The difference between a business plan and a business proposal

The difference between a business plan and a business proposal


For the development of any type of successful business, the creation of a variety of important documents is necessary. From documents which layout strategy and policy, to plans for a business’s future growth, putting your ideas down in writing is an ideal way to be able to pick holes in potential plans. To name but two of the most essential documents, a business plan and a business proposal are important tools for both outlining your business’s structure and the services it can offer.

There is however a certain amount of crossover between these types of document, and some potential entrepreneurs may not know the difference. In this blog we will be exploring what a business plan and a business proposal is respectively, and when they should be used by entrepreneurs.  

Why you need a business plan

Although it may be structured slightly differently from company to company, a business plan is a fundamental document which should be created and maintained to establish that your business idea will be both feasible and successful. The plan is a fact-based document, outlining in detail how your business will be set up. It will explain how you intend to achieve your aspirations for the business based on elements such as its business model, financial projections and marketing structure. The content of a plan is unique to each client, but all plans should provide an informational account of how the business will succeed.

There are two primary purposes for a business plan. By putting pen to paper, the first purpose of the plan is to aid the entrepreneur themselves in understanding the feasibility of their business idea. The plan could present a resounding success, but by taking a realistic approach to writing it, your business plan could flag up some potential flaws in thinking or issues in processes which need to be improved. The second purpose for the plan is to be used as a tool to raise investment or funds. The plan will be read by any potential investors, accountants, attorneys, employees and suppliers for example. It is typically a requirement for any business loan application.

What is a business proposal used for?

A business proposal is a different document which sets out a proposition of how your company will take on a certain project. This sales-based document is created to highlight to a potential client the projected ideas your business has and the benefits for the client in opting for your service - all in an attempt to request their business.

There are two main types of business proposals. An invited proposal is one which has been requested by a potential client through a request for a proposal (RFP). The RFP typically asks for the proposal to be structured in a specific way and to answer certain points raised. The other type of proposal is a non-invited proposal, these are submitted to potential clients who may not have even requested one. These types of proposals can be structured in any way the business sees fit, and generally try to accommodate any anticipated questions.

In containing elements such as a description of your business’s services and/or products, a quote, answers to potential questions and a description of the scope of your work, the primary aim of a business proposal is to win certain business or develop business opportunities.

Both documents are essential in the growth and success of a business. From the marketing-based sales document of a business proposal to a more factual business plan, both documents are important for all entrepreneurs. If you would like help with putting together your business plan, get in touch today! Contact us online using the form on the right or call 01604 420 420.

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