerings in the executive summary.

Details of offerings This is an in-depth description of the products or services your company has to offer.

How will the offerings solve the client’s problems? This explains why your products/services are the right fit to address a prospective client’s needs and why it is a better alternative than the competition.

The methodology/implementation of offerings This section is a blanket explanation of how the promised deliverables will be executed. It provides step-by-step clarity on each action along with timelines. It gives the client peace of mind and builds trust and confidence in the offering.

Pricing, payment, and legal matters Here, you talk about the pricing structure, applicable taxes, payment schedule, cancellation policy, and how you plan to solve the legal matters (if any arise in the future).

Here are some tips for this section:

  • Ensure that the pricing details are concise and complete.
  • Providing a comparison chart with different pricing options helps to make decisions faster.
  • Don’t go overboard with pricing, and also, don’t underrate yourself.
  • Always refer to the RFP and verify if every request has been fulfilled.
  • Separate out and create a new legal section if your business demands an extensive list of legal requirements.

Details about your company This is an exhaustive overview of your company. Don’t forget to add relevant customer testimonials, case studies, or success stories to build your case among prospective customers.

Signatures and Call to action This is the moment that gets butterflies in your stomach; the closure. This is the concluding part of a business proposal. Here (if all your prayers get answered), you and your client sign the proposal and secure the deal. Hurray!

Pro tip: Once you send the business proposal, don’t sit idle in your cocoon day-dreaming of winning the proposal. Always proactively do follow-ups with the prospective clients and clarify their doubts.

For start-ups or small businesses, drafting a business proposal can be an unnerving experience. They work fingers to the bone to write a perfect business proposal. Spending too much time on it might lead to missing the deadline and eventually losing out on a golden opportunity.

According to a report by Better Proposal , sending a business proposal within 24 hours increases the likelihood of winning the deal by 25%.

Here’s the secret sauce to speedily create flawless business proposals :

First, pick a professionally vetted and ready-to-use business proposal template and draft a business proposal like a cakewalk. Such as the Business Proposal Template included below.

Next, always use Process Street ‘s super-powered business proposal template checklist and ensure no step gets missed in the process.

Business Proposal Template Checklist

It even turns out a blessing for big businesses since they have to draft multiple proposals all the time. Templates and checklists save a lot of time, enhance productivity, and increase the chances of success.

Types of business proposals

Majorly, there are two types of business proposals:

Solicited business proposal Also known as an invited business proposal, it comes into play when a buyer, or a company, outlines its requirements and requests suppliers to present an offer. It can be a response to a public tender issued by big corporations or government agencies.

Alternatively, a solicited business proposal can also be submitted as a response to the RFP shared by a prospective client.

The difference between the two is that while the earlier one is open to all bidders, the latter’s scope is limited as it is shared with shortlisted suppliers.

Pro tip: Do a thorough check before submitting an invited business proposal. Missing out on-minute details can kick you out from their consideration list.

Unsolicited business proposal An uninvited or unsolicited business proposal is a proactive attempt to create a business opportunity. This proposal is sent to prospective clients without being asked.

The good news is, there are slim chances of your rival sending a business proposal simultaneously, so less or no competition.

The bad news is, it might breathe in the customer’s inbox for a few days and then, without being read, depart to the heavenly abode -the trash folder.

But still, like a cold call, it leaves some impression on prospective clients and shoots up the chances to cut a deal in the long run.

Pro tip: An unsolicited business proposal is mostly sent through emails. Make certain to write an attention-grabbing headline and a convincing explanation to draw attention.

Here’s a comparison chart that distinguishes between business plan and business proposal:

business plan vs business proposal tips

Bonus: How to make ‘wow’ business plans and business proposals

Here are the secret ingredients to make awesome and captivating business plans and proposals:

what's the difference between business proposal and business plan

Follow the principle of KISS (Keep it simple, silly)

This is not the right place to brag about your vocabulary skills. You want the prospective customer to focus on reading rather than wasting time looking up for a word.

Always remember! Communication is the key.

So, go simple and ditch those heavy jargons.

Don’t wear-out the pupils of your prospects with long-winded documents. Capitalize on the multisensorial abilities of humans as well.

Visuals increase people’s desire to read content by 80%.

Leverage the power of visuals and make your document easily graspable by adding graphs, infographics, flowcharts, tables, images, and videos.

Add social proof

Do not forget to add positive feedback or customer testimonials. If similar projects have been delivered in the past, do add relevant links and case studies of that work. It helps to build trust and strengthen your case.

“Make sure you have great success stories that you can share with potential clients. At the end of the day, most, if not all, potential clients want to know you will provide value to them and generate positive ROI.” – Mathew Bivens, Podcast and marketing consultant,  10 Sales Experts Share Their Best Business Proposal Tips

Proofread ️

Ensure the document is free from grammar and spelling errors.

Follow brand guidelines

Your document should reflect your brand. Bring consistency in all your documents and design them as per the brand guidelines.

Use document builder tools ️

Time is money!

The likelihood of getting a ‘yes’ on your business plans and business proposals depends on how fast you can create a flawless document.

Empower your organization with a smart and all-in-one document builder tool like Revv – create, communicate, collaborate, and close your documents in no time.

Business plans and business proposals are two different worlds with distinct purposes and goals. But, both play a prime role in increasing the odds of business success.

People often get the wrong end of the stick and ask for a business plan when they mean business proposal or vice-versa.

But, we don’t need to worry about that since we are now clear on what is what.

Cheers to us!

P.S: Don’t forget to subscribe to the Process Street blog to get notified of our upcoming articles. We also have a podcast “Tech Out Loud” featuring content written by respected industry leaders such as Peep Laja , Sujan Patel , Tomasz Tunguz , and more!

What is your take on business plans and business proposals? Have you ever got your wires crossed with these two terminologies? Don’t forget to post your comments below.

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what's the difference between business proposal and business plan

Molly Stovold

Hey, I'm Molly, Junior Content Writer at Process Street with a First-Class Honors Degree in Development Studies & Spanish. I love writing so much that I also have my own blog where I write about everything that interests me; from traveling solo to mindful living. Check it out at mollystovold.com .

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Business Plan vs. Business Proposal

business proposal vs. business plan

The terms “business plan” and “business proposal” are sometimes used interchangeably, however, they are very different. The main difference between a business plan and a business proposal is that a business plan documents your growth strategy while a business proposal is a specific ask for someone to take an action you desire (e.g., buy your product/service, invest in your company, partner with you, etc.).

In this article, we will define a business plan and a business proposal and give you examples of when each is appropriate for you to use.  

What is a Business Plan?

professional business plan

Download our Ultimate Business Plan Template here

Business Plan Structure

Typically, the business plan structure contains the following 10 components:

  • Executive Summary
  • Business Description & Overview
  • Market Research & Analysis
  • Customer Analysis
  • Competitive Analysis
  • Marketing Strategy & Plan
  • Operations Plan
  • Management Team
  • Financial Projections & Plan

It is recommended that a business plan is updated annually to adjust for changes in the industry trends and the business itself.  

What is a Business Proposal?

business proposals

In terms of what you are asking from them, it can be anything that involves funds and time on their end including cash investment, product development assistance, and even employees if they have applicable skill sets.  

Business Proposal Structure

An invited business proposal is written in response to an RFP. A request for proposal (RFP) is a document that invites potential suppliers to submit business proposals. How to write a business proposal depends on the format requested and the questions included in the RFP.

The following are the components that usually make up a business proposal:

  • Brief description of your company’s services/products as the proposed solution to the goals of the RFP
  • Reiteration of the scope of the particular project
  • Responses to questions asked in the RFP
  • Cost of the project, including drafting services, materials, tools, labor, delivery and other expenses

An unsolicited business proposal is essentially the same format, but it will solicit the client’s business while anticipating the clients’ concerns and issues. A business proposal is more of a marketing document than an offer because it attempts to persuade the potential client to do business by demonstrating your value proposition and a call to action.  

So, What’s the Difference Between a Business Proposal vs. a Business Plan?

In a business proposal, company representatives typically work with the customer to tailor a business proposition that is attractive to both parties. This usually comes in the form of a written document detailing the services and cost associated with fulfilling an offer or request but can also include electronic contracts.

In contrast, a business plan is a description of your company on the executive and operational levels aimed at investors for raising financial support or other stakeholders in order to facilitate long-term growth. For example, an investor will want to know about how different departments within your business interact with one another, while somebody who will be implementing your product probably only needs more limited information such as design specs because they are not going into production themselves.

A business proposal may provide you with more details of the project, but it does not include information about your company’s operations or future plans.  

Examples of Business Plans vs. Business Proposals

  • When you give a potential investor your business plan which includes all sorts of information about how we will achieve your goals together as well as the amount of money it’s going to take. The business proposal is for them to write you a check in return for interest/principal payments or a percentage of your company.
  • You might be getting partners involved in your business who will help with product development and distribution. You are offering them a business proposal to work together. However, they may request to see your business plan to better understand your goals, potential profitability, and how you plan to reach these goals before deciding to work with you.
  • Your existing business has been so successful that you decide to outsource the social media marketing efforts to a freelancer to free up more of your time. The freelancer would provide a business proposal stating their terms and conditions along with the agreed-upon pay arrangement for their services. This change in organizational structure may be noted in your business plan to demonstrate expansion and financial stability to continue growth.
  • In your business plan , one of your goals is to grow your client base by 5% each month. You identify potential clients in need of your services or products and send an unsolicited business proposal to demonstrate how your products or services can benefit them in order to develop a new prospective client list.

The business plan is a roadmap for your company’s present and future, while the business proposal has to do with what you are asking someone else for money.  Applying this difference into practice can be difficult at times because business plans are often marketed as business proposals. However, it is important to be able to identify the difference between a business plan and business proposal in order to maximize their effectiveness and importance with potential investors or partners.

How to Finish Your Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Other Helpful Business Plan Articles & Templates

Business Plan Template

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Business Plan vs. Business Proposal

  • May 15, 2024

business plan vs business proposal

When you start a new business or own a young company, you often hear terms like business plan or business proposal. But the question is: do you need a business plan? Or is it a proposal that you need? Or both?

Being new to the game, these terms can seem quite intimidating, and you probably don’t know where to start.

Don’t worry. We’ve created a simple business plan vs. business proposal comparison so you can determine which one to prioritize.

Let’s start by defining them!

What is a business plan?

A business plan documents a company, its business objectives, and how it plans to achieve them. It includes data regarding business goals, marketing strategies, products, services, market research, financial projections, and the dream team.

Pretty much everything a company will use to achieve its intentions.

Okay! And what about the business proposal?

What is a business proposal?

On the other hand, a business proposal is a document that describes your business’s offerings, like a product or service, to help you win potential clients and partners.

It also outlines your business, including its unique value proposition and how your company can help solve customers’ specific problems.

Now that we know the two business documents aren’t the same let’s see how they are different and in what ways.

Business plan vs. business proposal: How are they different?

Even though used interchangeably (and wrongly), a business plan and proposal are poles apart. Here’s how:

Before you ask why you need a business plan , it’s, first and foremost, to legitimize a business idea that you’ve been brewing in your head.

But it’s also to document company strategies, objectives, and operations that help you create a clear idea on how to achieve your company goals. All that data becomes one source of truth that works as a communication tool. That becomes your golden ticket to wooing investors and lenders.

On the other hand, a business proposal’s purpose is entirely about convincing a potential client and partner that your project is worth their time and money.

Unlike a business plan, it only focuses on a specific product, service, or opportunity instead of the entire business.

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what's the difference between business proposal and business plan

2. Components and Structure

When you write your business plan , it will typically follow a specific structure containing the following components:

  • Executive summary: This summary summarizes your entire business plan, highlighting the most important aspects, such as your company’s mission, financial projections, and vision statement.
  • Company description: It reveals your company’s history, mission, value proposition, detailed description of products and services, achievements, and target market.
  • Industry or market analysis: This is an analysis of the industry landscape to gain statistics about market needs, size, trends, competitors, and target demographics.
  • Marketing plan: This includes different marketing strategies and approaches your company will take to market its products and services. It can be your pricing strategy, sales and distribution plan, and unique selling proposition.
  • Operations plan: This component reveals how a company’s operations would look on a day-to-day basis.
  • Organizational structure and management team: This section provides an overview of your company’s structure and how its management teams will execute the operations plan effectively.
  • Financial projections and goals: This section contains a company’s financial performance, including income, sales goals, cash flow projections, and balance sheets.

Similarly, when you write a business proposal , you’ll typically encounter a structure as well. It goes like this:

  • Cover or title page: To make a first impression. It can contain aesthetic visuals.
  • Introduction: To introduce yourself and your company. Also, briefly explain how your product or service will solve a specific problem.
  • Statement of the problem or project: To explain your understanding of the customer’s need, its importance in addressing it, and your right-fit, proposed solution.
  • Table of contents: To make your data essay accessible.
  • Project details: To communicate essential data, including objective, scope, timeline, key stakeholders, disclaimers, cost, and conclusion.
  • Agreement with a signature box: To obtain the client’s signature.

3. Audience

A business plan’s target audience is internal stakeholders, investors, and lenders interested in your company’s long-term goals and path to success.

On the flip side, business proposals go to potential clients from established businesses. They target external or new clients, partners, or funding agencies with a specific focus on:

  • Addressing customer needs
  • Solving customer problems
  • Or seizing opportunities

Do you know how many types of businesses exist today? Two words: Too many!

Now, that implies there are many different types of business plans. But here’s a quick list of the most common types:

  • Startup business plan: This plan describes the foundation of a new business with room to adjust as the company grows. It’s given to potential investors to ask for startup funding.
  • Internal business plan: In this plan, company leaders communicate business goals, strategy, and performance. The aim is to keep the board and the team in sync regarding business objectives.
  • Strategic business plan: This plan documents the framework required to keep long-term goals and company vision intact.
  • Growth business plan: Also known as an expansion plan, this plan describes how a company is trying to grow and hence requires greater resources like more employees, funds, materials, etc.

Business proposal types can be broadly divided into two categories:

  • Solicited business proposals: In this case, a prospective client requests the informational document from you directly or expects to receive it—implicating their interest in your products or services.
  • Unsolicited business proposals: Here, no client requests the documents. Instead, you take the cold email approach and send your unsolicited proposals to people you think are prospective clients or partners.

Business Proposal and Planning Best Practices

It’s already challenging to overcome market entry barriers in saturated markets and persuade potential investors. Creating a compelling business proposal and plan shouldn’t be too!

Here’s how to go about it:

  • Clearly define your business goals and objectives.
  • Make sure you get your audience right. (Business plans and proposals have different audiences, remember?)
  • Conduct in depth research and analysis.
  • Use pictures along with words, such as visuals and statistics, to support your claims and projections.
  • Pay attention to the writing style, structure, and tone depending on your audience and purpose.
  • Use software like an AI business plan generator or proposal templates to save time and effort.
  • Review and revise regularly.

Start creating effective business plans and proposals using Upmetrics

It’s okay if you were confused about the difference between a business plan and a proposal before today. You now know the distinction between the two lies in their purpose, components, structure, audience, and type.

While a business plan provides a thorough overview of the entire business and targets internal stakeholders, investors, and lenders, a business proposal focuses on specific projects or opportunities and targets external clients, partners, or funding agencies.

When you understand these differences and employ the best practices in creating both documents, your business can effectively communicate its vision, strategy, and value proposition, securing a solid spot in this competitive world.

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

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Frequently Asked Questions

What is the difference between a business plan and a business idea.

A business idea is a concept’s initial spark for a product, service, or opportunity. However, a business plan is a detailed document outlining how a business idea will be executed and managed.

How many pages is a business proposal?

A good proposal is 10-20 pages long. However, it can be longer based on the industry, buyer requirements, product or service type, the scale of buyer needs, and other aspects unique to the business.

What comes first, a business plan or business proposal?

The business plan comes first since it legitimizes a business idea. Then comes a proposal because it’s specific to a particular project or opportunity and not the business as a whole.

Do I actually need a business plan?

A business plan is a detailed roadmap for your entire venture. It helps you gain investments, beat competition, make sound decisions, communicate with stakeholders, and identify risks. So, yes, you need a business plan.

About the Author

what's the difference between business proposal and business plan

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Business Plan vs Proposal: An In-Depth Comparison

Business Plan vs Proposal An In-Depth Comparison Featured Image

Explore the distinguishing factors and circumstances that make a Business Plan or Business Proposal more fitting for driving success and growth in your enterprise. Gain insights into the purpose, audience, and strategic value of each document, and learn when it’s best to utilize a Business Plan or pitch with a Business Proposal.

Table of Contents

What is the Main Difference Between a Business Plan and a Business Proposal?

