Transcript What is a Business Proposal

Business Proposals and
Business Plans
What is a Business Proposal
Persuasive written report offering
 To provide a service
 To sell a product
 To find a solution to a problem or need
Two types:
 Solicited formal proposal
 Unsolicited formal proposal
Business Proposal
They range from casual, one-page memos
to multiple-volume, lengthy reports that are
hundreds of pages long.
Proposals
Solicited - Sent to funder in response to
request
 Funder – agency, business, foundation
that finances projects
 RFP – request for proposal
 RFI – request for information
 CFP – commercial request for proposal
Unsolicited - Sent without request or
invitation
Proposal Checklist
What do I propose to do?
Can I do it?
How do I propose to do it?
Is this possible or feasible?
What evidence can I introduce to
demonstrate that what I propose to do will
actually get the desired results?
Proposal Checklist
How much will it cost me to do the task?
How much shall I charge to perform the task?
What evidence must I show to convince the
reader that this cost is acceptable?
Is my time schedule appropriate?
Proposal Checklist
•What evidence can I use to convince my
reader that my way is the best way to
obtain the desired results?
•How can I show my ability to do what I
propose to do?
Characteristics of a Proposal
Proposals deal with the future
Proposals must convince the reader that
there is a problem
Proposals must convince the reader that the
writer is the best person to fix the problem
Proposals are often legally binding offers
To Convince the Reader
Proposals must be persuasive.
Proposals must convince your reader
that they will get benefits from your
proposal.
Proposals must show that you are
capable of fulfilling your promise
Internal Business Proposals
See text 106-107
Introduction
Convince the reader that there is a
problem at the beginning of the
proposal
Convince the reader that the solutions
you are proposing is urgently needed
Body
Should suggest a practical solution to the
problem
Describe the solution in detail
Explain the approach you will adopt
Tell about the expertise, qualifications and
the personal you will use.
Describe the equipment you will use
Give the cost breakdown
Conclusion
Reconfirm that the proposal will solve the
problem
Repeat that you have confidence that you
can carry out the plan
Discussion of the plan could be face to
face with the reader
Additional information could be given
Introduction of the
Capital Appropriations Proposal
A proposal committing a large sum of
money
Introduction should provide all the
background information needed to make a
decision
Introduction should briefly describe
feasibility study that has been conducted.
Body of the Capital Appropriations
Proposal
Briefly describe the item to be purchased
Alternative choices you have considered
Life expectancy of the item
The specific products, services or projects
to be supported by the item
Expected return on investment
Latest feasible date of acquisition
External Proposals
Vary in length and format
More formal manuscript
Same components as a formal report
Very persuasive document
Provide details of your credentials
Usually has supplementary parts
Occasionally contain an appendix
Copy of the RFP and Letter of
Transmittal
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Request for proposal
Letter or memo issued by a company or
government agency that invites competing
companies to bid for a job
Large companies and government agencies
may have more than one circulating
Letter of transmittal – sometimes called the
cover letter.
Introduction
Refer to the RFP
Tell why you are submitting the
proposal
Proposals must convince the reader
that there is a problem
Proposals must convince the reader
that the writer is the best person to fix
the problem
Body of Proposal
Describe what you are offering
Focus on the strengths of products or
service
Disclose enough information to convince
the client
Describe how you will carry out the work
Give dates when portions will be finished
Methods and resources you will use
Body
Provide information about the people in charge of
implementing the work plan
 Supporting staff
 Credentials, expertise, and qualifications
Budget Most important
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Uses more numbers than words
Can get the proposal accepted or rejected
Budget carefully
provide the information as accurately as possible.
Breakdown the costs in detail
Conclusion
Last chance to persuade
Review what you have said
Restate the merits of the proposal briefly
Stress your company’s strong points
Emphasize the benefits
Sound assertive, assuring and confident
Poor Business Proposals
Too little information - Submitting just a company
brochure with a price quote.
* Poor writing - Pleasing to look at, but, after the first
read-through, boring to read.
* Lack of marketing focus - Trying to be everything to
everyone, but being nothing to no one.
* Too general and self-centered - Focusing on the
company instead of addressing the prospect's needs
and desires.
* Done too quickly - Offering trivial solutions and
canned material instead of ideas that get results.
* No "sell" - Presenting just information rather than a
persuasive argument for the company.
