Free business proposal template: 10 steps for small business owners

Free business proposal template: 10 steps for small business owners

Winning 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’ll need to provide an estimate, quote, or price list before a customer will consider hiring you.

If you sell to other businesses, you can increase your chances of closing a deal with a formal business proposal, which outlines everything they need to know about the solutions you’ll provide for a set price.

If you’ve never created a business proposal before, it can be intimidating, and you may be unsure of where to start.

That’s why we’ve created a free business proposal template for you to follow. It’ll help you include all the information your prospective customers need to make a purchase decision.

But first, let’s clarify what a business proposal is and what it isn’t.

What is a business proposal?

When you’re negotiating a new project or contract, it’s important to know when to use estimates, quotes, bids, or proposals. Each tactic has different use cases that can be interpreted in several ways.

Let’s review a brief definition of a business proposal, along with the others I mentioned above, to help you understand how to proceed with a new customer, and solidify a good working relationship.

Proposal: business proposal vs business plan

While you might write a business plan to use when pitching to investors to gain funding for business growth, you’ll need a business proposal to demonstrate how much a project will cost a prospective client.

A business proposal should include an in-depth explanation of the work to be done and the prices associated with factors such as goods, materials, tax, labor, mark-ups, and subcontractor fees.

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

From there, the project will usually begin on the terms set out in the proposal.

The benefits of writing a business proposal include:

• Making you look professional and set you apart from competitors
• Helping investors and potential customers make a faster decision
• Clarifying all project deliverables and pricing upfront with clients
• Avoiding confusion and any disputes about the project scope

Bid

A bid is similar to a proposal in that you must clearly state the price for which you’d be willing to do a certain project. However, a bid is a firm price that, if approved, means you must carry out the work as described in the bid.

Construction firms or contractors typically submit a bid to complete a project for a set amount and within a certain timeframe, based on a bill of quantities. A bill of quantities is an itemized list of materials, parts, and labour costs.

Because a bid is considered binding, you should include a contingency sum to allow for any unforeseeable costs that could be incurred throughout the project. For example, if the project goes beyond the scope of work that was originally requested.

Estimate

An ‘estimate’ is simply an estimation of how much a job will cost. Usually, a contractor will provide an estimate when they have limited information about the job at hand, meaning the figure may increase or decrease when they have more information.

The purpose of an estimate is to give clients a rough idea of whether your services are within their budget before proceeding further. It’s not legally binding, meaning you, the contractor, are not required to carry out work for the figure you’ve outlined in an estimate.

Quote

Similar to an estimate, a quote provides a rough approximation of how much a contractor will charge for a job and isn’t legally binding. It’s usually far more detailed than an estimate, and specifically includes the cost of all materials and goods needed to complete a job.

As the price of these materials may fluctuate, quotes are usually only valid for a short period of time. For example, a quote provided in April may not be relevant in October.

To ensure you and your client are on the same page regarding what’s included, it’s a good idea to confirm the details of the quote before you begin working on the project.

How to write a business proposal: Outline and steps

Once you’ve identified the need to write a business proposal for a project, there are ten steps to follow to ensure your business looks professional and detail-oriented.

Here’s what you need to include in your business proposal layout:

1. Attach a business proposal cover page
2. Add a thank you note
3. Include a table of contents
4. Write an overview (executive summary)
5. Develop your proposal or statement of work (SOW)
6. Outline your solution and deliverables
7. Provide an “about our company” or “about me” section
8. Detail the pricing structure or budget
9. Explain the legal terms and conditions
10. Leave space for signatures
11. Bonus: Add a project proposal appendix

Let’s review what’s required for each of those steps, so you can follow our sample of a business proposal.

1. Attach a business proposal cover page

You can do this at the very beginning or end of your proposal process. Either way, it’s important to include pertinent information like:

• Title of the proposal and applicable dates
• Who it’s for, stakeholders names, and company name
• Who it’s 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 as well. Make sure to have a lot of white space around this information, so it is easy to spot and read.