The main difference between a Business Plan and a Business Proposal is that a business plan is a formal document that outlines the company’s goals, strategies, market analysis, financial needs, and projections for the future, aimed at providing a roadmap for the business’s success and often used to secure funding or guide the management team. On the other hand, a business proposal is a tailored document created to pitch a specific product, service, or solution to a potential client or partner, detailing how the business can fulfill a particular need or solve a specific problem for the recipient, often with the goal of initiating a transaction or project.

Understanding Business Plans and Business Proposals

A Business Plan is a comprehensive document that outlines a company’s objectives, strategies, market analysis, financial forecasts, and operational structures. It primarily serves as an internal roadmap for the company’s strategic direction and helps to attract investors by showcasing the company’s potential for growth and profit. Business plans are often developed during the foundational stages of a company and updated periodically to guide the company through different stages of growth.

A Business Proposal , on the other hand, is a targeted pitch provided to a specific client or partner to convince them to do business with you. Unlike a business plan, a business proposal is not a broad overview of the entire company. Instead, it is a customized suggestion that outlines how your business can solve a particular problem or meet a specific need of the prospective client. The proposal highlights the benefits of selecting your company’s products or services and typically includes pricing, terms, and conditions for a potential engagement or project.

Key Differences between a Business Plan and a Business Proposal

  • Purpose : A business plan is primarily used for strategic planning and securing investment, while a business proposal is aimed at winning a specific contract or project.
  • Audience : The audience for a business plan is typically potential investors, stakeholders, or company management. On the other hand, the business proposal is directed towards a specific client or partner.
  • Focus : A business plan covers the entire company’s goals and operations, whereas a business proposal targets a specific offering for the client.
  • Details : While business plans include detailed financial projections and market analysis, business proposals focus on how your company can meet the client’s needs and the costs associated with your proposition.
  • Frequency : Business plans are created infrequently, often at startup or significant growth stages, while business proposals are generated as needed when pursuing new business opportunities.
  • Structure : Business plans have a standard structure, including an executive summary, company overview, products/services, and financials, whereas proposals are tailored to the client’s request.
  • Standardization : Business plans tend to follow a similar format from one to the next, while proposals are highly customized to align with the potential client’s requirements.
  • Duration : The time horizon in a business plan can span several years, reflecting long-term planning, but a business proposal typically concerns the timeframe for a specific project or service offering.

Key Similarities between a Business Plan and a Business Proposal

  • Strategic Elements : Both documents outline strategic approaches, whether for the company as a whole or a specific project.
  • Research : Thorough market research is essential in creating either a business plan or a business proposal to ensure feasibility and competitiveness .
  • Objective Setting : Each document includes clear objectives that the company wishes to achieve, be it long-term company goals or objectives of a contract.
  • Persuasive Nature : Both are meant to be persuasive documents that convince the reader to invest in the company or to hire the company for services/products.
  • Professional Presentation : A business plan and a business proposal should both be presented in a professional manner, well-organized and free of errors, to make the best impression.
  • Financial Information : Financial aspects are crucial in both; while a business plan may have more comprehensive financial projections, a proposal should still outline costs and pricing models.
  • Action Plan : Action steps or milestones are outlined in both to guide the intended strategy into practical steps or to give the prospective client a clear timeline for project completion.

Advantages of a Business Plan Over a Business Proposal

  • Clarity and focus : A business plan provides a clear roadmap for your company , detailing your objectives, strategies, and financial projections. It enables you to stay focused on your long-term goals and the steps required to reach them.
  • Risk assessment : It allows for a thorough risk assessment, helping you foresee potential challenges and devise strategies to mitigate them.
  • Investor attraction : A well-crafted business plan is essential for attracting investors and lenders as it showcases the viability and profitability of your business idea.
  • Strategic planning : The business plan acts as a strategic planning tool, helping you to align your short-term and long-term goals with the overall vision of the business.
  • Operational guidance : It provides detailed operational guidance, outlining day-to-day activities, management responsibilities, and the organizational structure.
  • Performance tracking : By setting benchmarks and performance metrics, a business plan makes it easier to track progress and measure success over time.
  • Market analysis : A business plan includes an extensive market analysis, offering insights into your target market, competition, and market trends, which are crucial for making informed decisions.

Disadvantages of a Business Plan Compared to a Business Proposal

  • Inflexibility : A business plan can be quite rigid, with a focus on long-term strategies and projections that might not adapt well to rapid changes in the market.
  • Time-consuming : Preparing a comprehensive business plan requires a significant amount of time and effort, potentially diverting resources from immediate business opportunities.
  • Outdated information : A business plan might quickly become outdated if the market or the company’s circumstances change, requiring frequent revisions.
  • Cost : The production of a business plan can be costly, especially if it necessitates the expertise of consultants or outside advisers.
  • Overemphasis on planning : There’s a risk of over-planning and under-executing, where too much time is spent on creating the perfect business plan instead of taking action.
  • Complexity : A business plan’s complexity might be intimidating or overwhelming for small business owners who may prefer the simplicity and directness of a business proposal.
  • Less tailored : While a business proposal is often customized to the needs and interests of a specific client or investor, a business plan is a broader document that may not address specific concerns or questions from potential stakeholders.

Advantages of a Business Proposal Over a Business Plan

  • Focus on Specificity : A business proposal is usually tailored to a specific client or project, which means it’s highly targeted and practical. This specificity allows the business to directly address the client’s needs and provide a customized solution that a general business plan cannot offer.
  • Rapid Execution : Proposals tend to be shorter and more concise, which allows for quicker evaluation and a faster start on the project. Businesses can get to work immediately after the proposal is accepted, shortening the time from planning to action.
  • Persuasive Element : A business proposal aims to persuade a particular client or investor to buy into the idea, product, or service. This persuasive nature means that proposals often focus on benefits and competitive advantages, potentially leading to a higher success rate in securing funding or partnership.
  • Adaptability : Since a proposal is typically for a particular client or project, it can be easily adjusted for different opportunities or audiences without reworking an entire business plan. This adaptability makes it more versatile in responding to market changes.
  • Ease of Preparation : A business proposal can be less daunting to create than a full-blown business plan as it generally does not require as much market analysis and financial forecasting. It allows the business to focus on the immediate opportunity rather than extensive strategic planning.
  • Potential for Immediate Feedback : When you present a business proposal, you often do so in a setting that allows for immediate questions and feedback. This gives you the chance to quickly address concerns, modify your offer, and improve the chances of an agreement.
  • Enhanced Relationship Building : Crafting a proposal requires understanding the client’s needs and objectives deeply, often leading to stronger client-business relationships. This rapport can be beneficial for both future business and referrals.

Disadvantages of a Business Proposal When Compared to a Business Plan

  • Lack of Long-term Vision : A business proposal is often focused on the immediate project and may not outline the long-term strategic direction of the company as comprehensively as a business plan would.
  • Limited Scope : Proposals generally address specific aspects of a business’s operations rather than providing a complete picture. This narrow focus might overlook broader opportunities or challenges that a business plan would typically account for.
  • Missed Detail : While business proposals are succinct, the brevity can sometimes result in the omission of important details that would be standard in a business plan, such as thorough market analysis or full financial projections.
  • Potential Dependency : If a company relies too much on individual proposals for direction, it might find itself without a cohesive strategy which a business plan is designed to provide. This can lead to a reactive rather than proactive business approach.
  • Risk of Assuming Knowledge : Proposals may assume that the reader has a certain level of understanding about the company or product, which can be a risky assumption if the reader is new to the business or its offerings.
  • Need for Customization : Each business proposal needs to be customized for its intended audience, which can be resource-intensive when dealing with multiple prospects or regular tender submissions.
  • Limited Investor Appeal : Investors often prefer to understand the comprehensive strategy and the broader financial implications of a business, something a focused business proposal may fail to communicate in comparison to a detailed business plan.

Situations When a Business Plan Is Preferable to a Business Proposal

  • Establishing Clear Direction : When a new business is just starting out, laying out a comprehensive business plan is crucial for establishing a clear direction and objectives for the business. It serves as a roadmap for where the owners want to take the company and how they plan to get there.
  • Securing Funding from Investors : A business plan is generally required for entrepreneurs seeking investment or loans. It presents detailed financial projections, market analysis, and business strategies that are essential to convince investors or banks to finance the venture.
  • Long-term Strategic Planning : For setting long-term goals and defining the vision of the business, a business plan is more appropriate because it takes a broader view of the business’s place in the market and its growth strategy over the coming years.
  • Developing Comprehensive Financial Projections : A business plan includes detailed financial forecasts that cover multiple years. This level of detail is necessary for stakeholders to understand the financial trajectory and potential of the company .

Situations When a Business Proposal Is Preferable to a Business Plan

  • Responding to Specific Client Requests : A business proposal is tailored to the needs and specifications of a potential client or partner. When a business wants to offer solutions to another company’s problem, a proposal is best suited for outlining how it will meet those specific needs.
  • Competitive Bidding Situations : When entering a bid to win a contract, a business proposal is more advantageous as it focuses on why the business is the best fit for the project, detailing its approach, unique benefits, and value proposition.
  • Establishing Partnership Agreements : If a company is looking to form a collaboration or partnership, a business proposal lays out the terms and benefits of the partnership, which is more specific than the broader scope of a business plan.
  • Project-driven Opportunities : For businesses that operate on a project-by-project basis, such as construction or consulting, business proposals are the better tool. They provide prospective clients with a detailed breakdown of the objectives, strategies, and costs for each unique project.

What components should be included in a business plan?

  • Executive Summary : An overview of the business and its strategy
  • Company Description : Legal establishment, history, start-up plans, etc.
  • Market Analysis : Industry, market and competitor research
  • Organization and Management : Business and management structure
  • Service or Product Line : Description of what you’re selling
  • Marketing and Sales Strategies : How you’ll attract and retain customers
  • Funding Request : Your current funding requirements
  • Financial Projections : Balance sheets, cash flow statements, and income statement forecasts
  • Appendix : An optional section that includes résumés, permits, and other legal documents

How often should a business plan be revised?

A business plan should be reviewed and revised at least annually, or more frequently if there are significant changes in the market, the business model, or if new challenges or opportunities arise .

In what scenarios is a business proposal unnecessary?

A business proposal may not be necessary when transactions are straightforward and do not require detailed explanations, such as standard retail sales or when there is already an established relationship with the client based on trust and familiarity.

Can a business proposal lead to a long-term relationship with a client?

Absolutely. If a proposal leads to a successful project and client satisfaction, it can serve as the foundation for a long-term business relationship and future projects or collaborations.

What is an unsolicited business proposal?

An unsolicited business proposal is one that is offered without an explicit request from the potential client. It often reflects the proposer’s initiative to identify potential needs of the recipient and offer solutions to unaddressed challenges.

How can you make a business proposal stand out?

To make a business proposal stand out, it should clearly articulate the unique value proposition, be tailored to the client’s specific needs, contain compelling and concise content, and demonstrate a deep understanding of the client’s industry and challenges.

Are there any legal considerations when drafting a business proposal?

Yes, a business proposal should ensure that all claims and statements are truthful and that no proprietary or confidential information is disclosed without permission. Additionally, the terms and conditions should be clearly outlined to avoid any misunderstandings, and if accepted, it can be the basis for a legally binding contract.

Business Plan vs Proposal Summary

The decision between a Business Plan and a Business Proposal hinges on the specific requirements, goals, and context of your enterprise. A Business Plan lays the foundation for your company’s long-term strategy, risk mitigation, and operational guidance, with an expansive view of the business’s aims and the means to attract investors. Conversely, a Business Proposal concentrates on the immediacy of client-specific projects, presenting a tailored solution with a persuasive edge to secure contracts and foster client relationships swiftly.

About The Author

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Hidayat Rizvi

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what's the difference between business proposal and business plan

Comparison Between Business Proposal and Business Plan

Conducting a comparison between business proposal and business plan enables you to highlight the differences between the two. 3 min read updated on February 01, 2023

Updated November 12, 2020:

Conducting a comparison between a business proposal and a business plan enables you to highlight the differences between the two. Business plans are documents detailing how owners want to set up their business, their goals and objectives, and the processes and methods required to achieve these goals.

Understanding the Features of a Business Plan

A business plan is a document that describes in detail how your business is set up, the vision of the company, and the methods and process for realizing business goals.

A comprehensive business plan should provide detail on your:

  • Products and services.
  • Business structure.
  • Marketing strategy and market research.
  • Budgetary expenses.
  • Financial projections for the next five years.

Benefits of Drafting a Business Plan

Although developing a business plan takes a lot of research, planning, and calculation, it is well worth it. Drafting a business plan is a good idea for existing businesses and startups alike.

The reflection and time spent while creating your business plan will clarify your business ideas, providing you with insights into aspects of your business that you may not have considered, and help you strategize.

A well-written business plan is a blueprint for success because it outlines all the steps required to move your business from the ideation stage to reality.

However, not all business plans are meant to be executed. You could discover during the research stage that your business idea isn't right for implementation. Realizing this earlier on means you can save yourself time and money that you would have invested in a dead-end idea.

Before trying to raise funds for a business loan through an angel investor, incubator, or venture capitalist, ensure that you have thoroughly researched your business plan. Developing a well-researched business plan should take approximately six weeks, so writing your plan a day before meeting with a potential investor won't cut it.

Your business plan should serve two purposes:

  • To provide suppliers and investors with information about the viability of a business.
  • To keep an accurate record of business goals and the steps required to achieve them.

The following is a sample structure you can use to prepare your business plan:

  • Executive Summary.
  • Business Description.
  • Market Analysis & Strategies.
  • Design and Development Plan.
  • Management and Organization.
  • Service/Product Line.
  • Sales and Marketing.
  • Funding Requests.
  • Financial Projection.

What is a Business Proposal?

Business proposals are documents proposing a business arrangement between you and another enterprise. The two main categories are:

  • Non-invited.

When large corporations or the government want to purchase products or services from private suppliers, they usually post a public tender inviting contractors to submit a bid. The winning bid will be selected from those submitted by interested contractors.

Some organizations may also send RFPs (Request for Proposals) to select businesses that they are considering as potential suppliers. In this instance, you will compete against a handful of pre-selected contractors. Usually, the client provides a Bidding document stipulating the categories of information to be detailed as well as the style and type of proposal they expect from interested contractors.

If the Bidding document is not available, it is up to the contractors to decide what style of the proposal to present.

Companies that respond to a call for tender or an RFP are competing with other enterprises similar to theirs. As such, they must present themselves in the best possible light to win the bid.

Non-invited Proposal

Unlike invited proposals where the clients expect a bid for a product or service they need, an uninvited proposal is sent to solicit a business arrangement. You may have an idea for a product or service that will be beneficial to Company X and you have the ability to provide the service/product.

To indicate your interest in undertaking business dealings with Company X, you send an uninvited proposal stating your intentions to form a business relationship.

The company may or may not be open to your proposal; however, if it is interested, you don't have to worry about competing with other bidders.

To boost your chances of your non-invited proposal being accepted, you must market both your concept and your company. You must convince the prospective client of the value of the product or service as well as the stability and credibility of your company.

If you need help with a comparison between a business proposal and business plan, you can post your legal need on the UpCounsel marketplace. UpCounsel accepts only the top percent of lawyers on its site. Lawyers on UpCounsel come from prestigious law schools like Yale Law and Harvard Law and usually have 14 years of legal experience, including work on behalf of or with companies like Airbnb, Menlo Ventures, and Google.

Hire the top business lawyers and save up to 60% on legal fees

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Difference Between a Business Plan and a Business Proposal

what's the difference between business proposal and business plan

Table of contents

It’s natural to get confused between a business proposal and a business plan if you are planning to turn your idea into reality. While business proposals and plans may sound similar on the surface, they have differences — such as distinct purposes and formats. 

A business plan describes your business goals, strategies, and financial projections. A business proposal, on the other hand, proposes a specific solution to a problem or opportunity and helps you persuade the relevant stakeholder to invest in your business. 

However, writing a business proposal or a business plan can be challenging, especially if you are confused about their purpose. In this blog, we will explain the difference between a business plan and a business proposal and its major components.

Business Plan

A business plan tells the investors how you plan to ship your product to enough people to clock revenue. It’s about the strategies that will make you the first buck. 

A business plan keeps your team on the same page — you can use it as a guiding light. It can help you track the progress of your business, give you a roadmap, and help you make decisions about your business’s future.

Plus, it can be helpful when it comes to pitching your business idea to a third party, for example, when seeking a loan.

Components of a Business Plan

A business plan is majorly divided into three sections, which include an executive summary, a sales and marketing strategy, and a financial plan. 

