How to write a business proposal for small businesses in nine steps

Finding your target audience and earning a customer’s business requires a lot more than a smile and a handshake. If you sell a service of any kind, chances are you will need to provide an estimate, quote, or price list before a customer will consider hiring you.

That is why we have created a free business proposal template for you to follow. It will help ensure that you include all the information your prospective customers need to make a purchase decision. But first, let us clarify what a business proposal is and what it is not.

• What is a business proposal?
• Types
• Benefits
• Business proposal vs. business plan
• How to write a business proposal page-by-page
• 1. Attach a business proposal cover page
• 2. Include a table of contents
• 3. Write an overview (executive summary)
• 4. Develop your proposal
• 5. Outline your solution and deliverables
• 6. Provide an “About” page
• 7. Detail the pricing structure or budget
• 8. Explain the legal terms and conditions
• 9. Add an appendix (optional)
• Tips for writing a business proposal

What is a business proposal?

A business proposal is a basic rundown of what a project is going to cost your customer. It should include an in-depth description of the work being performed and the prices associated. The proposed price will include the following:

• Cost of goods sold
• Materials cost
• Tax
• Labor costs
• Markups
• Subcontractor fees

Types of business proposals

Proposals are usually competitive in nature, so a client may request offers from several different businesses. While a proposal is not binding, once it is accepted by the client, it is typically considered an agreed-upon contract.

From there, the project will begin on the terms set out in the proposal. However, there are different types of business proposals: unsolicited and solicited. 

• Unsolicited business proposals: Proposals that are not in response to a client's request. They are sent in hopes of initiating an idea that will later produce a contract. 
• Solicited business proposals: Proposals that are in direct response to a client's request. These are usually in the form of a request for proposal (RFP). 

Benefits of writing a business proposal

Writing a business proposal that is both concise and thorough can differentiate your business from your competitors. Here are some other benefits:

1. Makes you look professional and sets you apart from competitors
2. Helps investors and potential customers make a faster decision
3. Clarifies all project deliverables and pricing upfront with clients
4. Avoids confusion and any disputes about the project scope

Business proposal vs. business plan: What is the difference? 

Business proposals should not be mistaken for business plans. A business plan is used when pitching to investors to receive funds. This is usually conducted during the early stages of business development or during a time of growth. Here is a breakdown of the main differences between the two. 

Business proposal:

• Used once the business is already established
• Gives the client a pricing rundown so they can make an informed decision
• Used as a business growth tool to gain more clients

Business plan:

• Maps out the road to business development from conception to completion
• Used before a business is started and possibly again when growth is on the horizon
• Used to seek funding from investors, attract a new business partner, or apply for a small business loan

How to write a business proposal page-by-page

Once you have identified the need to write an effective business proposal for a project, there are nine steps and several tips to follow to ensure your proposal looks professional and detailed. Here is what you will need to do:

1. Attach a business proposal cover page
2. Include a table of contents
3. Write an overview (executive summary)
4. Develop your proposal or statement of work (SOW)
5. Outline your solution and deliverables
6. Provide an “About Our Company” or “About Me” section
7. Detail the pricing structure or budget
8. Explain the legal terms and conditions
9. Add a project proposal appendix (optional)

Let us review what is required for each of those steps so you can follow our business proposal sample.

1. Attach a business proposal cover page 

Attach a business proposal cover page or title page. You can do this at the very beginning or end of your proposal process. Either way, it is important to include pertinent information like:

• Title of the proposal and applicable dates
• Who it is for, stakeholders’ names, and company name
• Who it is written by, their title, and company name
• Contact information for follow-up (email and phone number)

You may also wish to include your company’s logo along with the client’s logo on this page. Make sure to have plenty of white space around this information, so it is easy to spot and read.

2. Include a table of contents

A table of contents is simply a page with a numbered list of all the sections of your proposal. You can use the nine-step list we provided earlier as a guide, which includes:

1. Cover page
2. Table of contents
3. Executive summary
4. Proposal or statement of work (SOW)
5. Solution and deliverables
6. About Our Team
7. Pricing structure or budget
8. Legal terms and conditions
9. Appendix (optional)

If the client’s request for proposal includes more elements than the nine sections we have outlined, be sure to include them here and address them as a separate section in the proposal. 

