What is a Business Proposal? Definition, Types, and Examples

Written by Nikola Gemeš


You’ve returned from a big trade fair. You couldn’t afford a big booth for your startup, but your creative visual marketing drew a lot of visitors. 

Plenty of business cards change hands, and you give away all the promotional T-shirts and cup holders. Also talked to all sorts of investors and company reps.

And then, out of nowhere, you get a request for proposal in your inbox. 

Apparently, one of the companies you got in touch with is interested in your services. They expect your offer. They want a business proposal.

So what do you do? You haven’t seen a business proposal in your life and now you’re supposed to write one?

Don’t panic. We got you covered

Let’s take a look at what makes a good business proposal, along with the most successful types used today.

What Is a Business Proposal?

A business proposal is a sales document that a supplier sends to a potential client with the purpose of winning a specific project. The proposal can be requested by a client or less commonly, sent unsolicited. 

Many service-based businesses depend on proposals to sell their services and bring in new business. The proposal can be either digital or printed. It explains the product or service features taking into consideration the potential client’s requests or needs. 

In other words, a business proposal shows how a company can solve a customer’s specific problem.  

Types of Business Proposals

Business proposals can be solicited or unsolicited. A solicited proposal is sent when a client specifically requests a proposal. A client can ask for a proposal casually in conversation, during a meeting, or send a formal request for proposal (RFP) document. 

Here’s how it works:

Formally Solicited Proposal

For example, a small boutique resort has been a regular client of your landscaping business. They have already hired you for a few one-time jobs and you know what they need. Now they want a regular service and need to double-check the terms before paying. 

They ask you to send a business proposal that contains service names, prices, timelines, payment options, etc. 

After receiving your offer, they are obliged to respond within an agreed period. In case the resort agrees to your terms, the proposal becomes a legally binding purchase agreement.

Informally Solicited Proposal 

In this scenario, the boutique resort has discovered your landscaping business and is interested in your services. In an informal conversation between the two reps, they ask for a document that will give them more details about the quality of your services, previous clients’ reviews and testimonies, pricing, etc. The difference is that they are not obliged to respond to the offer.

Unsolicited Proposal

Your landscaping business is running a lead generation campaign and wants to inform the boutique resort about the services it offers. In this case, you create a general proposal that contains an introduction to your company, your expertise, and qualifications, cooperation terms, partnership programs, etc.

Business Proposal vs. Business Proposal Letter

A business proposal letter or cover letter is a document that businesses sometimes send to their prospects alongside a business proposal. A shorter proposal may even combine these two in a single document.

Business ProposalProposal Letter
long form
personalized
thanks the client
refers to previous work
provides client testimonials
contains pricing
gives contact information

A cover letter helps provide context on why you’re sending the accompanying proposal. 

A cover letter should be brief, no longer than one page. It definitely shouldn’t steal the show from the business proposal. 

It should:

  • Mention when the proposal was requested
  • Credit people who helped prepare the proposal
  • Offer an executive summary of the proposal
  • Thank the potential client
  • Provide your contact information
  • Show them the next steps

You can mention the client’s RFP document or refer to a conversation where the potential client has expressed interest in seeing the proposal. 

Proposals vs. Estimates

Proposals and estimates are both sales documents that businesses use in attempts to win projects. 

However, a proposal is much more detailed than an estimate and usually covers more complex projects. 

Proposals also tend to explain the value the company will provide to a potential client, together with listing its past projects and including client testimonials. 

Some small businesses use estimates to detail the costs and tasks covered by the project. Then, they prove their value through other means, like during a call or a site visit. This way they avoid drawing a formal proposal altogether.

Business ProposalEstimate
long form
offers pricing and tasks
refers to previous work
provides client testimonials

There are also examples when a business doesn’t have to prove its value because it has a great reputation. In this case, the client is already sure that your company is the best fit for the job. 

Maybe they got a referral from a trusted partner or they have read great online reviews. In both cases, the job is not overly complex and a project estimate will do. 

On the other hand, the job can be complicated or have unique requirements. In this case,  clients may need more proof to make sure your business is the right fit. 

Then you need a proposal to prove that you as a supplier or service provider are able to provide the right approach, design, timeline, etc.

Key Parts of a Business Proposal

The Cover Page

The cover page is the first thing your potential client sees, so make sure to make the right impression from the beginning. Ask any graphic designer and they’ll tell you that here less is more. Keep it simple and focus the client’s attention to:

  • the project name
  • the name of the person the proposal is addressed to
  • your company name
  • your contact information
  • submission date

You also need to include your logo. Since this is the cover page, make sure you use a high-resolution version.

cover

If you’re thinking about whether you need the cover page at all, let me assure you that you do. We did our own research that shows that if you include a cover in your proposal, you’re 4.6% more likely to land the account.

The Introduction

Before they sign off on the project, the clients need to like you. And they can’t like you if they don’t know you. 

Your intro needs to be tempting. And before you ask, yes you need one. A proposal without an intro is like showing up to a job interview without introducing yourself first. What’s more:

  • The introduction is the part where people spend 38.2% of the time reading your proposal.

This is the part where you tell them what your company is all about and how you can bring value to their business.

introduction

On the other hand, avoid the common pitfall of making the intro all about you. Instead, you want to segue into the client’s pain point and let a glimpse of solutions your company can provide. This way, you’re holding their attention from the very start and raising your chances of sealing the deal. 

