5 Key Components of Successful Business Proposals
Small business owners must submit a business proposal in order to win contracts from larger companies or government entities. The U.S. government specifically promotes contracting and subcontracting between small businesses and federal agencies, and has a direct initiative to ensure that a fair proportion of all federal contract and subcontract dollars are awarded to small businesses. These contracts include earmarked amounts set aside for women-owned small businesses ($23.4 billion was awarded in 2018) and service-disabled veteran-owned small businesses ($22.5 billion was awarded in 2018).
Knowing exactly what needs to be included in a business proposal is crucial for winning a contract for your small business. Unlike a business plan, which is designed to direct strategy and raise capital, a business proposal is a bid-specific sales pitch to earn more work.
The two primary types of business proposals are solicited and unsolicited proposals.
Solicited Business Proposals
A solicited business proposal is one that is requested by the potential contract holder. For example, a corporation or government body seeking an outside company to fulfill a project or complete a task may choose to allow companies to bid for the job.
As such, a business proposal may be drafted in response to an open bid placed on the market for which other companies will also be competing for a chance to win the contract. Solicited business proposals can also be made available to a select company or group of companies.
Unsolicited Business Proposals
Unsolicited business proposals, on the other hand, are proposals that have not been specifically requested. They are submitted on the initiative of the seller and function as a way to get the attention of a prospective client.
By submitting a targeted, well-written business proposal, businesses create an opportunity to win the confidence of a strategic client. A small business can also use an unsolicited proposal when attempting to forge a joint venture with another business.
Writing a Business Proposal
If you want to write a business proposal that wins an invitation for bid (IFB), request for quote (RFQ), or request for proposal (RFP), you should know what specifics need to be addressed, and how your company can rise to the task. Make sure your proposal stands out by incorporating the following five components:
- Solutions: After writing a lead paragraph showing you've identified the company's needs, follow up with a presentation of how your business can provide solutions. The key here is to only promote and promise solutions you can actually deliver.
- Benefits: A winning business proposal will clearly outline the benefits of doing business with your company. For example, if your small business can offer complete confidentiality and meet tight deadlines, state it clearly in this section dedicated to the benefits of working with your team.
- Credibility: Your proposal should glow with credibility. If you've worked with clients in the same field or have won any awards, you should list these in detail. Highlight any case studies or third-party endorsements to build credibility, and include links to public feedback and evaluation of your business.
- Samples: A business proposal should include samples of what you've delivered to other customers as vital evidence of your ability to deliver. Even a small sample of your work can succinctly show your organizational capabilities and make the difference in winning a competitive bid.
- Targeted Language: A business proposal must be a clear communication of intent and ability. Customize each proposal for your intended audience and use the language (and jargon) that they would find familiar. Showcase your knowledge of the prospect's industry by using examples and analysis that is relevant to the market.
You can't develop a winning business proposal for every potential buyer, but with a well-practiced formula and consistant execution, you have a better chance of winning new contracts from companies that need what your small business can offer.