3. Write an overview (executive summary) 

Think of this section as the executive summary, or a quick breakdown that summarizes why those reading your proposal should care. Your stakeholders or potential clients should be able to read this section of your project proposal and understand:

• The nature of the client’s problem and client’s needs
• The impact of the problem
• Why it makes sense to perform a project that fixes the problem

Follow these steps to write an effective overview:

1. Clearly state the problem you aim to solve. 
2. Provide a clear and concise history of the issue your project proposal will remedy.
3. Include events that created the problem, metrics, or measurements that quantify the problem’s impact.
4. Add a timeline from the problem’s onset to its current status.

4. Develop your proposal 

Use this section to describe your vision and value proposition for solving the problem. A project-worthy vision includes more than simply fixing the client’s pain point. In solving the problem, your project should move your client’s vision toward success.

Here is a brief example:

Client [INSERT NAME] will hire [INSERT YOUR BUSINESS NAME] to complete [INSERT PROJECT DESCRIPTION] to help the client to [EXPLAIN HOW THE PROJECT WILL SOLVE A PROBLEM AND THE DESIRED RESULTS].

Keep this overarching question in mind when drafting the SOW: How does solving the problem align with their strategic goals?

If it is an unsolicited proposal, make sure your potential client understands the consequences of not acting to solve the problem. Use the metrics from the overview section to forecast the future impact of ignoring the problem.

5. Outline your solution and deliverables

A client stakeholder should read this section and understand the immediate and long-term steps needed to complete the project, plus what kinds of tangible results from your project they can expect to receive.

Use SMART goals to guide you. All goals should be:

• Specific. A specific deliverable answers the question: What will be done and by whom?
• Measurable. A proposed solution is measurable if the following question can be answered: How will the success of each deliverable be measured? Each deliverable should have at least one metric that gauges success. Use quantifiable metrics as much as possible.
• Achievable. A deliverable is achievable if you can answer “yes” to the question: Can we complete this deliverable with the identified restraints?
• Relevant. Is the proposal relevant to your company? Does it align with company goals? 
• Time-based. Each deliverable should be limited in time—at least by completion date. If your deliverables will be completed in milestone stages, then include an estimated completion date for each stage.

6. Provide an “About” page 

The purpose of this section is to answer the question: Why should the customer hire me over someone else?

In this part of the document you will want to:

• Explain who you are (or your company)
• Include your mission statement
• Outline any similar projects or clients that you have worked with
• Provide any case studies or details on the success of recent jobs
• Add quotes or testimonials from happy clients including their name, job title, and company name 
• Include logos of high-profile clients to showcase that many businesses trust you with their money

These are all examples of social proof you can use to demonstrate that you are qualified for the contract.

Finally, if you will be assigning a team to work on the project, you can list their names, titles and any other pertinent information (their previous work experience, for example) that will also help persuade the customer to sign off on the proposal.

7. Detail the pricing structure or budget

Once you have made a convincing argument in the earlier sections of the proposal to close the deal, it is time to talk about the budget or price.

The budget section of your proposal should answer two questions:

• What resources are needed to complete the project?
• How much will the client have to pay for the project?

Your resources should include more than direct costs. Resources also include employees and company equipment used to complete the project, like computers or machinery.

If your project requires your existing company resources, the resources may no longer be available for other areas of your business. You must, therefore, factor in this opportunity cost when developing your proposal. It is another indication of whether this project is right for you and your business at this time.

1. Determine your source of internal funding before the project launches. Can your business afford the project with existing funds or do you need to raise money to hire more help for future projects? If you need to raise additional funds, should you sell current assets or should you seek outside investment?
2. Be sure to include the cost of taxes. This is so your client knows exactly how much to budget for the work.
3. Include some contingency costs. As we mentioned earlier, sometimes projects go off the rails and you need to protect yourself. You might say something as simple as: “Any work required that goes beyond the scope of work detailed in this proposal will be billed at an hourly rate of X.”