2. Add a thank you note

This would be on the next page and could be written by the sales rep or a senior member of your staff. Your aim is to thank the prospective client for the opportunity to provide a proposal for their project. It just needs to be a few sentences and should include a signature at the end of the note (if it’s in letter format).

If you are sending the proposal via email, you could also opt to use it as the email message instead of adding it to the proposal.

Here’s a business proposal email template:

Hi [INSERT CLIENT NAME],

Thank you for giving me [OR COMPANY NAME] the opportunity to provide a proposal for your upcoming project [YOU CAN SPECIFY WHAT THAT IS IN A SENTENCE OR TWO].

Please find attached our/my proposed statement of work, deliverables, and pricing for the project. Let me/us know if you have any questions.

I [or We] look forward to working with you in the near future.

Sincerely,

[INSERT NAME AND CONTACT INFO]

3. Include a table of contents

This is simply a page with a numbered list of all of the sections of your proposal. You can use the ten-step list we provided earlier as a guide for that table of contents.

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

4. Write an overview (executive summary)

Think of this section as the executive summary or a quick breakdown of 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 problem
• The impact of the problem on your business
• Why it makes sense to launch a project that fixes the problem

Clearly state the problem you aim to solve and provide a clear and concise history of the issue your project proposal will remedy.

Your summary should also include events that created the problem, metrics or measurements that quantify the problem’s impact on your business, and a timeline from the problem’s onset to its current status.

As part of the summary, you’ll want to recap what the client has requested in order to confirm and clarify 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 work that you had initially agreed upon.

Having the details in the document, and getting them 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.

5. Develop your proposal or statement of work (SOW)

Use this section to describe your vision for solving the problem. A project-worthy vision achieves more than simply fixing the problem. In solving the problem, your project should move your client’s business toward success.

Basically, this section details the main points of your solution, highlighting the client’s needs you’re addressing. It can just be a few paragraphs if it is a small project. Or, an entire strategy that lists what solutions you will offer to the customer and what they can expect.

Here’s a brief example of your SOW:

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 an overarching question in mind when drafting the SOW: How does solving the problem align with their business’s strategic goals?

If it’s a big, expensive project, make sure your client understands the business consequences of not acting to solve the problem. Use the metrics from the overview section to forecast the future impact of ignoring the problem.

6. Outline your solution and deliverables

This section is the core of your project proposal. Your solution should be thorough but concise, while deliverables (e.g., the things you will provide to the client when you complete the project) must be actionable.

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 evidence of your project they can expect to receive.

Use SMART goals to guide your drafting. All goals should be:

• Specific
• Measurable
• Achievable
• Relevant
• Time-based

A good proposal features goals that check off all of the above. If your stated goal doesn’t meet the above criteria, find a way to make it more specific, measurable, achievable, relevant, or time-based.

You can provide a detailed list to make it easy for them to scan the information, like this:

[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. The third stage in the project: Describe deliverables and explain if the timing is reliant on client approval of the deliverables from the previous tasks.
4. And so on until all of the stages, deliverables, and timelines have been identified.

You can also add key metrics to each phase to measure whether that part of the project completion will be a success.

To better illustrate this strategy, let’s look at how each of the SMART goal sections can be applied to the deliverables in your business proposal.

Specific: What are the details of your project proposal?

A specific deliverable answers the question: What will be done and by whom?

Try to avoid vague descriptions, and leave nothing to interpretation. Anyone who reads the deliverable or solution be able to observe the same set of steps once the project starts.

If your deliverable includes a series of steps, clearly list the steps one by one. Don’t allow the stakeholders to read assumptions into your project proposal because you have not been specific enough.

Your specificity should also directly tie the deliverables to the objective and the problem. The stakeholders should understand how your proposed solution addresses their problem and directly works towards the objective. Here’s how you might present it in your proposal:

[INSERT COMPANY NAME] proposes to [INSERT OBJECTIVE, such as improve CLIENT COMPANY’S customer retention] by [INSERT SOLUTION TO THE PROBLEM, like helping the customer service team to be more responsive to customer complaints].

Your proposed project might be to develop and execute a customer service department growth and training strategy. A non-specific solution is: Write a strategy to help them improve their customer service department.