An executive summary is a brief, clear, and compelling overview of your business. It is usually the first section of the document, and it contains the most important information, such as your strengths. 

These can be further broken down into the following sections:

  • Description of products and services, including mission, vision, and objectives of the business
  • Target market
  • Competitive advantage
  • Industry and Competitor Analysis
  • Marketing strategy
  • Operating plan
  • Team structure and qualifications
  • Internal business analysis
  • Management introduction 
  • Financial analysis
  • Cash flow statement or sales forecast
  • Break-even analysis

Business Proposal

A business proposal is a separate written document that outlines a specific business opportunity, project, or idea and presents it to potential clients. 

It intends to persuade them to take action, such as accepting a business deal or entering into a partnership, thereby helping you get new customers or partners. 

A business proposal should be customized to the needs and interests of the receiver. A generic proposal will rarely help you meet your business goals. 

At the same time, ensure your proposal is well-organized, persuasive, and creative. Check out these free business proposal templates to impress your clients. 

Solicited and Unsolicited Business Proposals

Proposals are solicited from you, or you send them on your initiative. 

You write a solicited proposal in response to a prospect’s or customer’s request for a product. They may ask you verbally, or they may issue a written request for proposals (RFP). A solicited business proposal contains a detailed description of the product, service, or solution that you offer to solve the customer's problem or need. It’s generally easier to write because you know what the customer wants or expects. 

But if you’re writing the proposal on your own, which is the case with unsolicited business proposals, then you’re convincing the receiver to work with you or buy from you. Such proposals are often challenging to write because you have to convince them they have a problem and you have a solution.

Components of a Business Proposal

The following are the key components of a business proposal :

  • Executive summary
  • Introduction
  • Problem statement
  • Scope of work
  • Benefits of Return on Investment (ROI)
  • Call to Action (CTA)

Business Plan vs. Business Proposal

While a business plan outlines your goals and explains how you will achieve them, a proposal sells your product to potential customers.

In the following table, we have summarized the main differences between a business plan and a business proposal:

what's the difference between business proposal and business plan

Streamline the proposal creation process

To wrap up, a business proposal is a document that pitches your products or services to a potential client, while a business plan outlines your goals, strategies, and financial projections for your business. 

With business management software like Cone, you can easily streamline and automate your proposal creation while ensuring your proposals are bespoke and customized. Sign up for free and experience the seamless proposal creation process for yourself. While you’re at it, check out other business proposals and management resources we have for you.

How to Write a Business Proposal

Author: Briana Morgaine

Briana Morgaine

8 min. read

Updated March 18, 2024

A business proposal can make or break your chances of securing a new client. Write a great one, and you’ll likely snag their business.

Write a poor one, and you might lose out—even if you’re offering the best service out there. So, how do you write a business proposal? What is the proper format? What do you need to include?

While it all depends on your industry, and whether or not you’re offering a product or service, writing a business proposal is pretty straightforward. We’ll answer all those questions and more throughout the course of this guide. 

  • What to expect with this business proposal guide

Whether you’re starting fresh or need to look at a specific section, here’s what we’ll be covering in this guide. 

  • What a business proposal is
  • The differences between a business proposal and a business plan
  • The format of a business proposal
  • How long to make your business proposal
  • How to write a business proposal

You can download a  free business proposal template here  to start writing up your own proposal as you work through this article. By the end, you’ll be prepared to develop a well-written business proposal that can explain your business clearly and win more clients. Let’s get started.

  • What is a business proposal?

A business proposal is a document you’d send to a prospective client, outlining the service you’re offering, and explaining why you’re the best person for the job. 

It’s a  pitch by a business or individual  to complete a specific job or project, to supply a service, or, in some instances, to be the vendor of a certain product.

What are the different types of business proposals?

A business proposal can be either solicited or unsolicited. With a solicited proposal, the prospective client will put out a request for proposals; with an unsolicited business proposal, you are approaching a client in hopes of attracting their business, even though they did not explicitly request a proposal.  

While both are commonplace, a solicited proposal is an easier sell, as your prospective client has already decided that they want to make a purchase or use a service, and they’re evaluating possible vendors or businesses.

With a solicited proposal, your prospective client might have issued an RFP, or “request for proposal.” This is exactly what it sounds like—they want you to send over a business proposal so they can take a look at it.

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  • Differences between a business proposal and a business plan

A business proposal is not the same as a  business plan . This is the most common misconception, but while there are areas of overlap (like your  executive summary ) the two are different.

That being said, you can certainly pull information from your business plan while writing your business proposal—in fact, that’s a great way to start.

But don’t confuse the two; they are distinct and separate. In short, a business plan represents the cohesive strategy of how your business operates and makes money. A business proposal is an official pitch to clients selling your products or services. 

A business proposal outlines a particular product or service offered by an established business to a prospective client.

You’re trying to sell your prospective client on your product or service, not on your business itself. You’re not after funding, as you are with a business plan, you’re trying to make a sale.

A business proposal is also not an estimate; although you’ll likely touch on costs and pricing in your business proposal, an estimate is much more informal and just a quick look at the costs, not the whole picture.

  • What goes into a business proposal?

Your business proposal should address the three Ps:

  • Problem statement: What your customer’s current problem is
  • Proposed solution: How your business solves that problem better than other solutions
  • Pricing: How much that solution costs compared to alternatives

If you’re stuck on how to start, maybe try brainstorming first; start with these three points, and you’ll have a rough, bare-bones version of your business proposal.

Once you’ve done that if you’re ready to go more in-depth, here is a step-by-step look at how to format your business proposal.

Your business proposal should start with a title page, which should include your name, the name of your company, the name of the person to whom you’re submitting your proposal, and the date submitted.

Table of contents

Depending on how long your business proposal is, a table of contents is a nice touch. Include it after your title page, and before you launch into any details. If you’re delivering it as a PDF, including anchor links down to each section, so it’s easy to get to specific areas. 

Executive summary

Introduce your proposal with a great executive summary, one that really sells your business and the products or services you provide—it’s about why you’re the right company for the job. You can draw from your business plan’s executive summary here, too.

Statement of problem, issue, or job at hand

Following your executive summary, go on to discuss the problem that the client is currently facing. Think of “problem” or “issue” loosely; after all, their main problem may just be finding the right person to complete their project. But be sure you understand why they want the product or service they’re seeking. If the proposal is for developing a brand new website, make sure you understand what they want to get out of the site—better sales, more content management flexibility. 

This is the place to show your new client that you  understand their needs , and fully grasp the issue they are trying to solve. Take this opportunity to restate the issue they are facing in your own words so that they know you understand what they are looking for.

Approach and methodology

This section shows how you plan to tackle your potential client’s problem, and the steps you’ll take to carry out your plan.

This is where you’ll get into the nitty-gritty of how you actually plan to fulfill your client’s needs. While earlier sections might have been a bit surface-level, this section of the business proposal is where you’ll go into detail about what steps you’ll take to solve their problem.

Be careful of going into  too  much detail, though—keep the jargon to a minimum. Your client should be able to follow along and get a clear sense of your plan, but you don’t want to drown them in minutiae.

Qualifications

Go ahead, brag a little—this is the section of your business proposal where you get to convince your potential client why you are the most qualified person to take on the job.

You can mention any relevant education, industry-specific training, or certifications you have, your past successful projects of a similar nature, years of experience, and so on.

Schedule and benchmarks

Be clear with your potential client: How long will your proposed project take?

Making sure you and your prospective client are on the same page from the outset will help make sure that the relationship stays positive for both of you, and that you don’t set your client up with unrealistic expectations.

While you might be tempted to underestimate how long it will take you to complete the project, don’t. Don’t promise what you can’t deliver!

If you’re offering a product, this section might not be applicable to you, so feel free to omit it. The business proposal format is flexible, so tailor it to suit your business and industry.

Cost, payment, and any legal matters

Here is where you get down to brass tacks and state the cost, and payment schedule if necessary.

How you structure this section will largely depend on the particular project or service you are offering. A section entitled “Fee Summary” may be sufficient if one-time payment is required; otherwise, a “Fee Schedule” list or pricing table might be more appropriate. Always refer back to the client’s RFP whenever possible, to make sure you’re supplying them with all the information they need to help make their decision.

If there are any legal issues to attend to, such as permits or licensing, include this information here. Feel free to add a section entirely devoted to handling the legal side of the project if need be.

This is your final sell—don’t be afraid to detail for your prospective client all they have to gain by choosing you to complete the project.

Impress upon your clients why you are the best choice, and all the ways in which their business will benefit from choosing you and your business as their solution.

  • How long should a business proposal be?

When it comes to the format of a business proposal, this is the million-dollar question without an answer. Remember in school, when you’d ask your teacher how long an essay should be, and they’d reply, “as long as it takes to answer the question.”

The same applies to your business proposal. It ultimately depends on your industry, the scope of the project, and the client’s specifications in terms of detail and elements included.

That being said, the tighter your initial proposal can be and the more directly you can make your point, the easier it will be to pitch it to clients. Start by following the business proposal format above as a guide, and you’ll be well on your way to creating a winning business proposal—and securing new clients.

Content Author: Briana Morgaine

Bri Morgaine is a seasoned content marketing leader with a decade of experience in copy editing, social media operations, and content strategy— having honed her skills at industry giants like Palo Alto Software and Andreessen Horowitz.

Check out LivePlan

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what's the difference between business proposal and business plan

April 13, 2023

Can't find what you're looking for?

Difference Between Business Plan and Business Proposal

One of the most searched queries on Google is "business proposal vs business plan", and we are here to break the confusion.

What's Inside?

You are starting a new business, and you aren't sure what you need to do. You heard that you needed a business proposal and a business plan, but you weren't sure what's the difference between them.

You did some research and couldn't find what you are looking for... You decided to create both of them, but you need weeks to write and refine them.

business proposal vs business plan 2

Don't worry, we are here to remove this confusing process. Let's see what's the difference between them. You may, and probably do need both of them. But which one should be your priority?

The Difference Between a Business Plan and a Business Proposal

When you're starting a business, one of the most important things you'll need to do is create a business plan . This document will outline your company's goals and strategies for achieving them over the next five years.

business proposal vs business plan 3

A business proposal , on the other hand, is a sales document that you put together to pitch potential projects to clients. It's not the same as a business plan, and it usually includes cost quotes for potential projects.

The main difference between a business proposal and a business plan is that, while a business plan is informative, a business proposal is intended to showcase operations, goals, and potential.

Executive Summary

The executive summary of a business plan will include information about the company leadership structure or the introduction of management. Generally, business plans include an executive summary part while business plans don't.

We have seen some samples that use executive summaries but since the main goal is to close a deal. We suggest keeping them short and clean.

The business proposal format depends on whether the business is solicited or unsolicited . Details of products and services offered, the scope of work and responses to specific questions in an RFP are included in a business proposal.

business proposal vs business plan 4

A business plan documents the vision of a business and how it will be achieved. A business proposal offers comprehensive information for potential investors, suppliers, accountants, etc.

A proposal shows the external player what the company is all about and how it intends to carry out its project. Keep these differences in mind when you're putting together your next business presentation --you'll need to tailor your content accordingly!

What Are Business Plans?

A business plan is a document that outlines the business goals, strategies, and tactics a company will use to achieve those goals. The business plan also includes an overview of the company, its management team, the target market, and the products and services the company plans to offer.

It usually includes information about the company's products and services, target market, marketing plans , financial forecasts, and management team bios.

Here's a sample template to use while creating a detailed business plan.

What Is The Purpose of a Business Plan?

A business plan is a key document for any business. It lays out the goals and strategy of the business and helps to ensure that everyone involved in the business is on the same page. It can also be used as a tool to help secure funding from investors or banks.

A business plan is a document that outlines the strategy and goals of a company. It can be used as a planning tool , to track progress, or as a basis for making decisions . A well-written business plan provides a roadmap for the business , and it can help attract investors or partners.

There are many reasons to create a business plan. Some of the most common reasons include:

  • To track progress - A business plan can help you track your progress and ensure that you are on track to achieve your goals.
  • To make decisions - A business plan can provide guidance when making decisions about the future of your company.
  • As a planning tool - A business plan can help you identify potential problems and solutions, and it can be used to forecast future growth.
  • To attract investors or partners - A well-written business plan can help you attract investors or partners who share your vision for the company.

What is a business proposal?

A business proposal is a written document that offers a solution to a problem or a way to achieve a goal. It is often used to sell products or services to a potential customer. A business proposal must be well-written, clear, and concise in order to convince the reader to take the desired action.

business proposal vs business plan 5

A business proposal is a formal response sent to an RFP (request for proposals). It is a way for the seller to convince the buyer that their proposed solution is the right one in order to win business. Business proposals are meant to persuade a prospective client.

A business proposal typically consists of four main points: what are the challenges, how your solution solves the problems, why they should choose you over others, and the best pricing options available. The price is typically stated in the document. If a business is requesting proposals, they should be sent in their format. An RFP response should include specific details about the scope of work and the cost estimate.

Here's a sample template to use while creating a detailed business proposal.

Why do you need a business proposal?

A business proposal is a key part of the business development process . It is a document that outlines the business goals, strategies, and tactics that will be used to achieve those goals. A proposal is used to convince potential clients or partners that your business is the best option for them.

It's typically used to pitch an idea to a potential client or customer. A well-crafted proposal can help you win new business and close deals.

business proposal vs business plan 6

Your company might be expanding into a new market and need to propose a new product or service. Or, you might be approached by another company with an opportunity you'd like to explore. Maybe you've identified a gap in the market and want to propose a new product or service to fill it.

How To Prepare For a Business Proposal?

Well, we do have a comprehensive guide to business proposal creation with templates and examples, but if you need a more brief explanation, keep reading!

When preparing for a business proposal, it is important to do your research and understand the client's needs. You should also have a clear understanding of your own company's capabilities and what you can offer the client. Additionally, it is important to be well-organized and to have a strong pitch.

business plan for project teams

You should have a clear understanding of your target audience and what will appeal to them. You also need to have a good grasp of the competition and what they are offering. In addition, you should be familiar with the terms and conditions of any potential contracts that may be involved.

Your proposal should be neatly formatted and easy to read. It should also be free of grammatical errors and typos. Be sure to proofread your work carefully before submitting it.

Make sure you provide complete contact information, as well as an outline of your proposed solution or service. If possible, include testimonials from past clients who have been satisfied with your work.

Remember that you are offering a valuable service that can help the reader achieve their goals. Believe in yourself and your ability to succeed, and you will be able to deliver a winning proposal every time

How To Write a Business Proposal?

When writing a business proposal, make sure to follow this brief outline:

- Introduce yourself and your company

- Outline the proposal's purpose

- Explain the problem that you're trying to solve

- Describe your solution

- Explain the benefits of your solution

- List your qualifications

- Request a meeting

It should include an overview of the product or service, information about the company proposing it, financial projections, and terms and conditions. A well-crafted proposal can help your company win new contracts and increase sales.

Here's another sample template you can use while creating a business proposal:

Business Proposal Template Checklist

Here's a story of our customer John who joined the Decktopus community 2 years ago.

John had been working in sales for years, but he had never worked in a company that sold products. When he was hired by a new startup, he was excited about starting making sales and increasing profits. However, he soon realized that there was no one in the company who knew how to sell. The founder of the company told him that he would need to create a presentation template to share with the other reps.

business plan for marketing consulting

John wasn't sure where to start. He read article after article, trying to gather information about what made a good business proposal. After weeks of research, he finally created a template that he felt confident in sharing with his fellow reps. He was excited to see how it would help them increase sales and profits.

This is the outline we gathered while our support team helped him along the way:

-Executive Summary

-Problem/Opportunity Statement

-Business Plan

- Marketing Plan

-Financial Plan

Types Of Business Proposals

An unsolicited proposal is one in which the company offers a product or service to a potential customer who has not solicited it. Here's an unsolicited proposal template .

unsolicited business proposal cover

A solicited proposal is one in which the company responds to a request for proposal (RFP) from a potential customer. Here's a solicited proposal template .

simple solicited business proposal

A proposal to bid is a document that a company submits to a potential customer in response to an RFP.

The purpose of the proposal to bid is to persuade the potential customer that the bidder's product or service is the best option among those being considered.

Here's a proposal to bid template .

business bid proposal example

Business Plan Structure

A business plan has three main sections: the executive summary, a description of the business model, and financial projections.

The first section is an introduction that should be no more than one or two pages long. It should include a brief overview of your company, its products and services, and how you plan to make money.

The second section, a description of the business model, provides details about your company's competitive landscape, industry trends, and how you plan to reach your target market.