If you notice a project is going out of scope, you can alert your customer early on and let them decide how they want to proceed. They might decide to hold off on some of those new required deliverables for another phase of the project. In that case, you can scope it out separately and propose another price for investment in the future.

8. Explain the legal terms and conditions

Legality is a part of any business proposal you prepare. It should include the services you provide as well as what you are liable for versus what the client will cover. Before you get to the signature section of your proposal, it is recommended that you:

• Consult with your lawyer: They can help ensure you include any necessary legal terms and conditions.
• Obtain a signed master service agreement with the client: This is the master contract, the one you will refer to throughout the project life cycle. You may need to include the signing of this document as part of the overall proposal approval process. 
• Sign off on a nondisclosure agreement (NDA): This is only necessary if you or your client require one before sharing confidential internal information and intellectual property. Explain all of the necessary requirements in this section of the proposal.

Finally, it is time to close the deal!

9. Add an appendix (optional)

The appendix provides evidence to back up your assumptions on any element and allows stakeholders to verify your work. The appendix is not technically part of your proposal, but it is your chance to wrap up any loose ends and show the client you have a well-researched business proposal.

After viewing the appendix, stakeholders should have a clear understanding of how you drew your conclusions, if there are any case studies backing your proposal, and if your proposal is worth considering.

Tips for writing a business proposal

A quality business proposal outline is a valuable tool that any business should use to investigate and launch new projects. Using the nine steps above, you can format your own templates to ensure a consistent and effective approach to business projects. For those who want to really dig deep into the perfect proposal, here are some additional tips to consider. 

Tip 1: Create a thorough summary

As part of the summary, you will want to recap what the client has requested in order to confirm that what you heard from them is, indeed, what they need. Remember: This document will help you in a situation where a client asks for things that are out of the scope of the project that you had initially agreed upon.

Having these details in the document and getting the client to sign off on it is a tool you can use to make sure the project stays on track and that you get paid appropriately for your time and efforts.

Tip 2: Include appropriate pricing

If it is a big project, break down your pricing for each of the expected deliverables. These are obvious requirements that must be presented in the budget. If it is a smaller project, you might just provide an overall flat fee estimate for the entire project.

Tip 3: Create a business proposal cover letter

When you are ready to send your proposal, draft a formal letter to attach to the document.

• Make sure to be brief, yet friendly and grateful for the opportunity to send the proposal to your customer
• Include your contact information 
• Welcome any questions or concerns they may have about what you have provided

You do not have to include the quoted price in the business proposal email or cover letter if you do not feel comfortable. They will see it anyhow when they review the document you have attached.

After you have sent your business proposal letter, make sure to wait at least a week or two before following up. No news is often good news.

Business proposal example

A good proposal features goals that check off the SMART objectives listed earlier. If your stated goal does not meet the criteria, find a way to make it more specific, measurable, achievable, relevant, or time-based.

You might also consider providing a detailed list to make it easy for the client to scan the information. For example:

[INSERT YOUR COMPANY NAME OR PERSONAL NAME IF A SOLOPRENEUR] will achieve the desired results described above by:

1. First project phase: Describe the timing and assets you will deliver to the client, and what metrics or contingencies are related to completing this phase on time.
2. Second project phase: Describe the deliverables and explain if the timing is reliant on client approval of the deliverables from the first task.
3. Third project phase: Describe deliverables and explain if the timing is reliant on client approval of the deliverables from the previous tasks.

Continue this format until all of the stages, deliverables, and time frames have been identified. You can also add key metrics or key performance indicators to each phase to measure whether that part of the project completion will be a success.

The next steps for your business proposal 

With the right business proposal design, your ideas can truly shine and win over those with the power to make your ideas and small business dreams a reality. But sometimes you might have to wait a few weeks or even months before that proposal turns into a contract.

If you have not already, set up an online invoicing system that offers professional templates and a standardized process for charging your clients for work completed, a monthly retainer, or recurring charges.

You will also need to think about other types of legal, tax, and business actions, and a way to easily keep track of your business performance including income, job time and expenses, and invoicing.