Easier said than done, eh?

Here are a few pro tips. 

  • Keep it short and sweet

The rule of thumb with introductions is to keep them short. For now, your goal is to hook your prospects and keep them reading. There’ll be time to reel them in the next sections.

  • Make it personal 

Your business may be sending a lot of business proposals, but you don’t want to copy-paste the same generic content over and over again. Generic content always loses to customized pitches, so you’re ruining your chances of closing a deal. 

Your potential client is likely entertaining other companies as well, so you need to stand out from the crowd. The best way to do this is to personalize your proposal. 

This is fairly easy, especially if you’re using proposal software

For example, you can use merge tags for the clients’ names. This saves you a ton of time and leaves no room for error since you don’t have to fill them in manually everywhere. 

  • Draw from meeting notes

If you had a call with your potential client and asked the right questions, you should have a pretty good idea of what problems they have. Now you only need to show why you’re the right choice to tackle those problems. 

Recall an overview of their specific needs. You can mention the objectives they shared with you, their current situation, and how you can help them achieve those objectives.

Your Solution

When your prospect gets past the introduction, they’ll be eager to know what’s in it for them. Here it’s important that you focus on the end result rather than the process that will get them there. Let’s say you’re selling landscaping services. 

As a professional, you know how much work goes into each project. You need to do the on-site assessment, improve the soil, create the drainage slopes, select plants for each layer, etc. not to mention the actual manual work. 

Since you take pride in your expertise, you may be tempted to describe the entire process from start to finish. However, that’s not always the best idea.

solution

The client is hiring you to get the results, not a crash course in gardening. At the end of the day, they are interested in the improved aesthetic appeal of the resort and the increase in traffic that goes along.  

I admit that finding the right balance between describing the services and results can be difficult. The trick is to focus on benefits while allowing just enough technical specs to resolve any potential disputes.

As the experts from Real Estate Skills say, give them a taste of your skills, but never the full product – just to keep them excited about the outcome.

The Project Timeline

All clients want to know how long a project is going to take. Include a timeline to help your client get on board with the process and to set your own pace and milestones. 

For example, a big project can have a six-month timeline, which may seem intimidating for the client. The best course is to break it up.

First, it helps the client distinguish between different phases. Second, it lets you set deadlines for yourself to keep you on track. 

You can take the timeline to the next level and turn it into a sign-off sheet. This is a great feature that lets both parties stay on the same page, as related to the scope of work and deliverables. 

Also, using a sign-off sheet allows you to charge for any additional services that clients request, which weren’t included in the original agreement.

The Social Proof

There’s hardly a better way to win a client who’s on the fence than showing them that you’ve done similar projects before. 

That’s why you absolutely must add a relevant case study to your business proposal.

case-study

Depending on the project, you can choose an industry- or project-centered case study. 

You may be tempted to include your entire portfolio, but that will only make the proposal impractically long.

The Pricing

You’ve shown that you understand your client’s needs and offered appropriate solutions. Now it’s time to nail the section the client will spend the most time on.

pricing

Help them choose you by making small adjustments:

  • Use “Investment” instead of “Pricing

It sounds much better this way because it assures your client that they are investing in the future. 

  • Add a brief testimonial

After seeing the price, the client needs to see how your solution has helped someone else’s business take off. It helps them realize the value you provide for the money. 

  • No optional services

You may be tempted to offer your clients upsells and package prices. However, our report shows that this can actually hurt your conversion rate. It’s much better not to give any choices. If you go with one price, you can ask for a 20.6% higher upfront fee and 33% higher monthly fees.

The Guarantee 

Some businesses embrace the idea of a guarantee. Others are less enthusiastic about giving guarantees, fearing abuse. 

Still, guarantees can be the last piece the client needs to convert. Instead of a typical money-back guarantee, consider guaranteeing a part of your service or a timescale.

For example, for smaller projects, you can offer a “curb appeal in a day” guarantee.

The Next Steps

At this point, you need to tell the client how they should proceed. Take some time to explain the steps they need to take to close the deal. You don’t have to go overboard here. Everything up to now should be clear. 

Our proposal template has a Next Steps section with three simple steps:

  1. Simply type your name in the box below and click “Sign Proposal.”
  1. We will arrange a final call to discuss all the remaining details.
  1. We will set up the best billing arrangements. 

By signing, the client agrees to the terms of the proposal and agrees that their typed name can be used as a digital signature.

Terms and Conditions

Finally, it’s always better to include your terms and conditions in your proposal. That way, the client only needs to sign one document. They know what to expect and you’re legally covered.

All our templates come with proposed terms and conditions sections which you can adapt to your liking.

Wrapping Up

As you see a business proposal is a complex sales document with many steps that need to be done right. 

How much detail is too much? What goes first? How to present a case study without showing off? 

Crossing all the ts and dotting all he is takes time and experience. 

But why wait so long? The business is happening now.

Instead of starting with a blank page, consider using proposal software that lets you write an amazing proposal that converts in less than an hour. 

With Better Proposal templates you don’t have to figure out how to structure your offer.  Our templates are always being updated with the latest marketing trends, as we hone the features that regularly make the most conversions. 
Sign up for our 14-day free trial and see for yourself.

Categories: Proposal Writing Tips