The marketing model is an informative section that should include detailed information about the industry competition and build-out plan. This part of the document can be several pages long and will help investors understand your company's place in the market.

business proposal templates

While all three sections are important, remember that potential investors will likely focus on the financial projections most closely when deciding whether to invest in your company. The financial projections section is important because it shows potential investors how you expect your business to grow over time.

A well-crafted business plan can help convince potential investors to put their money into your company.

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Business Proposal and Business Plan: What’s the Difference?

Business Proposal and Business Plan: What’s the Difference?

Business proposal and business plan are relatively similar but distinctively different terms, making many use these two words interchangeably.

You’ll see distinguishing features in their content, structure, writing style, purpose, and goals. Even so, there are various similarities between a business proposal and a business plan.

The main distinguishing factor to note is that a business proposal documents the growth strategy and presentation of facts, while a business proposal is a specific ask for an individual to take action (buy your service/product, partner with you in business, and invest in a particular business) . 

Let’s look at the two terms in detail and highlight a few examples when it’s appropriate to use.

What is a Business Proposal?

A business proposal is a company’s documentation that goes directly to its prospective. It’s usually written in an attempt to sell a company’s product or service.

While a business proposal is not an estimate, it’ll have certain financial details. An estimate is unofficial and simply a way to skim over the real costs without presenting the real picture.

In a nutshell, a business proposal shows a particular business idea intended to get investors to support this particular endeavor being suggested.

what's the difference between business proposal and business plan

Although a business proposal shows an overview of what the company does (just like a business plan), its main aim is to provide information about the suggested business idea. 

It answers any questions or concerns potential investors may have about the suggested business idea.

Prospero business proposal generator can help you easily draft a competitive and compelling proposal to beat other bids. With its user-friendly interface and various proposal templates , you don’t have to create everything from scratch.

what's the difference between business proposal and business plan

Let’s now look at the importance of a business proposal and a business plan.

Reasons for a Business Proposal

The main reason a proposal is written can only be understood based on the type of proposal you want to draft. They’re two types of proposals; invited and non-invited proposals.

Invited proposal

An invited proposal is submitted in response to an advertisement from a potential client. A good example is government agencies inviting contractors to bid on a particular service.

Alternatively, businesses request a proposal from a group of suppliers they’re willing to consider as prospective clients.

Non-invited proposals

Non-invited proposals, on the other hand, are submitted to potential clients even when they haven’t requested one. In both instances, a company must develop a compelling proposal to convince buyers. 

Proposals are limited in the scope of a particular need or project and written to specific audiences.

The main reason why businesses write proposals is to solicit or grow company opportunities. You can think of a proposal as an external document to present or sell the company to external players.

It shows what the business is all about and how it intends to carry out a particular project or use that opportunity to generate revenue for both parties.

What is a Business Plan?

A business plan is a factual description of a company on the operational and executive levels. It’s a written presentation of a company’s grand vision.

The document is typically tactical; it states where and when you want to start a project. Moreover, it will highlight when you’ll want to move on to the next phase of the project and how to accomplish that project.

what's the difference between business proposal and business plan

It makes potential investors interested in a company (especially small startups that haven’t made a name for themselves).

A business plan will also provide an idea of what the business requires from professionals, such as attorneys and potential employees. It indicates whether or not a company’s business goals are realistic, let alone achievable.

Reasons for a Business Plan

Business plans are visions for your company and how you intend to execute all these visions. They outline financial projections of what a business will cost to develop and operate, plus an estimate of the revenues the business will generate.

Its main purpose is to provide a reasonably detailed description of the company for use by potential investors, suppliers, accountants, and prospective employees, among other people. For instance, one of the prerequisites for an SBA loan is an extensive and organized business plan.

Moreover, it’ll provide a quick but comprehensive view of what your company does and its chances for success.

The main reason companies write business plans is to convey and record information.

Structure of a Business and Plan Proposal

Here, the two documents have various components featured on them. Here’s a detailed description of their structure below:

Structure of a Business Proposal

Overall, the structure of a proposal will depend on whether it’s solicited or unsolicited.

A solicited proposal responding to a request for proposal takes the format of an RFP. Here are the components of a business proposal:

  • Usually, it takes a quick description of products and services relevant to the RFP goals.
  • Outlining the company’s scope of work.
  • Answers to questions posed in the RFP.
  • Estimate detailing tools, materials, labor, delivery, and other elements that’ll affect the project’s cost.

An unsolicited proposal to create a business opportunity follows the same format. It, however, anticipates questions potential clients might have .

A proposal is a marketing document designed to convince prospects to do business by presenting a value disposition plus a call to action.

Try creating your business proposal here .

Structure of a Business Plan

A business plan has three components; sales tactics, business model description, and financial goals. More elaborately, it consists of the following section of information:

  • A summary of the executive
  • Product/service description
  • Industry analysis
  • Operating plan
  • Marketing strategies  
  • Internal analysis
  • Built-out plan
  • Structure of leadership 
  • Introduction of management 
  • Financial goals

The business plan is more like an information document displaying the company’s operation and potential.

Many companies fail to follow this format while writing their business plan or proposal, a reason why most don’t win bids or prospective clients. 

Using Prospero to write a professionally compelling business proposal and integrate your business plan can help you get investors interested in your company so that they want a sit at the table.

What’s the Difference Between a Business Plan and a Proposal?

Business proposals differ from business plans in content, writing style, purpose, goals, and structure.

The sole distinguishing factor between the two terms is that a business plan is a factual presentation of facts, whereas a business proposal is an external market document that highlights a quote and a call to action.

Let’s look at some distinguishing features between the two terms:

Business Proposal vs. Business Plan

A business plan provides a detailed description of how the business was set up, plus its project.

On the other hand, a business proposal is a purposeful sale document illustrating how a business will execute a particular project. Usually, it’s drawn and submitted to another enterprise or organization putting forward a business arrangement.

In addition, the structure of a business plan contains three elements, including a description of the business model , sales tactics, and financial projections.

On the other hand, the structure of a business proposal takes the format of an RFP if it’s solicited.

A business plan shows the scope of a business and, in turn, clarifies your thinking as a business owner and also gives you information that you hadn’t considered before.

Conversely, proposals show a limited scope of a specific project or need for a particular audience.

While trying to craft these two documents, you must seek proficient experts to help you write compelling proposals and plans to convince potential investors and other partners to invest in your business.

Types of Business Plans and Proposals

A business proposal can be divided into solicited and unsolicited proposals. How different are they? Let’s delve right in.

Solicited Proposals

This is presented in response to a request for proposal (RFP). It’s usually submitted responding to a work statement from sponsors.

These sponsors use the request for proposal to solicit a specific proposal for research, training, or to provide services or goods. The RFP includes standard terms, conditions, and assurance that the company is asked to accept. 

A good example is when an organization or government agency wanting to buy products or services from a particular sector invites contractors to place bids.

In other scenarios, some businesses will ask suppliers to provide RFP to those they’re considering a partnership with.

The business is competing against other businesses that want to secure the same contract. It’s, therefore, in their best interest to provide compelling and competitive business proposals.

Prospero can assist you in such instances; it has the experience and expertise to curate excellent proposals that win contracts. Call it today to generate a proposal with its Prospero business proposal generator .

Unsolicited Business Proposals

This proposal is submitted to potential clients, even when they haven’t asked for one.

In such circumstances, a business wanting to secure a contract will suggest a product or service to a potential organization in return for funds.

A good example is when an organization tends a proposal to develop an application or renders some training services to its staff.

Just like solicited business proposals, a company must curate a well-researched proposal that will convince prospective clients you’re the right candidate for the job.

Types of Business Plans

Business plans are also categorized into four types, including

  • short plans,
  • presentation plans,
  • working plans,
  • and what-if plans.

These types require different degrees of labor and are not always proportional to results.

Presentation Plan

Using PowerPoint to outlay information about a business changed the way companies created their business plan. Many businesses lose sleep trying to figure out how you’re going to present a business plan that can affect a company’s future.

what's the difference between business proposal and business plan

Working Plan

This is a plan used to operate your business. The plan can be long in detail but shorter in presentation. There’s no room for informality or candor while preparing it.

If you’re considering presenting this plan to a loan committee, you’ll have to describe a competing rival primarily on a price basis.

A working plan used to create outlines for internal use may have some elements omitted; probably, you’ll not need to add an appendix with a resume of key executives.

Internal policy considerations may guide what to include or exclude in the working plan.

What-If Plan

A business must prepare for unforeseen circumstances. The company may want to have a contingency plan when seeking bank financing.

This plan is usually curated in the worst-case scenario that you can foresee your business surviving. It’s important to shelter yourself from things like loss of market share, the defection of a key member of management, and heavy price competition.

A contingency plan can help cover the fears of bankers and investors by demonstrating that your business has considered more than one rosy circumstance.

Moreover, your business can benefit from a what-if plan in situation acquisition. It can help you outline the worth of the acquisition and how it can affect the core business.

In summary, you can say that a business plan is more of an internal document, whereas a business proposal is an external one that is used to sell the product or service of a company to prospective clients.

In addition, a business plan guides the activities of a company internally in terms of revenue projections and marketing strategies that must be achieved in a particular time frame.

On the other hand, a business proposal will show external parties like a government agency and sponsors what the business is all about to convince them to invest in your business. The proposal should outline how you will carry out a particular project to generate revenue.

Whether trying to curate a business plan or proposal, it has to be compelling and competitive to beat other bidders. 

Why Not Give Prospero A Try?

Working with Prospero to generate professionally written proposals or plans is essentially wise. It has a variety of templates for different industries and comes with a lot of customization options. Some ready-made content are also available so you won’t need to write from scratch every now and then.

You can manage and track the performance of your proposals through its built-in analytics, so your sales team would be more productive and efficient.

It’ll increase your chances of securing contracts and proposals that can take the business to the next level.

Sign up for free today and get your free trial!

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Difference Between a Business Plan & a Business Proposal

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Why Create a Business Plan?

How to rescind a business letter, 6 types of business plans.

  • How to Create a New Business Plan
  • How to Conclude a Business Plan

A business plan and a business proposal are very different documents, with different purposes and goals. A business plan is a factual broad description of a company on the executive and operational level. A business proposal is a focused sales document intended to describe how a company will approach a project, state the value of the project to the client and solicit the client's business. A business plan is a written presentation of fact. A business proposal is a quote and call to action.

Reasons for a Business Plan

A business plan documents your vision for your business and how you intend to achieve that vision. It contains financial projections of what the business will cost to develop and operate plus an estimation of the revenues to be generated. Its purpose is to provide a reasonably detailed explanation of your business for use by potential investors, suppliers, prospective employees, accountants, attorneys and other people who need a quick but comprehensive understanding of what your company does and its potential for success. The primary reason for a business plan is to record and convey information.

Reasons for a Business Proposal

Proposals may be unsolicited business ideas presented to a potential customer or partner, or they may be answers to requests for proposal submitted to your company by a potential client. They are limited in scope to a particular project or need. A business proposal also generally has a specific audience. The primary reason for a business proposal is to solicit or develop a business opportunity.

Business Plan Structure

A business plan has three elements: description of the business model, the marketing model and financial projections. It consists of informative sections, including the executive summary, business description, marketing model, analysis of industry competition, build-out plan, operations plan, introduction of management, and a discussion of financial issues and projection of results. It is introduced by an executive summary, which can be a dense abstract or a longer marketing tool to attract interest in the business plan. The business plan is an informational document designed to factually display your company's operations and potential.

Business Proposal Structure

A business proposal written in response to a Request for Proposal (RFP) should follow the format requested in the RFP. Generally, this involves a quick description of your company's services and products that are relevant to the goals of the RFP, a reiteration of the scope of work, answers to specific questions posed in the RFP and a quote detailing materials, tools, labor, delivery and other elements of the cost of the project.

An unsolicited business proposal intended to create and develop a business opportunity follows essentially the same format but anticipates questions the potential client might have. A proposal is more of a marketing document, designed to convince the audience to do business by presenting a value proposition and a call to action.

  • Entrepreneur: An Introduction to Business Plans
  • Forbes: The Difference Between a Business Plan and Planning

Victoria Duff specializes in entrepreneurial subjects, drawing on her experience as an acclaimed start-up facilitator, venture catalyst and investor relations manager. Since 1995 she has written many articles for e-zines and was a regular columnist for "Digital Coast Reporter" and "Developments Magazine." She holds a Bachelor of Arts in public administration from the University of California at Berkeley.

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The Difference Between A Business Plan And A Business Proposal

Difference Between A Business Plan and A Business Proposal

A business plan and a business proposal are two distinct documents. Most people mistake them for each other, and a lot of articles on the internet that teach how to write a business proposal are actually just explaining how to write a business plan.

While a business plan focuses on a company’s goals, the problems and solutions it’s trying to address, its potential market size, keys to success, products and services, market execution, and more, a business proposal on the other hand usually focuses on how a certain project would be executed, states a quote for the project, terms & conditions, and several other key pointers.

These two documents are very different with each serving distinct purposes. So it is important you know whether what you need is a business plan or a business proposal at any time.

See Also:   10 Reasons To Write A Business Plan

Reasons For A Business Plan

A business plan envisions your pipe dream. It shows how your business goals, objectives, philosophies, industry analysis, target market, products & services, market execution, competitive analysis, financial projections, and a whole lot more will position the business for success.

It is a detailed document that investors, banks, accountants, and financially savvy individuals can easily review to know what your business is about, its chances of success, and how you’ve planned to scale.

Business Plan Structure

In preparing a business plan, here is a sample structure you should follow to get it done right:

  • Executive Summary
  • Business Description
  • Market Analysis & Strategies
  • Design & Development Plan
  • Organization & Management
  • Service or Product Line
  • Sales & Marketing
  • Funding Request
  • Financial Projections

See Also:   How To Write A Business Plan: The Complete Guide

Reasons For A Business Proposal

Business proposals are usually solicited or unsolicited. A solicited business proposal is written upon request from an organization, institution, or individual. For example, if you receive a Request For Proposal (RFP), what you’re preparing would be a solicited business proposal. In this instance, you’d have to follow the requirements as stated in the RFP.

An unsolicited business proposal, on the other hand, is prepared in response to a client after a sales meeting, giving you more flexibility in curating the contents of the proposal.

Business proposals are limited in scope, and are thus, written for a specific audience.

Business Proposal Structure

Here’s a sample business proposal structure:

  • Introduction
  • Table of Contents
  • The Body of The Proposal

In your business proposal, you will detail the scope of the work, materials needed, cost estimates, project timeline, previous clients, team members, achievements, and a whole lot more in the body of the proposal. It’s a marketing tool, and its goal is to convince the target customer to do business with you.

See Also:   How To Write A Winning Business Proposal: The Complete Guide

What Then Do You Need?

The variations between a business plan and business proposal are wide apart. As shown in this article, they serve different audiences and are prepared for different reasons.

If your goal is to seek investment or a bank loan, a bank and investor ready business plan is what you need. But if your goals are to convince a client to use your service whether the client has asked for a document showing how much value you’d add to them or not, a business proposal is what you need.

See Also:   How To Write A Feasibility Study Report: The Complete Guide

What are your thoughts on the difference between a business plan and a business proposal? Let me know by leaving a comment below.

Image Source: businessnewsdaily.com

Stan Edom

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thanks for these information it is really gearing forward toward my goal.

I’m glad you find it valuable, Yusuf.

Do have a great time!

Thanks Edom, I have been reading your publication, they have inspiring, informative, education and above all priceless. keep up the good work.

samuel Chika

Thank you for the kind words and for being a reader, Chika.

I appreciate them.

Great read.I have always confused the two terms.Business plan means you plan for a business and that business has not yet started but business proposal it means you propose something in a business which is ready stand.Thanks for the detailed information.

You’re right Michael.

I’m glad you learned something from the article.

in my understanding, business plan is general road map for the company strategy, but business proposal is one away to find new market or potential client.

I was searching difference between B.Proposal and B.Plan. I found here, Thanks for the publication. IF you also publish “Samples” besides the templates will be more helpful to a person like me, who did not write proposal before.

My Best Regards

Thank you for reading and for the suggestion.

Hello Stan E.,

This is absolutely spot on. No unnecessary embellishments or needless journey. Straight to the point, self-explanatory and informative.

Thanks a million, Sir.

Thank you for reading, Figo.

Not many people really know the differences. They used both interchangeably. Thanks for the clarity.

Thanks Edom, your publication was most helpful to me. I am grateful sir, continue with the good work.

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The difference between a business plan and a business proposal

Whether you are in business, employment, or college pursuing a degree, understanding the basics of a business proposal is a skill that you must have. Most people use the terms business plan and business proposal interchangeably. These two documents are very different. A business plan is different from a business proposal in terms of content, structure, writing style, goals, and purpose. The most important difference to note is that a business plan is a written presentation of fact while a business proposal is a price quote and a call to action.