Business
Plans
Definition
Document that can convince the reader
that the business can produce enough
revenue to make a satisfactory profit and
therefore attractive as an investment
opportunity
What is a Business Plan?
Define goals
Determine objectives to reach goals
Assess resources and make decisions
Create contingency plans for managing
changes
Rationally assess operational feasibility
and financial viability
Reasons for Writing a
Plan
To serve as the guide you will
follow throughout the life of your
business
All lenders and investors require
a business plan
A business plan is the key to
conducting business in the
international marketplace
Business Plan Characteristics
Persuade potential investors to invest
Allows readers to assess the profitability and
goals of the new venture
Provide employees with guidance and direction
Convince suppliers and customers that the new
venture is promising
Clarify the objectives of the new venture
Create strategic alliances with other business
partners
The Planning Process
What are the parts of a Business Plan?
 Cover Sheet
 Table of Contents
 Executive Summary
 Part 1: Organizational Plan
 Part 2: Marketing Plan
 Part 3: Financial Documents
 Part 4: Supporting Documents
Title Page (cover page)
Business name, address, and phone
number
Date the plan was prepared
Confidentiality statement
Owner's name, address, phone
number, web address, e-mail
Table of Contents
List major sections of the plan and
the page number where each section
can be found.
This page cannot be prepared until
the plan is finished.
Executive Summary
(prepared last)
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Describe the business structure, purpose, and goals
Describe your products / services and production
process?
What is your overall marketing strategy, and who will
be/are your customers?
Who will be/is in the business, and how is it managed?
What are the skills of each member of the
management team?
What is the amount and terms of needed financing
and what will it be used for? How will loans be
repaid?
The Company Profile
The two major topics of the company
section:
Organization and Management
Products or services
(The Company)
Organization and Management
Briefly mention what the business
purpose is and what you provide to
the customer
Identify the legal structure of your
business
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Sole proprietorship
Partnership
Corporation
LLC
Organization and Management
Describe your own experiences, skills,
qualifications and education that will
ensure the success of the business.
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Personnel Management
Bookkeeping
Inventory control
Customer service
Advertising
Work history
Professional membership
(The Company)
Organization and Management
Identify your team
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How many employees are needed?
Organizational chart
Methods of compensation
Hours to be worked
Required skills
Job descriptions
Specialists
Advisors
The Market
The two major items for this section
of the business plan are:
Industry
Marketing Plan
Part II: Marketing Plan
Overview & Goals of Your Marketing Strategy
Market Analysis:
Target Market, Competition, Industry Trends
Marketing Strategy: Product
Distribution, Packaging, Pricing, Branding,
Database Marketing, Sales Strategies,
Promotions, Advertising Strategies,
Public Relations, Networking
Customer Service
Implementation of Strategy
Assessment of Marketing Effectiveness
(The Market)
Marketing plan
sections
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Competition
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Customers
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Strategies to meet sales goals
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Market research
(The Market)
Marketing plancustomers
Who?
What?
When?
Where?
Why?
How?
(The Market)
Marketing plan- sales
strategies
What is the selling price of the product or
service?
How was this determined?
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Quality
Competition *
Service provided
Location
Your business costs *
Perceived value to customer
What the market will allow *
Profit
(The Market)
Marketing plan- sales
strategies
Promotional activities are determined
by your target customers
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Advertising – newspaper, radio, TV, yellow
pages, billboards, direct mail, flyers, posters,
business cards, website, etc..
Sales promotions –samples, reduced prices,
coupons and contests.
