proposal writing tips

The Difference between a Business Plan and a Business Proposal

September 8, 2016

A Business Plan Versus a Business Proposal

Some words are easy to decode while others have unclear precincts, such as the difference between a business plan and a business proposal. Most people use the terms business proposal and business plan interchangeably. People often think they are one and the same thing. In reality, a business proposal and a business plan are two entirely different terms.

Both are documents used in business but each has different purposes and goals. A business plan is a purposeful document that describes in detail how your business is set up. It reflects the way your business plans to establish itself over an extended period. Business plans cover your business structure, marketing strategy, market research, products and services, and your complete financial projections for up to five years (

A business proposal, in contrast, is not meant for long term purposes. It is simply a document that you submit to another company proposing a business arrangement. It acts as a focused sales document intended to describe how your company will approach a project and offer a solution. It plainly states the value of the proposal to the client and solicits the client for business (

The intended audience of these two documents also varies considerably. A business plan is a document intended for the management and the lenders. A business proposal is however only intended for the other enterprise with whom a business wishes to enter into a contract with.

Simply put, a business plan is a written representation of facts while a business proposal is a price quote and a subtle call to action.

Reasons to Write a Business Plan

A business plan details your vision for your company and how you intend to realize that vision. It contains financial forecasts of what the business will cost plus a valuation of the revenues to be generated. Its main purpose is to provide a meticulous explanation of your business to potential investors, prospective employees, suppliers, attorneys and any other person who may need a quick understanding of what your business entails and its roadmap for success (

Both new and existing businesses need a strategic plan. A lot of research and planning must be done to develop this document. Business plans can help perform a variety of tasks for a business. First, they are used by investment-seeking businesspersons to convey their vision to potential investors. Secondly, they may be used by firms trying to prospect for new business, attract key employees or deal with suppliers (

The typical plan writer is an entrepreneur looking for funds to help start a new venture. In this case, the business plan is a breathing blueprint for success. It outlines how you will move from business idea to business success. If you’re seeking to raise funds through a loan or a venture capitalist, consider approaching these moneylenders only if you have a detailed business plan. Experts estimate that it takes about two months to come up with a thorough business plan. This is why you should never think of doing last minute preparations.

Note: The primary reason for writing a business plan is to gather and convey information.

Reasons to Write a Business Proposal

A business proposal is designed to sway prospective clients to buy a particular product or service. Proposals may either be solicited or unsolicited. A prospect may simply request a business proposal in the course of a sales call by saying, ‘’That’s a brilliant idea. Why don’t you submit a proposal on that.’’ In other cases, the client may send you a formal solicitation, usually called a Request for Proposal (RFP) (

An RFP is a document that specifies the products and services to be provided, the specifications sought and the deadline for submission. In short, solicited proposals mean that the client has already decided to make a purchase. Only the selection of the ideal vendor is to be decided. If you’re responding to an RFP, you are aware of the service or product required, but you will be competing against many other people who bid. As such, you must sell your proposal as the best choice among all the submissions (

In an unsolicited proposal, you might have a solution that would be of benefit to company X. So you submit a proposal to the company offering to provide a product or service to solve a certain problem in exchange for some funding. In this case, you don’t know if the prospect will be open to your proposal. Nonetheless, if they like your solution, you won’t be in competition with other numerous vendors. For this reason, your proposal has to sell not only your solution but also your business. It needs to appeal to the prospect for it to pull through the front door and have a chance at success.

Note: The primary reason for writing a business plan is to solicit a business opportunity.

Business Plan Structure

A business plan has three sections: a description of the business concept, marketing model and financial projections. It consists of the following informative sections: executive summary, business description, marketing design, analysis of competition, operations plan, introduction of management, a discussion of financial matters and projection of results. It is often introduced by the executive summary, which can be a detailed abstract or a comprehensive marketing tool to attract attention to your business (

Business Proposal Structure

A business proposal has five sections: executive summary, cover letter, title page, table of contents and procedures. The cover letter provides a summary of your proposal and introduces your company and qualifications. The title page contains your name, the name of your company, the name of the prospect’s company and the date of submission. The executive summary is the primary argument of your proposal- keep it short and concise. The procedure section is the longest part of the proposal and contains all the technical details and explanations (


Everything considered; a business plan is a broad description of a company and its projections while a business proposal is a dedicated sales document that describes how a company intends to approach a project and offer value to the client’s business.

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