According to an article on Entrepreneur.com , a business plan is a document that outlines a detailed description of how a business is set up. It is a 5-year plan of a business showing the company structure, products and services, market findings from research, marketing strategy, planned budget and financial projections. It can be simply defined as the factual and wide description of a business and its projections. A business plan can be drawn by a start-up as well as a going concern.

A business proposal is a purposeful sales document formulated to illustrate how a business will carry out a project, give the value of the project to the prospective client and ask for the client's business. Therefore, it is a document that a business submits to another enterprise or organization putting forward a business arrangement.

A business plan ideally comprises three elements: description of the business model, the marketing strategy and financial projections. It includes informative sections, specifically the executive summary, business description (products and services), marketing plan, industry analysis (competitor analysis), build-out plan, internal analysis, operations plan, leadership structure or introduction of management, and financial projections -- discussion of financial concern and projection of results. The opening page is the executive summary. It can be an intense abstract or a detailed but precise marketing tool to draw interest in the plan. The business plan is an informational document intended to factually showcase the company's operations, goals and potential.

According to Sean Kerner from Tech Republic, the format of a business proposal depends on whether it solicited or unsolicited. A solicited proposal and in response to an RFP should take the format called for in the RFP. Usually, this entails a quick description of the services and products offered by your business and clearly showing their relevance to the goals of the RFP, a replication of the scope of work, response to specific questions raised in the RFP and a quotation detailing materials, equipment, labor, delivery and other basics of the project outlay. An unsolicited business proposal may or may not take the same format. The intention is to create and develop a business opportunity, and so it is advisable to follow the same format or any other that is popular with the industry or business. Be keen to address all the questions that the potential client might have. With an unsolicited proposal, it is up to you to decide the structure. Whichever format you choose, ensure that the proposal is professional, highlights key areas of interest, presents a value proposition, is thoroughly researched and loaded with facts and with a call to action.

A business plan is required for two main reasons. It clearly defines the scope of the business and in the process clarifies your thinking as the proprietor of the business. It offers you information that had not been considered previously. Simply put, it documents the vision of the business and how it will be achieved. This guides the business towards a practical strategy to guide the business for the time-frame enclosed by the plan. It is the blueprint to success of the business. It outlines strategies for converting the ideas into core competencies. It also presents the financial projections of starting and operating the business as well as estimation of revenue generation from business activities. Secondly, it offers comprehensive business information for use by potential investors and employees, suppliers, accountants, attorneys and other stakeholders. The primary function for a business plan is to record and pass on information.

A business plan is also used to raise funds in form of a business loan, venture capitalist, angel investors or incubation. When approaching these money lenders you must present a thoroughly researched and realistic business plan. The investors need to be sure that you are confident and truthful about the market statistics and financial projections indicated in the report. A business plan should be as truthful as possible because it is the blueprint and vision of the company. It provides a checklist of whether the objectives of the business are on track. According to experts, a professional business plan requires about six weeks of in-depth research and preparation. It is not possible to whip one a day before your appointment with investors.

The reason for a business proposal can be well explained based on the type of the proposal. There are two major types of business proposals: invited and non-invited. An invited proposal is submitted in response to an advertisement from the buyer or client. For instance, organization and government agencies wanting to purchases services and products from private suppliers invite contractors to place their bids. Alternatively, some businesses ask for Request for Proposals (RFP) from a selection of suppliers that they willing to consider as a prospective partner. In each case, the business is competing against other bidders. It is in the interest of your business to present a competitive and compelling business proposal.

Non-invited or unsolicited proposals are submitted to potential clients even when they have not requested for one. In this scenario, you give suggestions to the company or organization to purchase services or products in return for funds. For instance, you can tender a proposal to develop an app for an organization or training services for its staff. The most important thing in both cases is to come up with well researched offer to convince buyers. A business proposal is limited to the scope of the specific project or need. In addition, it has a specific audience. The primary function for a proposal is to solicit or grow a business opportunity.

You can look a business plan as more of an internal document. A proposal on the other hand is an external document used for presenting or selling the business to an external player. A business plan guides the activities of the business internally in terms of marketing strategies and revenue projections that should be achieved. A proposal shows the external players such as governments, donors or business partners what the business is all about and how it intends to carry out a project at hand or use the opportunity to generate revue for both partners.

For more information, here is an article on how to write a business proposal .

Entrepreneur.com: An Introduction to Business Plans https://www.entrepreneur.com/article/38290

Win more clients by creating impressive digital business proposals, price quotes, and contracts using ClientPoint Software

If you want your business proposals, price quotes, and contracts to stand out above your competitors and give you the best chance at winning new clients, use ClientPoint's Proposal Software . It makes creating and formatting professional business proposals, price quotes, and contracts fast and easy.

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Proposal writing tips, a business proposal checklist to help you win more clients, 8 reasons why paper-based business proposals are dead and digital business proposals are superior, business proposal template - how to write a business proposal.

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How to Write a Business Proposal in 2021: 6 Steps + 15 Free Templates

How to Write a Business Proposal in 2021: 6 Steps + 15 Free Templates

How to Write a Business Proposal

If you need to know how to write a business proposal, congratulations! You just found an amazing resource packed with business proposal examples and free templates to help you get started.

It’s totally normal to feel overwhelmed (and a little bit anxious) about writing a winning business proposal. You want to get it in as soon as possible, but you have no idea what to put in there, how long it should be, or even where to start.

However, should the task still seem insurmountable, or if you find yourself strapped for time, remember that there are professional services available that can assist. An option some businesses consider is to pay for research paper expertise, especially when their proposal requires substantial market analysis, competitive research, or financial forecasting. Engaging with professionals who can compile comprehensive, data-backed business proposals can not only elevate the quality of your submission but also significantly reduce the stress associated with such critical tasks.

Writing a business proposal doesn’t need to be daunting. In fact, if you soak up all of the information in this article, you’ll already be one step ahead of the competition. So relax, pour yourself a coffee, and let’s make your next business proposal easier to write.

Table of Contents

  • 1 What is a business proposal?
  • 2 Solicited and unsolicited proposals
  • 3 What does a business proposal include?
  • 4 What’s the difference between a business proposal and a business plan?
  • 5.1 Step 1 – Make sure you have all the information you need
  • 5.2 Step 2 – Sketch out the scope of the project
  • 5.3 Step 3 – Estimate the cost
  • 5.4 Step 4 – Start writing your business proposal
  • 5.5 Step 5 – edit and proofread
  • 5.6 Step 6 – send your proposal (and follow it up!).
  • 6.1 Proposify
  • 6.2 Free template number 1
  • 6.3 Free template number 2
  • 6.4 Free template number 3
  • 6.5 Free template number 4
  • 6.6 Free template number 5
  • 6.8 Free template number 6
  • 6.9 Free template number 7
  • 6.10 Free template number 8
  • 6.11 Free template number 9
  • 6.12 Free template number 10
  • 6.13 PandaDoc
  • 6.14 Free template number 11
  • 6.15 Free template number 12
  • 6.16 Free template number 13
  • 6.17 Free template number 14
  • 6.18 Free template number 15
  • 6.19 Decktopus
  • 7 Let’s wrap this up

What is a business proposal?

YouTube video

A business proposal is a document that’s used to secure work. It can be sent by an individual or a business and is usually (but not always) a proposed solution to a specific job, project, or service that’s required.

Business proposals are also sometimes used by suppliers to secure business.

Think of a business proposal as a bit like a sales pitch , or a job interview on paper. You need to explain why you’re the best person (or company) for the job and really sell yourself or your business. Search online for business plan presentation templates to help you present your business proposal ideas to people and companies. 

A good proposal will outline the service you’re offering and briefly explain how you will approach the task. It will also include a quote and/or an estimate to complete the work.

Solicited and unsolicited proposals

A business proposal can be solicited or unsolicited . If a business proposal is solicited , it means that the individual or business writing the proposal has been asked to submit a proposal by the prospective client.

RFP’s (request for proposal) is the standard way that businesses ask for submissions.

Request for Proposal

Any business or individual can send out an RFP, and there are lots of templates available online to help you do this.

To give you an example, let’s say that a company (not yours!) was being sued. The company’s legal team might then send requests for proposals out to various law firms. The RFP would most likely contain an explanation of the situation and ask for help and legal advice.

Solicited proposals are generally easier to write because you are given clear guidelines. With a solicited proposal, you know exactly what the client or customer wants and can tailor your response accordingly.

Make sure you read the RFP thoroughly. Not only will this help you to deliver a comprehensive and relevant business proposal, but the RFP will often contain useful information about the criteria being used to make the final decision.

If you’re asked to submit a business proposal, you may also be given instructions for formatting, so be sure to check those too before you submit.

If you’re trying to attract clients by sending out business proposals without first being asked, then your proposal is unsolicited. Like cold-calling , these proposals are commonly used to try to generate leads.

Unsolicited proposals can be a little more difficult to write because you don’t have any information to go on. An unsolicited proposal also needs to be far more persuasive, which means it’s up to you to do your research on whoever you’re targeting and demonstrate your value proposition.

Gathering Business Requirements

Unsolicited business proposals should serve as an introduction to your product or service and aim to convince your prospective client that they should be using your service.

An unsolicited business proposal differs from other advertising materials in that it carefully considers the customer’s needs and concerns and addresses them specifically.

Obviously, a solicited proposal is far more likely to win new business as the company already has you on their radar. Unsolicited proposals do have their benefits though, the most obvious one being that there is no competition.

Sending out unsolicited proposals, providing they’re well researched and offer creative solutions to your client’s problems, can be an extremely effective marketing campaign.

Some companies, particularly government agencies, actively encourage the submission of unsolicited business proposals.

If this is the case, they will likely have a review schedule and/or submission guidelines. So it might be worth checking those out and timing your proposal submissions accordingly.

What does a business proposal include?

So, what the heck should you put in your business proposal?

Well, we’re going to deep dive into detail further down, but for now, here’s the basic format to give you a better idea of the key elements that should be included in all business proposals, whether they’re solicited or not:

  • Title or cover page.
  • Table of contents (optional but useful for longer proposals).
  • Executive summary
  • Acknowledgement of the problem.
  • Proposed solution / Outline of approach.
  • Deliverables.
  • Company information.
  • Case studies and/or testimonials (optional but recommended).
  • Terms and conditions.
  • CTA / how to proceed.

Here’s a great video that talks you through what goes into a winning business proposal:

YouTube video

What’s the difference between a business proposal and a business plan?

Confused Man

People often get confused between these two documents, but they’re actually very different.

Proposals and plans differ greatly in both their purpose and their audience .

A business plan is all about you. It’s a document that provides details about your company’s strategy and demonstrates how you intend to grow. The intended reader of this document could be an investor or a bank manager, for example.

The idea of a business plan is to outline your goals, show that you know what you’re doing and that you’re worthy of investment. Therefore, in this document you might discuss how you intend to scale and how you will make and increase profits.

A business proposal is all about them . A business proposal is a document designed to sell your services to someone else.

While you can certainly use some of the information in your business plan to help you write a business proposal, the focus for your proposal should not be on you, but on whoever it is you’re trying to bag as a client.

A business proposal should therefore focus on how you intend to meet the potential client’s problem, how you can help them out or provide value to their business. Paper writing help is essential for crafting compelling business proposals. These proposals should center around addressing the potential client’s specific challenges and demonstrating how your services can effectively solve their problems.

Another way to look at it, is that a business proposal is selling your services to clients and a business plan is selling your business to investors.

How to write a business proposal in 6 steps

Step 1 – make sure you have all the information you need.

The first thing you need to do is gather all of the information you need. Actually, scratch that. The very first thing you need to do is take a deep breath and relax.

Take a Deep Breath

Now that you’re nice and calm, let’s dive in. First things first. You’re going to be tempted to fly through the process for fear of missing out on the job. Don’t give in to the urge to panic and rush the business proposal!

While you certainly do want to submit your proposal as soon as possible, it’s far more important to do a good job on it.

You don’t want to spend your precious time putting together a business proposal only to realise that you’ve forgotten a crucial detail. So, be methodical and take your time.

Useful questions to ask before writing your business proposal:

Einstein Questions to Ask

Now, what information do you need to write this entire proposal? Here’s a list of questions to ask yourself before you begin writing:

  • Have I spoken to the client? – Talking to the client helps you to build up a repore and get a really good grip on what they’re after.
  • Do I fully understand the requirements? – Your client is a mine of information. Make sure you’ve gone through everything with them and thoroughly check any documentation you’ve been given. If you have a request for a business proposal, make sure you go over it carefully so that you understand exactly what your client wants.
  • Can I deliver what they’re asking for? You need to make sure that you have a clear understanding of the problem / pain points and that you have a custom solution to offer.
  • Is this the first attempt to solve this issue? – You don’t want to suggest something that’s already been tried. Looking at prior attempts and why they failed can provide a useful framework that could help you provide a better solution.
  • Do I have any questions? – What further information do you need to submit an accurate and successful business proposal?
  • Do I need to do some research? – Thorough research makes a great impression. Don’t be afraid to approach your potential clients’ staff, as well as researching your competitors to see if you can offer something that will make your business proposal stand out.
  • Who will be reading the proposal? – Is it just one person, or will it be passed through a team? Knowing who you’re talking to will help you tailor your business proposal to your audience and increase your chances.
  • Who is the final decision maker? Knowing who makes the final decision (and what boxes they need to check) can give you a great advantage.
  • What are the budget and project timeline expectations? – When does the prospective client expect you to start and finish the project? How much are they willing to spend? If you can’t meet the clients budget or deadline then don’t submit a proposal.

Top tip: Customer Relationship Management

If you’re sending out multiple business proposals, you could probably benefit from using CRM (customer relationship management) software .

Basically what this does is allows you to keep track of all of your contacts, appointments and leads. It’s a useful tool for creating a comprehensive system to organise your proposals and your contact with clients.

CRM

There are tons of CRM providers out there. So, to save you some time, here are the top 5 CRM options (I highly recommend option 1 if you’re just getting started):

  • Hubspot CRM – One of the top CRM services on the market, and it won’t ever cost you a penny! This free platform offers powerful tools that work for any industry or niche. It’s simple, quick, and easy to get started. Check out all the awesome features and benefits.
  • Salesforce CRM – This software app lets you track all of your interactions under one umbrella. It is fully comprehensive, offers extensive sales and marketing solutions and is suitable for everyone from beginner to behemoth. Prices range from $25 to $300 per month.
  • Freshsales – Freshsales is a global company with a fantastic reputation. Their CRM does a great job of combining organisation with analytics. The interface is simple to navigate, and the software allows you to easily keep track of, score, distribute and nurture thousands of sales leads. They do have a free forever option (Sprout), otherwise prices range from $12 to $79 a month
  • Pipedrive. This fully mobile optimised system is praised for its co-operative capacity. It syncs well with Google Calendar, Google contracts and other Google apps. Pipedrive is a popular choice because it can also accommodate most third-party business apps. No freebies here I’m afraid (just a free trial). Prices range from $15 to $59 per month.
  • bpm’online. Last but not least, this software is designed to help you streamline and boost productivity . The aim is to bridge the gap between marketing, sales and customer service. They offer 7 different packages ranging from $25 to $50 a month.

Step 2 – Sketch out the scope of the project

Once you have gathered all of the relevant information to write the business proposal, you should have everything you need to outline the scope of the project.

The scope of a project refers to the amount of work that needs to be completed to satisfy the clients requirements. Here’s a useful video that explains the concept (and the dreaded scope creep!):

YouTube video

To complete your scope outline , you need to develop a thorough understanding of what the work is going to involve. You should note down the various tasks to be completed along with any resources you’ll need.

At this point you should also assess how long the project is likely to take and begin taking costs into account.

Try not to get too bogged down with details at first. It’s better to treat it as a rough draft and then once you have your outline, you can flesh it out by filling in all of the details later. This is where a project plan template can help you outline your project in a structured way.

Here are some useful questions to help you create your outline:

Who will carry out the work?

Who will ensure the quality of the work?

Who will be the client’s point of contact?

What needs to be done?

What materials will you need?

What other resources will be required?

What resources do they already have?

What does the customer expect?

What will it cost?

How long will it take?

How will you approach the task?

How will you divide the work?

How will you ensure the client is happy?

How will you communicate?

How can you sell your solution?

Where will you be working?

Where will you get your materials?

Why have you chosen your particular solution?

Why should they hire you?

When can you start?

When will you meet your milestones?

When will you finish?

When will you expect payment?

Step 3 – Estimate the cost

Dilbert Budget Comic

Ok, so you’ve gathered all the information and you have successfully measured the scope of the project. Well done you! Now it’s time to start pricing up the job .