A specific solution is:

Grow the number of customer service agents by [INSERT TARGETED NUMBER OR PERCENTAGE, such as 30%] and hold [INSERT FREQUENCY OR NUMBER, like quarterly] agent training sessions with a specific focus on [INSERT LIST OF TACTICS, e.g., crisis mitigation, product returns, and customer satisfaction].

If your solution does not specifically explain what will be done, it isn’t specific. If you’re struggling to make it more specific, a good starting point is to ask yourself, “Is there a specific example that inspired this entire proposal?”

Measureable: What are the measurable results?

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.

In the example above, the deliverables are quantifiable.

The customer service agent headcount is increased by 30%. Training will be held quarterly. The type of training is known and identifiable.

However, not all solutions are easily quantifiable. For example, assume your project goal was to improve your client’s employee morale. Morale and happiness are not easily measured.

But you can get creative and try to find a measurement. You could survey your client’s employee base about their happiness before the project starts and again after project completion. Evaluate the differences. You won’t have exact numbers in this case, but you’ll have comparable data points to measure success.

Even if your example is a little more open-ended, like increasing happiness, the right explanation and data can make your point compelling.

Achievable: What are the identifiable achievements?

A deliverable is achievable if you can answer “yes” to the question: Can we complete this deliverable with the identified restraints?

“Can we complete this” is an obvious element of achievability. Restraints are the more troublesome element and include time and resource limitations.

A project proposal’s objective may include the solution to a problem that will revolutionize your client’s business. But if the identified restraints make the deliverable unachievable, the project shouldn’t be approved.

If your project proposes to reduce their overhead customer service costs by 80%, this objective alone would make their business exceedingly more profitable. However, if restraints include maintaining the same employee base at the same salary level and increasing investment in certain areas, an 80% cost reduction might not be achievable.

Keep those restraints in mind when determining whether a project objective is achievable.

Relevant: Is the proposal relevant to your company?

These questions can hurt, but you need to ask yourself:

• Is any of this connected to your company’s goals as well?
• Is this project a good fit for you and your team’s skill set?
• What about your company mission and future goals?
• If not, are there other proposals that fit better fit?

Likewise, ask yourself how relevant the overall objective is to your company’s current client priorities. This can help you determine if your proposal needs to include added headcount on your end, or if it is even feasible with your current workload.

If the answer is no. You’ll either have to walk away from this project or include your contingency planning as part of the proposal and pricing.

Time-based: What is the time frame in which the project will be completed?

Each deliverable should be limited in time — at least by completion date. If your deliverables will be completed in stages, then include an estimated completion date for each stage.

If certain steps will affect your timetable, describe the potential holdups and demonstrate how each deliverable completion date affects other deliverables.

If you’re implementing a new computer system for your client’s office, your project deliverables will include computer hardware, software, wiring, and other peripherals. The software can’t be configured until the hardware is available. The hardware can’t be installed until the appropriate wiring and power are installed.

For this project, your time-based solution should demonstrate how a delay in the wiring deliverable will delay the hardware and software deliverables.

7. Provide an “About Our Company” or “About Me” section

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

In this part of the document, explain who you are (or your company) and your mission statement. Next, outline any similar projects or clients that you’ve worked with and provide any case studies or details on the success of those jobs.

If you have quotes or testimonials from happy clients, be sure to add them to this section and include their name, job title, and company name. You could also 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’re more than 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 pertinent information (e.g., their previous work experience) that will also help to persuade the customer to sign-off on the proposal.

8. Detail the pricing structure or budget

Once you’ve made a convincing argument in the earlier sections of the proposal to close the deal, it’s 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 business have to pay for the project?

If it’s 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’s smaller, you might just provide an overall flat fee estimate for the entire project.

However, your resources include more than direct costs. Resources also include employees and company equipment used to complete the project (computers, machinery, etc.).

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’s another indication of whether this project is right for you and your business at this time.

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 find outside investment?

Be sure to include the cost of the taxes, as well, so your client knows exactly how much to budget for the work.

Finally, it’s important to include some contingency costs. As I 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.”