Publicity –feature stories, public relations,
trade shows, networking, organizations
The Financial Plan
Major sections include:
Financial Projections
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Income statements
Balance sheet
Cash flow
Assumptions
Sources and uses
Break even analysis
Contingent liabilities
Assumptions
Spell out conditions assumed when
compiling financial statements
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Sales volume
Pricing structure
Average sales amount
Number of customers
Seasonal trends
Specific expenses
Owner’s draw/salary
Growth rate
Sample Sources and Uses Statement
SOURCES and USES of FUNDS
Sources of FUNDS:
Owner's Cash Investment
Loan
TOTAL SOURCES OF FUNDS
$
$
$
5,500
30,000
35,500
Uses of Funds:
Inventory
Renovations to Facility
Equipment
Furniture
Machinery
Building
Working Capital
TOTAL USES OF FUNDS
$
$
$
$
$
$
$
$
5,000
3,000
1,000
1,000
500
20,000
5,000
35,500
SAMPLE CASH FLOW STATEMENT
CASH FLOW STATEMENT
Beginning Cash Balance:
Start-up Costs:
$
-
Cash Receipts:
Sales
Loan Proceeds
Equity Investment
$
$
$
$ 16,879 $ 14,018 $ 17,506 $ 13,404 $ 14,662 $ 14,561 $ 16,701 $ 12,191 $ 14,852 $ 17,144 $ 14,821 $ 15,255 $
85,000
-
181,994
Total Cash Receipts:
$
85,000 $ 16,879 $ 14,018 $ 17,506 $ 13,404 $ 14,662 $ 14,561 $ 16,701 $ 12,191 $ 14,852 $ 17,144 $ 14,821 $ 15,255 $
181,994
Cash Disbursements:
Materials Purchases
Rent
payroll
payroll taxes
advertising
purchased services
office supplies
utilities
telephone
insurance
sales tax
vehicle expense
Miscellaneous Exp.
Startup Costs
Maintenance & Repairs
Prof fees
Loan #1 Interest
Loan #2 Interest
Loan #3 Interest
Loan #1 Principle
Loan #2 Principle
Loan #3 Principle
Capital Purchases
Owner's Draw
$
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
$ 13,350 $ 11,350 $ 12,450 $ 14,884 $ 15,925 $ 16,953 $ 17,737 $ 19,398 $ 20,027 $ 21,560 $ 23,221 $ 24,243
8,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
4,220
865
5,570
1,091
238
40
30
600
50
2,356
30
100
150
2,365
75
673
-
$
$
$
63,650 $
$
427
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,505
865
4,626
906
198
40
30
600
50
25
100
150
75
150
670
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
4,377
865
5,777
1,131
247
40
30
600
50
31
100
150
75
666
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,351
865
4,423
866
189
40
30
600
50
24
100
150
75
663
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,666
865
4,838
947
207
40
30
600
50
26
100
90
75
659
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
441 $
$
$
3,640
865
4,805
941
205
40
30
600
50
26
100
150
75
150
656
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
444 $
$
$
4,175
865
5,511
1,079
235
40
30
600
50
29
100
150
75
652
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,048
865
4,023
788
172
40
30
600
50
21
100
150
75
649
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
430 $
$
$
434 $
$
$
437 $
$
$
448 $
$
$
451 $
$
$
$
500 $
500 $
500 $ 1,000 $ 1,000 $ 1,000 $
500 $
3,713
865
4,901
960
209
40
30
600
50
26
100
150
75
645
-
45,499
10,380
60,058
11,759
2,566
480
360
7,200
600
2,356
320
1,200
1,740
2,365
900
600
7,846
-
466 $
$
$
$
500 $ 1,000 $ 1,000 $ 1,000 $
5,353
8,500
170,081
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
455 $
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
458 $
$
$
3,705
865
4,891
958
209
40
30
600
50
26
100
150
75
638
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,814
865
5,034
986
215
40
30
600
50
27
100
150
75
150
634
-
Total
13,350
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
4,286
865
5,658
1,108
242
40
30
600
50
30
100
150
75
150
642
-
$
462 $
$
$
Total Cash Disbursements:
$
71,650 $ 18,879 $ 12,918 $ 15,072 $ 12,363 $ 13,634 $ 13,777 $ 15,040 $ 11,562 $ 13,319 $ 15,483 $ 13,799 $ 14,235 $
Total Cash Flow:
$
13,350 $ (2,000) $ 1,100 $ 2,434 $ 1,041 $ 1,028 $
629 $ 1,533 $ 1,661 $ 1,022 $ 1,020 $
11,913
Ending Cash Balance:
$
13,350 $ 11,350 $ 12,450 $ 14,884 $ 15,925 $ 16,953 $ 17,737 $ 19,398 $ 20,027 $ 21,560 $ 23,221 $ 24,243 $ 25,263 $
25,263
784 $ 1,661 $
Supporting Documents
Personal resumes
Personal financial statement
Supporting documentation
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Market research
Business documents
Promotional materials
Letters of support
Proprietary protection
Previous income tax returns
The End