The best way to do this is to first figure out how much it’s going to cost you to do all of the work.

Make sure you include labour and material / equipment costs as well as things like transport. Try to be as accurate as possible and don’t forget to factor in any discounts for bulk buying etc.

You should already have a good idea of how long the job is going to take you, so factor in your labour costs accordingly.

A good rule of thumb is to multiply your estimated labour time by 1.5. This way you allow for any unexpected twists and turns in the project.

You can always make your client really happy by knocking these extra hours off the bill at the end of the project if they weren’t needed!

If the amount of time spent on a job iIs likely to vary (a construction worker may not know the full extent of a job until work has begun for example) then make sure that you include a caveat in your proposal that covers you for this.

Continuing with the construction worker example, these workers will also have to account for things like scope creep. If a construction worker hires a painter, they have to ensure that the client doesn’t ask for a paint job in a part of a house they didn’t agree to.

These painters could then use a helpful estimate app for painters to state a clause that prevents a constant influx of duties or costs.

Once you have all of your costing done it’s time to decide on your profit margin . This will vary depending on the type of business you are in. So, it’s probably best to do some research and check the industry standard.

With this information, you can start filling out an estimate template if you’re already charging your client for services.

Step 4 – Start writing your business proposal

You’ve done all the research, you’re prepared. Now it’s time to start writing. Gulp.

We’re going to break it down into the basic structure and take it step by step, starting with the cover.

Cover / title page

An attractive business proposal template makes your document more attractive.

Design matters. Given the option, 66% of people prefer to read something that’s well-designed instead of plain.

Even if your proposal is well written, offers a cost-effective creative solution and adds a ton of value, if your cover page looks like this:

Boring Proposal Cover

It’s going to put people off.

You might think that design isn’t that important for a business proposal. All that really matters is the cost, right?.

We live in a highly visual world where design influences our decisions all the time .

For example, did you know that most people (96% to be exact) equate design with how trustworthy a businesses is?

Like it or not, looks matter and you will be judged on them. A great design speaks volumes about your business and if done correctly, interactive proposals can make a fantastic impression.

Design isn’t just about the visuals. It also extends to the layout of your document.

Poorly formatted proposals can be unappealing, confusing or hard to read. For an attractive proposal, you want to make sure that the document has a nice look and an appealing easy-to-digest layout:

Birthday Invite

Consider the alignment, spacing and the text sizes you’re using. The goal is to clearly present your ideas and make it easy to read.

As a general rule, you want to break up your text as much as possible. So, use plenty of headings, bullet point or numbered lists and images or graphs where appropriate.

Short paragraphs and sentences work better because they are easier to scan.

You don’t need to do anything fancy. In fact, simple designs usually work better for business proposals.

If you have a designer on your team or an eye for design yourself, then it’s well worth putting in the effort to create an enticing cover design for your next business proposal.

There are lots of companies that help you do this, such as Canva , Adobe spark , and Poster my Wall to name but a few.

Not creative? Not to worry.

For those of you without creative bones, there are hundreds of free templates available for you to make your own.

Check out this eyecatcher from proposify which is 100% customisable:

 Proposify Template Display Settings

You can see that there is space (on the bottom right) for some information to be put on there.

So, what is the most important information you should include on your title / cover page?

  • A snappy title page – putting “a proposal submitted to ABC for the purpose of XYZ” is a wasted opportunity. Remember that the goal here is to sell yourself, so think like a marketer and create some compelling copy .
  • Your company logo
  • Your name and contact information.
  • Your client’s name.
  • The name of the person you’re submitting the proposal to.
  • The date of submission.
  • Any useful reference numbers. – For adding name and contact number, consider sharing a digital business card with your details for a professional look. You can check online resource like this to find the best digital card software

A word to the wise. If you’re using your own (or your client’s) logo on your title page, then make sure it’s a high resolution image.

There’s nothing worse than a grainy, insipid, poor quality image on the front of a proposal!

Introduction or cover letter

Whether you include your introduction in the main body of your report or send it separately as a covering letter is up to you.

In either case, you’ll want to keep this section fairly short. 1 or 2 paragraphs is fine:

Architect Proposal Template

Proposify – Architecture proposal template

Introduce yourself and your company in a couple of sentences. You may want to explain your background briefly.

Highlight your strengths and make it clear why you stand out. The tone should be friendly.

It helps if you can keep your clients needs in mind while you’re writing and present your strengths in a way that makes it clear how they can benefit from working with you.

Here’s an example of an effective cover letter:

Proposal Cover Letter

Executive Summary

Most people believe that this is where you present the project in a nutshell. Which is sort of right, but not quite.

You see, it’s more about selling than summarising.

While you do want to summarise your proposal, the main goal of the executive summary is not to provide a basic overview of the whole project, but rather to highlight why your proposed solution is the right one.

A good executive summary needs to be persuasive and benefit focussed. This is your opportunity to sell your solution to the client’s problem!

Focus on persuasion over description, use clear and straightforward language to make your points, and try to keep it short, less than 1 page is a good length.

This might be the first page your prospect ever reads, so make it count! Remember, you’ll have plenty of time to go into more detail later.

Start with something that grabs their attention and makes them want to keep reading.

Next, show that you have a clear understanding of the problem. Once you’ve done that, then you can show off your custom solution. Don’t forget to stress the benefits!

Figuring out how much detail to include here is tricky. You want to put some detail in there to back up what you’re saying, but not so much that it becomes a dull read.

It’s a balancing act and you’ll need to use your own judgement.

It’s a good idea to pop in a bit of social proof , and then round things off with a call to action.

Table of contents (optional)

Depending on how long your business proposal is, you may want to include a table of contents.

Table of Contents

A table (showing the page number where each section can be found) will help the reader navigate your proposal more easily.

If your proposal includes industry-specific terms, you may also want to include a table that explains these.

The main body

This section will make up the majority of your proposal.

There’s a lot of information that needs to be included, so let’s break it down into smaller sub-sections that are easier to manage.

Approach / solution

Here’s where you delve into detail about your client’s problem and your solution to it.

You need to go through your entire process, detailing exactly how you intend to approach the problem and what results the client can expect.

You will need to demonstrate that you are aware of any potential challenges and ensure that your solution is customised to your potential client as much as possible.

It can be tempting, when you’re sending out lots of proposals, to just use the same one across the board.

But changing a few details, making the proposal feel more tailored, adds a personal touch that goes a long way to improving your results.

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Deliverables

What exactly do you intend to deliver?

It’s important to have an itemised list of everything that’s included in the price and a detailed description for each item on your list.

You may also want to split your deliverables along a timeline as in the following example:

Deliverables Timeline

Project milestones

It’s a good idea to break down the project into several phases. This gives the client a good idea of how the project is likely to progress.

Outline the key events and deliverables involved with each stage. Give a realistic time frame for each part of the project, and say who is responsible for each deliverable.

Budget & pricing

If you want to win clients and maintain good profit margins, you’ll need to price your jobs up accurately.

It’s a good idea to have an itemized table that clearly shows all of your costs.

Itemized Budget

The more specific and clear you can be about your pricing the better. A table like this is also a useful tool for negotiations later down the line.

This is where you really sell your company. Top tip – think like a storyteller and make it interesting.

If you have an about page on your website, you might want to use this as a resource. And if you don’t, it’s well worth checking out some of the best about us pages on the internet for inspiration.

Explain who you are and what your company is all about. Talk about your values, your team, (include bios and photos to sell your team’s expertise) and your journey.

Highlight your expertise and your USP.

If you have awards, social proof, testimonials or case studies feel free to put those in as well. Check online for AI based templates to help you with the right format.

This section is all about familiarising the client with your business. You want your reader to feel like they know you and your company well.

Clients and references

This section is optional. However, including contact information for one or two past clients (make sure you ok it with them first) shows that you’re confident and can help to build trust.

If you have a bunch of particularly impressive success stories, you may want to include a slightly longer client list.

Terms & conditions / moving forward

The final section for your main body should first include your terms and conditions and then provide information / steps and a call to action for moving forward.

Your call to action might be an invitation to visit your website for example.

This section serves as a conclusion to the main body. Basically, you want to briefly reiterate how you can help, and go over what you and the client are both promising by agreeing to the business proposal.

Specify the duration of the agreement, the timescale for completion, and payment types and dates.

PPC and Adwords Template

Proposify’s AdWords and PPC proposal template.

You’ll also want to include any caveats or disclaimers in this section.

Your disclaimers should make your potential client aware that the pricing is for the work stated in the proposal and that you reserve the right to charge more should any unforeseen circumstances arise.

Step 5 – edit and proofread

Proofread

Once you’re done writing the proposal, you’ll want to go over it and check for any mistakes.

If possible, it’s best to get a fresh pair of eyes on it (or 2).

It’s also a good idea to run it through Grammarly or a similar program – just don’t rely on it completely as it will only pick up on basic spelling and grammar mistakes and not misused or unintended words.

A good test to check if your offer is well explained is to give the proposal to someone who doesn’t work in your industry and ask them if it’s clear what you’re offering.

If you want to be certain that your business proposal is mistake free, consider hiring a freelance proofreader / editor (with experience of dealing with business proposals) to check through it for you and provide some feedback.

Business proposal length

How long is a piece of string? Unfortunately, there’s no ideal length for a business proposal.

Some companies give out guidelines, but the length can still vary greatly depending on the industry and also on the depth and scope of the project.

Unsolicited proposals will generally be shorter than solicited – potential clients that have asked for a proposal are much more likely to sit down and read a longer document.

As a general rule, you want to keep it as short and succinct as possible, while still providing all of the necessary information and detail.

Your language should be clear and concise. It’s a good idea to use plain English and refrain from industry jargon and technical terms.

If you must use technical terms, then break them down to ensure that your reader understands them.

The easier your proposal is to understand, the easier it will be for the buyer to say yes!

How to keep your business proposal short and punchy

When it comes to proposal writing, a good tip to keep the length under control is to use economical sentences.

That means that your sentences should not contain any unnecessary words.

I’ll show you what I mean. Here’s an example of a sentence that is far too long winded and confusing:

For the purposes of adhering to the current regulations, I intend to take each and every precaution necessary in order to adequately fulfill the health and safety requirements.

If we get rid of all the unnecessary words and simplify the sentence, it now reads much more clearly:

Every precaution will be taken in line with health and safety regulations.

Here’s another example of a sentence that contains a lot of unnecessary words:

It’s important to plan ahead in order to avoid unexpected surprises and unintentional mistakes.

There are three words in the above sentence that don’t need to be there:

Ahead isn’t needed because planning always involves thinking ahead.

All surprises are unexpected , so that word doesn’t need to be there either.

It’s rare that someone makes a mistake on purpose so the word unintentional doesn’t belong.

If we take out the unnecessary words the sentence still makes complete sense:

It’s important to plan in order to avoid surprises and mistakes.

Why use “for the purpose of” when “for” will do? Why use “in the event of” when “if” is all you really need?

Check your proposal for unnecessary words and get rid of all the junk words from your sentences. Your proposal will be much more appealing and far better understood.

Also, avoid unnecessary repetition of words and phrases.

Another trick for proposal writing is to take out any tables and graphs and put them into an appendix at the end. Be sure to reference them in the main body of your text so that they are easy to find.

If you’re using examples to make a point, try to limit them to one or two. It’s easy to get carried away when you’re passionate about the results that you can deliver. So make your point (well) and move on.

Use appropriate language and tone

Have you noticed how many companies are dropping the formalities these days?

Contrary to popular belief, you don’t need to adopt a stuffy and formal tone in your business proposal!

You want to be professional, of course.

But there’s nothing wrong with adding a bit of personality.

A friendly conversational style can make you more relatable and work wonders when it comes to winning bids.

Don’t be afraid to have fun, notice the language in the example below is both professional yet informal and playful:

SAAS Proposal Template

Proposify’s SAAS proposal template.

Obviously, your choice of tone is going to be greatly influenced by the business you’re in.

Have a look at your company’s website. Have a read of their promotional materials. What sort of tone do they adopt?

Think about your target audience, and try to mimic the type of language they use. If you can, try to customise your tone for your reader, while also staying true to your brand.

Step 6 – send your proposal (and follow it up!).

How to submit your proposal.

Most of the time you’ll probably be sending your business proposals as an email attachment.

However, some businesses have a preferred submission process, so you should check whether that’s the case before you hit send.

If you have an RFP make sure you check it for instructions on how to submit.

It’s important to follow the directions exactly so that you don’t start off on the wrong foot.

You may be asked to log into a company’s portal or submit an application form that accompanies the proposal. Some companies may also ask for hard copies.

Some companies may even use submission guidelines as a test of your diligence.

For example, let’s say that the company you’re submitting to asks for the proposal to be formatted with double line spacing.

Any companies that miss this simple instruction will stand out a mile (and appear lax) and their proposal will be likely overlooked.

Even a perfect proposal can lose the contract if it’s submitted incorrectly.

How to follow up

The Art of Follow Up

People do business with people, not documents. That’s why it’s important to follow up with your client in order to keep the relationship going.

Ideally, your business proposal will have impressed your client so much that they will contact you back immediately. Unfortunately, this is rare.

They will likely have several proposals to look through and this could take some time.

So even though it’s hard, try not to jump down their throats too soon after you submit.

Once you’ve given them some time, drop them an email or give them a quick call.

Make sure they know that you’re available to answer any questions they may have about your proposal.

If you have submitted digitally and you have document analytics or email tracking software in place, then you’ll know when your proposal has been seen and you can time your follow up accordingly.

Business proposal templates

There are lots of companies that offer free business proposal software and templates. Some of them are terrible.

So, I’ve weeded those out and compiled a shortlist list of the 3 very best options.

Let’s take a look at them.

This is by far my favourite resource for a free business proposal template.

They currently have more than 70 free proposals to choose from, ranging from accounting advertising and architecture, to web design and wordpress development.

Their business proposals are well-written, well-designed and completely customisable.

They also seem to be adding new ones daily.

The proposals are organised into 6 main categories:

  • Real estate.
  • Professional services.

Let’s take a closer look at some of Proposify’s best business proposal templates.

Free template number 1

Advertising Proposal Template

Proposify’s advertising proposal template.

This one is 11 pages long and has some great eye-catching designs which are perfect for those in the advertising industry where it’s all about grabbing people’s attention.

This is a great example of how well thought out the designs are on the Proposify options. Not only is this proposal well-designed, but it also suits the industry that it’s aiming for.

Sadly, not many companies put this much thought into the look and design of their proposals.

But, as we’ve already learnt in the cover page section, design is a crucial element of your business proposal. So this one gets two thumbs up!

Free template number 2

Investment Proposal Template

Proposify investment proposal template.

This is a page from inside the investment business proposal template. I like how the colour scheme reflects the serious nature of the finance industry but also adds a little fun design element.

Free template number 3

Catering Proposal Template

This 12 page business proposal template would be great for anyone in the food business. It has an introduction and about page, and options to showcase themes and previous work:

Catering Proposal Template 2

Proposify catering proposal template

Free template number 4

Marketing Research Proposal Template

Proposify market research template

This 10 page offering for those in the marketing game is funky, fun and full of energy.

There’s plenty of space to explain the phases of your project and your overall methodology. There are also pages for introducing your team and including client testimonials.

Free template number 5

SEO Proposal Template

Proposify’s SEO proposal template.

Suitable for marketing agencies and freelancers, this 16 page business proposal template is chocked full of information that could save you a ton of time writing. The statement of work and contract at the end is also extensive.

Qwilr has some good modern designs.

There aren’t a huge range of business proposal examples to choose from (Less than 20 by my count), but the ones they do have are very good.

It’s quick and easy to knock one up and the proposals look clean and feel pretty slick.

If you use Qwlir, you can also set up notifications that tell you when your proposal has been viewed.

My only gripe with them is that you can’t easily separate the business proposals from the other documents they offer, which means it takes longer to find what you’re looking for.

I guess they just don’t have enough business proposals to warrant making an extra section for them on the website.

The best way to find them is to look through everything on the popular page. There is an option to select “business” but I found that when I did this, some of the proposals didn’t show up.

Despite the dodgy organisation, it’s well worth checking them out.

Here’s my top picks from Qwilr:

Free template number 6

Sales Proposal Template

Qwilr’s sales proposal template .

Video is so hot right now, which is why it’s great that you can easily incorporate video into this sales template. You can embed spreadsheets and slideshare presentations too.

On the whole, it’s very professional looking and feels current. I imagine that this would be a difficult one to say no to.

Free template number 7

Marketing Agency Proposal Template

Qwilr’s Marketing agency proposal

Those in the marketing biz will love this well-designed offering. This marketing agency proposal ticks all the boxes.

