How to write a proposal letter.

A step-by-step guide to writing a successful business proposal letter

Every business needs to secure clients to grow. However, you can’t assume that clients will just show up at your doorstep and offer you money to work for them. Instead, you may often find that you need to go through a formal process to sell products or secure projects. Also, you may need to write business proposals to form partnerships or secure the loans, grants, or investments you need to launch or evolve your company.

Writing business proposals can be an arduous and time-intensive process. It’s not something you can afford to leave to chance. To achieve the best results, it’s crucial to know the fundamentals of business proposal writing. Although these business documents can have varied purposes and forms, there are several essential components that appear in many of them. Once you master the basics, you can adapt more readily to new opportunities and write winning documents.

This guide will walk you through the important steps to build your business proposal development know-how. You’ll learn about types of business proposals, gain expert writing tips, and understand the must-have components for every proposal. Also, you’ll find out how to craft abstracts and cover letters that motivate audiences to want to read more. These proven practices will empower you to create standout documents that fuel the next chapter in your business’s growth.

Here is everything you need to know for writing a winning proposal letter

  1. What is a proposal letter?
  2. When do organizations use proposals?
  3. Examples of business proposals
  4. How to write a proposal, step-by-step
  5. How to write an abstract for a proposal
  6. How to write a proposal cover letter
  7. Seven tips for writing a winning business proposal letter

1. What is a proposal letter?

A proposal letter is a formal, written offer from an organization to provide products and/or services to prospective buyers. Typically, you’ll provide an overview of what you plan to do and provide, along with your price. Depending on the nature of your industry and clients, you may encounter names for proposals, such as bids, contract proposals, or sales proposals.

The truth is, you will likely receive proposals from businesses and provide them for others. They are essential tools for conducting business.

Solicited vs. unsolicited proposals: what are the differences?

Knowing the difference between solicited and unsolicited proposals is crucial for finding success. It’s not a hard concept to understand, but still very important terminology to know.

Solicited proposals

Simply put, a solicited proposal is one where someone asks you to submit an offer. Often, organizations will issue documents that outline their needs and identifies what details respondents need to provide in their responses.

There are three types to know:

  • Request for proposal (RFP)- An RFP is best when organizations have a need and want respondents to offer solutions to meet their requirements. In response, you’ll propose an approach for accomplishing the client’s goal along with your pricing.
  • Invitation for bid (IFB)- Organizations use IFBs when they have a clear scope of work and want potential suppliers to compete for the contract award. Your bid should demonstrate that you can handle the work at hand for the price you propose.
  • Request for quote (RFQ)- When organizations have a precise need for goods or services and want potential vendors to compete on price alone, they may issue an RFQ. Since contract awards often go to the lowest bidder in these scenarios, you’ll want to offer a competitive price.

Although any type of organization may use a solicitation approach, you’ll often find these requests issued by government agencies and others in the public sector. Also, large enterprises may use solicited processes to maintain a large network of potential suppliers and contain costs. While organizations will spell out any specific details you should include in a solicited proposal, you’ll often cover these elements:

  • Your action plan for addressing the issue
  • Your anticipated timeline for completion of work
  • Background information on your business and key personnel assigned to the project
  • How much you expect the project to cost

Be sure to read solicitation documents carefully and include all the information your potential client desires. A strong solicited proposal can carry you into the next round of consideration and award your business a coveted contract.

Unsolicited proposals

As its name implies, an unsolicited proposal is one you send to an organization that didn’t request one from you. These types of pitches can be excellent tools to help grow your business.

You use an unsolicited approach when you want to inform a prospective client about your products or services. Because the prospect didn’t request information from you, they may not have a specific budget set aside for what you are offering. Although that can be a downside, the upside is that unsolicited pitches allow the spotlight to be on you alone without competitive pressure.

An unsolicited pitch or offer may not always lead to immediate sales, but it can help you raise visibility with target companies. To make these activities a success, do your homework first. Find out if the company you plan to approach has any guidelines for submissions. Be sure to include information about your company and products and what makes you unique, and point out key team members and their expertise.