That way, 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 phase II of the project. In that case, you can scope it out separately and propose another price for investment in the future.

9. Explain the legal terms and conditions

Before you get to the signature section of your proposal, consult with your lawyer to ensure you include any necessary legal terms and conditions.

If you don’t have a signed master service agreement with the client already, you may need to include the signing of one as part of the overall proposal approval process.

You might also need to sign-off on a non-disclosure agreement (or NDA) 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’s time to close the deal!

10. Leave space for signatures

Before you complete your proposal, find out from your client who in their organization has the authority to approve, reject, or alter your project proposal? Identifying the authorizer is the most important aspect of this section.

You may have a single authorizer in this section or many, depending on the nature of your project. Clearly identifying who will approve each element of your project is your number one priority.

Make sure to include each authorizer’s printed name, title, their company, and the date below the space you provide for each signature.

Also, don’t forget to include the same for you or your boss’s signature as you’ll need to sign-off as well and provide the client with a copy of the signed document for their files.

Bonus: Add a project proposal appendix

As you produce more and more proposals, you will accumulate helpful documents, research, quotes, and other details that are essential to you drafting your project proposal. However, authorizers and stakeholders don’t always need to see everything.

You can make the materials available in an appendix in case stakeholders want more details later on. It’s possible some of the stakeholders simply need a bit more convincing or want to make sure you’re being upfront about everything.

The appendix provides evidence to back up your assumptions on any element and allows stakeholders to verify your work. Essentially, this isn’t part of your proposal, but it’s your place to wrap up any loose ends and show them you have a well-researched business proposal.

After viewing your appendix, the 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.

Example of 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 ten steps above, you can format your own templates to ensure a consistent, and effective approach to business projects.

When you’re doing your business proposal writing, be thorough, think like someone who knows nothing about your idea, and take your time.

Proposals can be lengthy, but with patience and proper research, they can make a world of difference. Be sure to customize each one to the client and business opportunity.

Not every proposal will need as much detail or an appendix. After you’ve been writing proposals for a while, you’ll get a better sense of what is necessary for each opportunity.

Sending your proposal: Business proposal letter

When you’re ready to send your proposal, you can either include the thank you note provided earlier as the basis of your email or written note. Or, 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. Also, include your contact information and welcome any questions or concerns that they may have about what you have provided.

You don’t have to include the quoted price in the business proposal email or letter if you don’t feel comfortable. They’ll see it anyhow when they review the document you have attached.

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

Your clients may be busy with other tasks and may not have had time to review it yet. Or, perhaps they’re waiting on their boss to approve and sign-off on it before getting back to you.

Follow up email for business proposals

When you do follow-up on the proposal, keep your email note brief and offer to review anything that isn’t clear. You can write something like this:

Hi [INSERT CLIENT NAME],

I hope you are doing well. I’m following up to see if you’ve had a chance to review the proposal I sent on [INCLUDE THE DATE]. Please let me know if you have any questions or would like to schedule a call to review the document in person.

Thanks,

[INSERT YOUR NAME]

Give them another week or two to get back to you. Likewise, be prepared and willing to negotiate terms, deliverables, and prices accordingly to close the deal.

Unfortunately, some clients will never respond if they’ve decided to go with a different vendor. If they formally reject your proposal, you can graciously ask for feedback on why they didn’t accept it, so that you can improve on your proposals in the future.

However, if your prospective client is busy, they may not provide that information and you’ll just have to keep working on your proposal skills. Hang in there, though, because rejection happens to everyone. It’s just a part of doing business.

While you play the waiting game …

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 dream a reality. But sometimes you might have to wait a few weeks or even months before that proposal turns into a contract.

So while Alec Baldwin’s character, Blake, in the classic film Glengarry Glen Ross says a salesman should “Always Be Closing (ABC),” it’s equally important to always be prospecting (e.g., generating leads through word of mouth and marketing). That way, if one proposal doesn’t work out, you have more leads that might turn into a proposal that you can win in the future.

If you haven’t already, you should 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, business actions, and a way to easily keep track of all your business performance including income, job time and expenses, and invoicing.