The design on this one somehow makes everything seem simpler and less overwhelming.

The images are great and text is good enough to base your ideas around (with just a few tweaks to customise).

Free template number 8

Landscaping Proposal Template

Qwilr’s Landscaping proposal template.

How nice does that lawn look?

The review summary in this vibrant landscaping proposal template is a nice touch and a good example of how you can include social proof.

As you would expect, there’s plenty of space in here to show off your proposed designs as well as previous work.

As this is a visual industry, this template contains more images than most. But there’s also room to go through the various services you offer and explain your pricing.

Free template number 9

Advertising Proposal Template 2

Qwilr’s Advertising proposal template.

If you’re pitching your advertising skills, you might want to use this bold and simple template that focuses on results.

It’s clean, professional and the imagery is minimal, meaning there’s no distractions from the bottom line.

Free template number 10

Photography Proposal Template

Qwlr’s Photography proposal template.

This is a great format for freelance photographers. The tone is relaxed and the overall proposal comes across as friendly and inviting, which is exactly what you want if you’re looking to get booked for weddings and events.

PandaDoc has over 450 templates available. But, it’s not as easy to browse through them as it is with Proposify and the Designs aren’t quite as good as either Proposfy or Qwilr, which is why it gets the number 3 spot.

Free template number 11

This is a pricing page taken from PandaDoc’s copywriting template. It has a contents page, room for an introduction and includes an executive summary, testimonials and terms and conditions.

Copywriting Proposal Template

PandaDoc’s copywriting proposal template.

Their proposals are comprehensive and very professional looking.

The design element is somewhat lacking compared to Proposify however, and you’ll find that the same design is used again for different Industries:

Web Design Proposal Template

PandaDoc’s web design proposal template.

Copywriting Proposal Template 2

Free template number 12

Catering Proposal Template

PandaDoc’s catering proposal template.

The catering proposal will get the job done. It has a nice design and contains lots of useful hints and tips.

There’s a handy table for keeping track of all the equipment needed, a place to break down the menu and to detail staffing and decoration requirements.

Free template number 13

IT proposal template

PandaDoc’s IT Services proposal template.

This IT services proposal template is great for those who want to keep it short and sweet. There’s options to add images,video and pricing tables (although this may incur charges).

Free template number 14

Sponsorship Proposal Template

PandaDocs sponsorship proposal template.

If you’re looking to pitch a sponsorship deal for an event, look no further than this template.

As with all of PandaDoc’s templates, It’s fully customisable, allowing you to add video and organise information in a way that works for you and appeals visually.

Free template number 15

Mobile App Proposal Template

PandaDoc’s Mobile app development proposal.

If you’re a budding app creator , this one could be ideal for you. This proposal has a nice simple design and contains plenty of useful information that provides a great framework for putting together a well thought out proposal aimed at the mobile app industry.

Decktopus is a new generation business proposal template creation tool that allows users to create good-looking, and living documents in no time.

The tool consists of more than 100 templates that are ready to use. All you need to bring is your content!

Decktopus allows you to share your business proposal template live, or you can also choose to embed the presentation on your website. The greatest feature of Decktopus is that you can easily connect with your clients or leads through the interactive forms that you can add to your business proposal template.

So, you can easily close the deal within the presentation with Decktopus!

Decktopus has over 100,000 users worldwide. Decktopus is climbing the stairs in becoming the fastest and most engaging business proposal & presentation creation tool for no-code creators and busy professionals or anyone who wants to share their know-how!

Let’s wrap this up

There you have it. If you have listened well, you should now have all the information you need to write an effective business proposal and follow up with potential customers.

So, what are you waiting for?

Scroll back up to the top and let’s get cracking!

Best of luck, I hope you nail it!

Read more: top 19 Venngage consultant business templates you could use right away.

One thought on “ How to Write a Business Proposal in 2021: 6 Steps + 15 Free Templates ”

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The Difference Between a Business Plan and a Business Proposal

The Difference Between a Business Plan and a Business Proposal

A business plan and a business proposal are very different documents. If you do an Internet search for how to write a business proposal, the results are predominantly focused on writing a business plan. Nevertheless, the two documents have different purposes and goals. A business plan is a factual broad description of a company and its prospects. A business proposal is a focused sales document intended to describe how a company will approach a project, state the value of the project to the client, and solicit the client's business. A business plan is a written presentation of facts. A business proposal is a quote and call to action.

Reasons for a Business Plan

A business plan documents your vision for your business and how you intend to achieve that vision. It contains financial projections of what the business will cost to develop and operate plus an estimation of the revenues to be generated. Its purpose is to provide a reasonably detailed explanation of your business for use by potential investors, suppliers, prospective employees, accountants, attorneys, and other people who need a quick but comprehensive understanding of what your company does and its potential for success. The primary reason for a business plan is to record and convey information.

Reasons for a Business Proposal

Proposals may be unsolicited business ideas presented to a potential customer or partner, or they may be answers to requests for proposals submitted to your company by a potential client. They are limited in scope to a particular project or need. A business proposal also generally has a specific audience. The primary reason for a business proposal is to solicit or develop a business opportunity.

Business Plan Structure

A business plan has three elements: description of the business model , the marketing model, and financial projections. It consists of informative sections, including the executive summary, business description, marketing model, analysis of industry competition, build-out plan, operations plan, the introduction of management, and a discussion of financial issues and projection of results. It is introduced by an executive summary, which can be a dense abstract or a longer marketing tool to attract interest in the business plan. The business plan is an informational document designed to factually display your company's operations and potential.

Business Proposal Structure

A business proposal is written in response to an RFP--A request for proposal (RFP) is a document that solicits proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service or valuable asset, to potential suppliers to submit business proposals --should follow the format requested in the RFP.

Generally, this involves a quick description of your company's services and products that are relevant to the goals of the RFP, a reiteration of the scope of work, answers to specific questions posed in the RFP and a quote detailing materials, tools, labor, delivery and other elements of the cost of the project. An unsolicited business proposal intended to create and develop a business opportunity follows essentially the same format but anticipates questions the potential client might have. A proposal is more of a marketing document, designed to convince the audience to do business by presenting a value proposition and a call to action.

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About Author

Denise grier.

Denise Grier is a freelance writer, pro blogger, SEO and WordPress expert.

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26 comments on “ the difference between a business plan and a business proposal ”.

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One of the most typical errors seen by QuickBooks users is error 80070057, which specifies that the parameter is wrong, especially when the company file is accessed. This error code means you don’t have sufficient authorization to remove the files.

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The data you supplied is quite useful.

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Hey, you are great doing, thanks for sharing with us. we loved your post. i will try. thank you so much

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kashi digital

Awesome quite impressive article thanks for posting this.

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Geoffrey T.Crosby

I appreciate your thought there with that one, because of course I agree, but I’m confused with why you thought it should be added. Don’t you think plan vs. actual is included with point 3, “It’s specific. You can track results against plan,” and then point 8 “It has to bring the planning process with it, meaning regular review and course correction?”

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  • Project Management

Business Model Vs Business Plan: What’s The Difference

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Sculpting success in the realm of commerce hinges on two critical blueprints:  the business model and the business plan . As if peering through a dual-lens, one unveils the anatomy of value creation, while the other charts a course for achieving it. This isn’t about mere documents; it’s the lifeblood of strategic foresight and operational vision.

Here’s the crux: although they waltz together in strategic symbiosis, these entities each spin a unique narrative of your venture’s voyage. One sketches the architecture of your enterprise, laying bare the revenue streams and value proposition.

The other, a meticulous roadmap, presents meticulous market analysis, financial projections, and the operational plan set to navigate the turbulent tides of commerce.

By journey’s end, you’ll not just differentiate between the two but harness their combined power.

Delve into concepts like competitive advantage, customer segmentation, and scalability. Decode the mesmerizing narrative behind a robust strategic planning foundation. Sales forecasting, funding requirements, investor pitch decks.

The differences between business model vs business plan

The business model is the foundation of a company, while the business plan is the structure. So, a business model is the main idea of the business together with the description of how it is working.

The business plan goes into detail to show how this idea could work. A business model can also be considered the mechanism that a company has to generate profits. At the same time, the business plan also does its part in being the way a company can present its strategy. It is also used to show the financial performance that is expected for the near future.

Comparing how business models and business plans work to help you in different ways is important. A business model can help you be sure that the company is making money. It helps to identify services that customers value. It also shows the reciprocation of funds for the activity that a business renders to its customers.

Any business can have different ways of generating income, but the goals of the business model should aim to simplify the money process. It does this by focusing on the large income generators.

So, we now understood that a basic business model is a gateway to show how an organization is functioning. A business plan is a document that shows the strategy of an organization together with the expected performance details.

We can find the details of a company when we check its business plan. What it does is offer more info about the business model. It does this by explaining the teams needed to meet the demand of the business model. It explains the equipment needed, as well as resources that need to be obtained to start creating. Explaining the marketing goals , and how the business is going to attract and retain more customers over the competition , will be part of the model.

Another interesting thing when it comes to comparing business models and business plans is that they cannot function without each other. Just remember this, the business model is going to be the center of the business plan.

Business plan

When comparing using a business model versus a business plan, we also need to understand each one better to draw some final conclusions. One of the first goals of a company could be to define its business model.

The business plan is going to be the detailed part that includes all the information and steps like Mayple’s marketing plan template, organization, products or services, sales plan, business proposal for investors , and so on. Some useful questions that you can use when developing your business plan are:

  • What do we have now?
  • What do we want to have in the future?
  • What do we need in order to be there?

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Business Plan vs Business Profile

Do you know the difference between a business plan and a business proposal? These are two very different business documents, each serving a distinct purpose.

A business plan documents your vision for your business and how you intend to achieve that vision. It contains financial projections of what the business will cost to develop and operate plus an estimation of the revenues to be generated. Its purpose is to provide a reasonably detailed explanation of your business for use by potential investors, suppliers, prospective employees, accountants, attorneys and other people who need a quick but comprehensive understanding of what your company does and its potential for success. The primary reason for a business plan is to record and convey information.

You will need a business plan for two reasons. First, your business plan is your blueprint to success — it outlines the steps to move from business idea to business success. If your research reveals that your idea isn’t destined for success, isn’t it better to know it now than a year later when you may have lost thousands of dollars?  Spending time to do this provides you with information previously not considered, and gives you a workable strategy to follow for the period covered by the plan.

Secondly, if you are hoping to raise funds through a bank or an angel, don’t even consider approaching them unless you have a thoroughly researched business plan in your hand. Experts estimate that it takes approximately six weeks to develop a business plan, so whipping one up the day before your appointment with your banker won’t work.

A business proposal is a document that you submit to another enterprise proposing a business arrangement.  They are limited in scope to a particular project or need. A business proposal also generally has a specific audience. There are two main categories of business proposals: invited and non-invited.

An example of an invited proposal – government and large corporations wanting to purchase services or products from private suppliers often post public tenders inviting contractors to bid. You will be competing against all bidders that noticed the posting and responded.

Similarly, some businesses will send Requests for Proposals (RFPs) to a selection of businesses that they are willing to consider as a potential supplier. In this case, you will be competing against perhaps five businesses that the client has already handpicked as suitable.

In a non-invited proposal, you might have an idea for a product or service that would be of benefit to Company X. You submit a proposal to that Company suggesting a business relationship.

In this case, you don’t know if the company is open to your proposal or whether they will like your proposed idea. However, if they do like the idea, you won’t be competing against numerous other bidders. Your proposal has to sell not only your concept but also your company. It must convince the client that not only is the service/product potentially valuable to them, but you and your company are credible and stable.

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’ll be ahead of the people who threw something together on the maxi.

In conclusion, a business plan and a business proposal have different purposes and goals. A business plan is a factual broad description of a company and its prospects. A business proposal is a focused sales document intended to describe how a company will approach a project.   A business plan is a written presentation of fact. A business proposal is a quote and call to action.

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  • Stand Up for Free Enterprise

Chamber Responds to Senator Sanders' Defined Benefit Plan

Sanders response final.

Chantel Sheaks Vice President, Retirement Policy, U.S. Chamber of Commerce

June 03, 2024

May 28, 2024

The Honorable Bernie Sanders, Chair Committee on Health, Education, Labor and Pension 428 Senate Dirksen Office Building Washington, DC 20510

RE: Request for Information on Retirement Security for All and Defined Benefit Plan Improvements

Dear Chair Sanders:

Thank you for the opportunity to provide feedback on the Majority Staff Report dated February 28, 2024 and your subsequent request for information (RFI) regarding the proposed Retirement Security for All legislation and ways in which to improve the defined benefit pension plan system. Our input and comments are below.

Defined Contribution Plan RFI

The Retirement Security for All proposal would require businesses that have been operating for two years or more to offer an automatic enrollment payroll deduction plan with lifetime income options to all employees (to include full, part-time, and 1099 workers). The requirement would be satisfied if a business:

  • Offers a defined benefit pension plan to its workforce (not just to highly compensated corporate officers);
  • Offers a qualified defined contribution retirement plan with automatic enrollment, automatic reenrollment, and automatic escalation; and a monthly income option (to include managed payout, annuities, and/or a Social Security bridge);
  • Offers a state facilitated retirement plan with the above features; or
  • Offers access to the federally facilitated pension plan.

Under this proposal for the federally facilitated pension plan, the Federal government would set up a pension plan via a public-private partnership for use by employers that choose to offer it instead of sponsoring their own plan. No details were provided on the design, cost, or administration of this plan.

Defined Contribution Plan Proposal Response

According to the Bureau of Labor Statistics, "[i]n March 2023, 73 percent of civilian workers had access to retirement benefits, with 56 percent of workers participating in these plans. The take-up rate (the percent of workers with access to an employer-sponsored benefit who choose to participate in the benefit) for retirement benefits was 77 percent in March." 1 This is a significant change in coverage compared to 50 years ago when the Employee Retirement Income Security Act (ERISA) was enacted. In 1975, one year after ERISA was enacted, only 46.2 of all private industry workers were covered by retirement plans. 2 However, of that 46.2 percent, it was highly likely that a number of those covered never received any benefits because of short tenure and vesting schedules as long as 10 years. According to the Employee Benefits Research Institute, the vesting rate (namely, the percentage of the entire population with at least some entitlement to some employer contribution) in 1979 was only 24%. For those who actually participated in a plan, or the participant vesting rate, it was 52%, meaning that only half of those covered by a plan received a benefit. As GAO noted in its report:

some have noted that the growth of DC plans since 1974 may have resulted in a greater share of private-sector workers receiving income from retirement plans. The reasons may include (1) lengthy vesting provisions that may have prevented some individuals in DB plans from receiving benefits and (2) the overall lower costs of DC plans, which may have resulted in more employers offering these plans. 3

There have been many positive changes to ERISA and the Internal Revenue Code (Code) that have increased coverage, participation, and benefits in the employer-sponsored system. The Retirement Equity Act of 1984 strengthened participation rules by lowering the minimum age that a plan may require for enrollment from age 25 to age 21 and lowering the minimum age for vesting service from age 22 to age 18. The Tax Reform Act of 1986 changed the minimum vesting requirements to either one of the following options: five-year cliff or graded, under which participants are 20 percent vested after three years, with an additional 20 percent each subsequent year. The Economic Growth and Tax Relief Reconciliation Act changed vesting on matching contributions: the 5-year cliff or 7-year graded was replaced by a 3-year cliff or 6-year graded vesting. The Pension Protection Act (PPA) of 2006 allowed for automatic enrollment in Code Section 401(k) plan features.

More recently, both the Setting Every Community Up for Retirement Enhancement (SECURE) and The SECURE 2.0 Act (SECURE 2.0) included provisions that would expand coverage to part-time employees, expand coverage through Pool Employer Plans, encourage small employers to establish plans by making tax credits available, and enhance retirement savings for lower income individuals with the Savers' Match.

Recently, there has been increased interest from the private sector in providing retirement solutions for small business, which is where the retirement coverage gap exists. Experts predict that by 2026, 86 percent of employers with fewer than 100 employees will offer defined contribution plans, up from 46 percent in 2022. 4 Many of the provisions in SECURE and SECURE 2.0 are likely to be attributable to this expansion. Furthermore, more and more service providers are focusing on this market by creating programs specifically targeted at smaller employers. For example, WTW, Morningstar and Voya have all recently launched products specifically for the small market, and JP Morgan has partnered with Vestwell to provide increased support for its small-business savings offering. 5 In addition, numerous fintech providers are providing services to the small and micro-markets, such as Penelope and Finhabits. 6

Given the positive changes in SECURE and SECURE 2.0 and the current marketplace that on its own is expanding coverage in the small market, new legislation creating a federal system is unnecessary. Instead, the focus should be on improving the current system to encourage employers to offer coverage. For example, the Saver's Match in SECURE 2.0 could be simplified so that more employers are willing to accept the match. Also, the pension linked emergency savings account provisions of SECURE 2.0 could be simplified to encourage adoption. Congress also could encourage the Department of Labor to issue regulations on SECURE Section 204 that would protect employers who offer lifetime income options under their 401(k) plan. We look forward to working with you on these and other ways to improve the current system, including streamlining reporting and disclosures requirements.

Defined Benefit Plan Improvement Response

There are many outside factors that may make it difficult for certain employers to bring back or establish traditional defined benefit plans. 7 However, there are numerous factors within Congress' control that could ease the burden of maintaining a traditional defined benefit plan, creating or facilitating new designs, or allowing the use of funds to more equitably distribute funds accumulated within a traditional defined benefit plan.

PBGC Premiums

Over the years, Congress has focused on how to prevent the PBGC from having to pay benefits, which is the only purpose of the PBGC, through increased premiums and forced funding. This focus has helped stabilize the PBGC, 8 but it also has had the unintended consequence of forcing employers to terminate their plans, which is contrary to PBGC's mission to "encourage the continuation and maintenance of private-sector defined benefit pension plans". 9

Pension derisking is where a plan sponsor lessens the risks associated with sponsoring a defined benefit plan either through in-plan solutions, such as liability driven investment, annuity buy-ins, or plan closures or freezes, or out-of-plan solutions such as lump sum offers, annuity purchases, or plan termination. "The increased PBGC premiums have 'tilted the scales' to make risk transfer look like a more cost-effective approach compared to in-plan solutions such as LDI. Eliminating benefit obligation and participant headcount allows sponsors to capitalize on short term and ongoing savings while simultaneously reducing risk." 10

For 2024, the PBGC flat rate premium is $101 per plan participant, and the variable rate premium is $52 for every $1000 of unfunded vested benefits (i.e., under 100%) capped at $686 per participant. 11 Even for a fully funded plan that is sponsored by a financially secure employer, 12 PBGC premiums are significant. For example, for 2024, a plan with 10,000 active participants and retirees that is 120 percent funded would owe $1,010,000 in PBGC premiums, even though in this scenario there is very little chance that PBGC would ever need to pay the benefits for this plan.

Even more disturbing has been Congress' use of PBGC premiums as a budget gimmick to "pay for" other legislative initiatives unrelated to the PBGC or retirement benefits. Currently, PBGC premiums are "on budget." This means for Congressional bill scoring, an increase in PBGC premium can be used to "pay for" other unrelated government spending even though PBGC funds are not part of the general treasury and go directly from a plan sponsor to PBGC. 13 In the last decade, single-employer PBGC premiums have been raised three times, and each time was outside the context of pension reform, 14 and the increases were used as a "pay for" for other items such as transportation. If Congress is unwilling to take PBGC premiums off budget, which they were before the 1980 amendments, Congress should at least pass the Pension and Budget Integrity Act (PBIA) which would bring transparency to unvetted increases in PBGC single-employer premiums.

In 1987 the variable rate premium was introduced as an incentive for plan sponsors to better fund single employer defined benefit plans and protect the PBGC. However, as GAO noted, plan underfunding is only one risk factor, and may not in fact show the full risk to PBGC. 15 Furthermore, the variable rate premium, which was meant to protect the PBGC, whose mission it is to encourage defined benefit plan formation and maintenance, has instead encouraged plan sponsors to terminate their plans. The variable rate premium (and the funding rules) puts many plan sponsors between a rock and a hard place because they can either fund up the plan to avoid the variable rate premium or use this money for other more immediate purposes such as wages or other benefits. A plan sponsor may not need to fully fund a pension plan in one year based on the plan's demographics and the plan's cash flow needs. However, once money is in the plan, it cannot be removed other than to pay benefits or plan costs. Therefore, to avoid the VRP, a plan sponsor must fund up a plan, even though such funding may not be necessary to pay the plan costs, and, at the same time, the plan sponsor must forgo other payments, including increased wages and other benefits. Section 349 of SECURE 2.0 froze the variable rate premium at 5.2% of unfunded liabilities by no longer subjecting it to inflation, which was a step in the right direction. However, significant reform is needed to the PBGC premium structure to encourage single employer plan sponsorship.

PPA was the most significant change to the pension funding rules since ERISA was enacted in 1974. PPA was a reaction to a crisis, rather than a proactive way to improve and encourage pension plan formation. Specifically, PPA was a reaction to the stock market drop in 2001, which left all defined benefit plans underfunded at that time. Most companies were able to make up that difference, however, there were some large bankruptcies, which resulted in PBGC taking on those pension liabilities. These bankruptcies were the catalyst for PPA. Ten years after its enactment, studies showed that the defined benefit plan provisions that called for all pension plans to be funded at 100 percent regardless of the underlying demographics or the plan sponsor's financial health, actually "had the unintended consequence of worsening the nation's retirement crisis. The volatile and unworkable funding rules in the law left employers less willing to continue offering defined benefit (DB) pension plans. The law also triggered more pension 'freezes,' leaving fewer Americans with pensions." 16 According to one scholar, "the inflexibility, impenetrability, and administrative costs associated with ERISA's defined benefit minimum funding rules are, for many employers, a significant deterrent to establishing or continuing defined benefit plans, particularly when those rules are contrasted with the greater flexibility, transparency, and simplicity of the rules governing ... 401(k) plans." 17

This is not to say that there should not be any funding rules. However, a one size fits all approach does not work either for employers or employees, as seen from PPA. Instead, when Congress looks at the funding rules, it should recognize that "there is no single threshold that assures a healthy plan. When assessing the fiscal soundness of a pension plan, many factors should be taken into account because each situation is unique." 18 As such, any subsequent legislation should consider the pension system more holistically rather than just at an aim of protecting the PBGC through onerous funding rules on all employers.

Transfers between Plans

As noted above, legislation has had the unintended consequences of encouraging employers out of the defined benefit system. In many cases, plan sponsors have frozen defined benefit plans to new entrants (soft freeze) or frozen the plan both to new entrants and to future benefit accruals (hard freeze). Because of a confluence of events (such as higher investment returns and lower liabilities), some of these plans have become overfunded.

However, because of the exclusive benefit rule, any excess assets may only be used for participants in that plan. But, because these plans are frozen, the participants in these plans represent a fraction of the employer's current workforce (and many do not even work for the employer because they are either retirees or individuals who have quit but have a deferred vested benefit). Current law prohibits employers from using this money to fund benefits for other employees while the plan is ongoing, and it also limits the use of it for other purposes for those in the plan to retiree health or life insurance. An employer could use the surplus to fund benefits for other employees to an extent, but only if the plan is terminated, which seems a draconian way to fund benefits. As such, Congress should explore ways that encourage plan sponsors to maintain frozen plans, but also allow certain amounts of excess funds to be used to pay for current employees benefits in other retirement plans sponsored by that employer.

Revisit the Prohibited Transaction Rules

ERISA and the Code categorically prohibit a litany of transactions regardless of whether a transaction is beneficial to the plan and its participants or necessary to actually run the plan. 19 For example, the prohibited transaction rules prohibit the furnishing of services between a plan and a party in interest, which includes service providers. Read literally, a plan is forbidden to employ an entity to run or administer the plan, even though there is no plan that could function without outside service providers. However, Section 408 of ERISA provides that the prohibitions in Section 406 (not just the prohibitions in 406(a)) will not apply in certain circumstances. With respect to services, the prohibition in Section 406 will not apply for "[c]ontracting or making reasonable arrangements with a party in interest for office space, or legal, accounting, or other services necessary for the establishment or operation of the plan , if no more than reasonable compensation is paid." 20 As noted below, and as illustrated by this example, there is no need for this prohibition or the exemption because entering into a contract for services that are not necessary to run the plan and/or paying more than reasonable compensation would per se be a breach of fiduciary duty of prudence under ERISA Section 404(a).

In 1995, two prominent ERISA practitioners observed that the prohibited transaction rules "increase the marginal cost of nearly every investment transaction that does not take place in public [markets]." 21 The authors reported asking "[s]everal experienced ERISA attorneys [if] they were aware of any case in which these rules had prevented or punished some abusive act that was not also proscribed by the general fiduciary rules. None could identify a single case." 22 This probably is likely because the prohibited transaction rules were not put into ERISA to protect plans or participants, but instead were a way for the tax committees to obtain jurisdiction over the legislative process as ERISA was working its way through Congress. As Frank Cummings, past Chief of Staff to Senator Jacob Javits, stated:

Long before those fights took place, the notion of a prohibited transaction in the first place was part of the strategy of putting the whole bill-not part of the bill, the whole bill-in the Internal Revenue Code. The idea was if you were going to have fiduciary behavior standards, how in the devil could you put that in the Internal Revenue Code? As I recall someone had remembered that the private foundation rules, which preceded ERISA by fifteen years-was it five years? Well, it was a while.

But at any rate, that was the model for these prohibited transaction provisions but the provisions were really invented for the purpose of preempting the Labor Committee­ so it was really part and parcel of whether the Labor or Tax Committee was going to get control of the legislation, and of course control in the tax-writing committees meant you weren't going to get a bill. So later, after they had developed a lot of this for the Internal Revenue Code, then you had to go back and fit that into Title I, but not all of the tax-prohibited transactions got back into Title 1. 23

It has been 50 years since this jurisdictional fight took place, and it is long past time for Congress to revisit the prohibited transaction rules to determine whether they actually benefit plans and participants and encourage plan formation or rather if they merely create unnecessary barriers and costs to plans because of the web of administrative and regulatory complexity that they have created. 24 Congress also should examine whether the "prohibited transaction rules are appropriate for retirement arrangements that do not involve an employer, i.e., most regular, rollover and Roth IRAs" 25

We appreciate the Committee's attention to this important matter, and we look forward to working with you to find retirement solutions that will work for everyone.

Chantel Sheaks Vice President, Retirement Policy U.S. Chamber of Commerce

1 "TED: The Economic Daily", September 29, 2023 available at https://www.bls.gov/opub/ted/2023/73-percent-of-civilian-workers-had-access-to-retirement-benefits-in-2023.htm#:~:text=In%20March%202023%2C%2073%20percent,was%2077%20percent%20in%20March .

2 "EXPANDING PRIVATE RETIREMENT PLAN COVERAGE AND BENEFITS: PROPOSALS BEFORE THE NINETYFIFTH AND NINETY-SIXTH CONGRESSES", Peter H. Turza, Duke Law Journal, Vol. 1979:615 avaiIable at https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2705&context=dlj ​

3 "A Visual Depiction of the Shift from Defined Benefit (DB) to Defined Contribution (DC) Pension Plans in the Private Sector", Dec. 27, 2021 available at https://crsreports.congress.gov/product/pdf/IF/IF12007.

4 "Experts Predict Major Growth in Retirement Coverage, Benefits", Natalie Lin, Mar. 23, 2023 available at https://www.planadviser.com/experts-predict-major-growth-retirement-coverage-benefits/#:-:text=Experts%20predict%20massive%20growth%20in,according%20to%20new%20industry%20research.

5 "Changing Dynamics of US Small Plan Retirement Market", Rashabh Hingar and Pankaj Aggarwal avaiIable at https://www.evalueserve.com/blog/changing-dynamics-of-us-small-plan-retirement-market/

6 See "Retirement Fintech for SMBS Raises $2.1M", Mar. 17, 2022 available at https://workweek.com/2022/03/17/retirement-fintech-for-smbs-raises-2-1m/ : "Latino-Owned Businesses May Be Poised for 401(k) Plan Growth", Alex Ortolani, Mar. 29, 2023 available at https://www.planadviser.com/latino-owned-businesses-may-poised-401k-plan-growth/

7 We are not taking a position on whether a defined benefit plan is better or worse than a defined contribution plan because whether a plan is beneficial for an employee depends on whether the employee is a long or short tenured employee. In addition, certain employers may not be in a position to sponsor a defined benefit program because of the longevity and other risks. As such, we hope that Congress will look at ways to make both types of plans easier to sponsor so that an employee may make the choice of plan based on employee demographics and the employer's abilities. See "Suddenly Everyone's Talking about Defined Benefit Plans", Alice Munnell, Nov. 21, 2023 available at https://crr.bc.edu/suddenly-everyones-talking-about-defined-benefit-plans/

8 According to its Fiscal Year (FY) 2023 Annual Report , "PBGC's Single-Employer Program remains financially healthy, with a positive net position of $44.6 billion at the end of FY 2023, up from $36.6 billion at the end of FY 2022, an improvement of $8 billion." PBGC Releases FY 2023 Annual Report Financial Positions of PBGC Insurance Programs Continue to Strengthen", Nov. 16, 2023 available at https://www.pbgc.gov/news/press/releases/pr23-048.

9 PBGC Mission Statement available at https://www.pbgc.gov/about/who-we-are

10 "Pension De-Risking Study Analyzing the Drivers of Pension De-Rising Activity", Mercer Prepared in Partnership with the Office of the PBGC Participant and Plan Sponsor Advocate, Dec. 7, 2017 available at https://www.pbgc.gov/sites/default/files/appendix_i_-_de-risking_study.pdf

11 "Premium Rates: Current and Historical Information", Last Updated: Oct. 13, 2023 available at https://www.pbgc.gov/prac/prem/premium-rates.

12 Under current PBGC premiums, whether a plan is fully funded depends on which interest rate is used. Unfortunately, because a plan must lock in which interest rate is used for five years, whether a plan is fully funded is at the whim of interest rates. This means that a plan may show up as underfunded for VRP purposes using one interest rate, but may not be using the other interest rate, but they cannot change rates for five years. See "Window of Opportunity Available for Reducing 2023 PBGC Premiums", Aug. 03, 2023 available at https://www.morganlewis.com/blogs/mlbenebits/2023/08/window-of-opportunity-available-for-reducing-2023-pbgc-premiums#:~:text=Action%20must%20be%20taken%20prior,is%20currently%20%2496%20per%20participant.

13 When ERISA was enacted, PGBC premiums were off budget. In 1980, Section 406 of The Multiemployer Pension Plan Amendments Act changed that so that PBGC premiums could be calculated as general fund revenue for budget scoring, even though the premiums cannot be used other than to pay benefits and PBGC administrative costs.

14 See Moving Ahead for Progress in the 21 st Century (P.L. 112-141), Bipartisan Budget Act of 2013 (P.L. 113-67), and Bipartisan Budget Act of 2015 (P.L. 114-74).

15 "Pension Benefit Guaranty Corporation: Redesign Premium Structure Could better Align Rates with Risk from Plan Sponsors", Nov. 2012 available at https://www.gao.gov/assets/gao-13-58.pdf.

16 "New Brief Examines Pension Protection Act Impacts 10 Years After Enactment", June 18, 2017 avaiIable at  https://www.nirsonline.org/2017/06/new-brief-examines-pension-protection-act-impacts-10-years-after-enactment/

17 "The Defined Contribution Paradigm", Edward A. Zelinsky, Nov. 30, 2004 available at https://www.yalelawjournal.org/pdf/388_rys1mj7u.pdf

18 "The 80% Pension Funding Myth", American Academy of Actuaries, Apr. 2012 available at https://www.actuary.org/node/13461.

19 See ERISA Section 406; Code Section 4975(c).

20 ERISA Section 408(b)(2)(A).

21 "The Regulation of Pensions: Twenty Questions after Twenty Years", 21 J. Pension Plan & Compliance, 1, 13, Kathleen P. Utgoff & Theodore R Groom (1995).

22 "Pension Simplification", 35 J. Marshall L. Rev. 565,602-603 (2002), David A. Pratt .Q)1j_og_Kathleen P. Utgoff & Theodore R. Groom, "The Regulation of Pensions: Twenty Questions After Twenty Years", 21 J. Pension Planning & Compliance 1, 13 (1995).

23 "Panel 4: ERISA and the Fiduciary" available at https://drexel.edu/~/media/Files/law/law%20review/Spring2014/Panel%204_revised.ashx?la=en

​ 24 There are 39 class prohibited transaction exemptions, and since 1996, DOL has issued over 1200 individual exemptions, although the number of individual exemptions has recently tapered off dramatically, even though many revised class exemptions now contain provisions making it more difficult to use the class exemption. Congress should investigate whether DOL has exceeded its statutory authority in its PTE process.

25 "Pension Simplification" at 603.

About the authors

Chantel sheaks.

Chantel Sheaks develops, promotes, and publicizes the Chamber’s policy on retirement plans, nonqualified deferred compensation, and Social Security.

  • Employment Policy

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