Since you may send unsolicited proposals via email, keep email communications best practices in mind. Aim to grab attention quickly and get vital points across right away. Make your offerings sound compelling and address the benefits you can bring to the potential client to make the biggest impact.

2. When do organizations use proposals?

Here are a few representative scenarios:

  • Bank loans: If you’re seeking a loan from a financial institution, you often need to put together a proposal. A bank loan proposal usually details the amount of money you are requesting, how you plan to repay the loan, and what your business will do if you can’t repay the loan.
  • Funding requests: In addition to loans, you could seek funding through grants or investors. Typical elements of funding requests include a description of the need, a plan for how you will use the funds, and the outcomes you expect to achieve.
  • Startups: Emerging companies frequently need to write business proposals to secure the funds they need to fuel growth. Thorough project plans, company financials, marketing and sales objectives, and operational structure are critical components of these documents.
  • Restaurants: Like other businesses, restaurants may need to write business proposals for loans or investments to support their launch efforts. As restaurants grow, they may create offers for event catering or bids for securing space for new locations.
  • Provision stores: Provision stores, which sell clothing or other necessary goods, may need to write proposals to secure funding or lease space in new venues as they start and expand.

As you can see from these examples, the content for your business proposal can vary widely. You can’t expect to use a one-size-fits-all approach for every potential audience. You need to understand the type of organization that will receive your document and the roles of the people who will read it.

3. Examples of business proposals

Depending on your business needs, you may find yourself creating business proposals for investors, partners, or small business grants. Each will have specific components to include.

Writing a business proposal for investors

An investment proposal targets individuals or organizations that invest funds into promising businesses. Your proposal will need to demonstrate why your business can deliver value and ROI and show that you have a sound business plan. Keep in mind that you should have a viable business plan before you start seeking investment funding. You’ll need to know exactly how much funding assistance you need and how you plan to use it to make a compelling case.

To make a professional impression, your investment request should include detailed content and professional language. Always start with an executive summary that gives investors a quick rundown of why providing funding for your business is a smart move.

Architect your document so that it clearly describes what your business does. 

  • Introduce the opportunity. Your introduction should describe the investment opportunity and delineate company details such as mission, goals, team members, and location. Include an overview of the marketplace and competition. 
  • Provide project and financial details. Describe the project(s) funded by any investments in detail. Offer a thorough financial plan, list resources you have and need, and outline the milestones you’ll use to chart progress. 
  • End on a strong note. Wrap up your document with a strong conclusion. Detail how you’ll put investment funds to use and recap your project cost estimates. Note any supporting documents for your proposal, which can include anything from your business plan to engineering schematics to endorsements from past clients and/or investors.

Even though you want your investment proposal to be professional, you should keep the language readable and accessible. Define any terminology that may be unfamiliar to reviewers. Add data to prove your capabilities and the viability of your plans. Be exact about the amount of money you are seeking, and explain how you’ll use it to fuel your business success.

Writing a business proposal for investors

Ref: globalnegotiator.com

Writing a proposal for a business partnership

Partnering with complementary companies can accelerate your business. It’s important to conduct thorough research and shortlist potential partners, before reaching out to them with a business proposal. Ensure that any prospective partners can offer compatible products and services while making sure the companies are good cultural and operational fits. That way, you can create a productive and mutually beneficial working relationship.

As with investment proposals, a formal approach is best for partnership offers. Follow the following tips to achieve the best results:

  • Be professional and align with your audience’s processes. Use professional language and keep your document focused on the business value of the potential partnership. Before sending an offer, investigate the company to determine if they have a formal partnering application or process that should guide your content.
  • Introduce your business. Quality partnership proposals start with an introduction to your business. Explain the company’s experience, key accomplishments, and unique selling proposition. 
  • Communicate the value you offer. After your introduction, identify the problem or business need and how the relationship will benefit your partner. Even if you have needs that you’re looking for a partner to fulfill, focus your document on the value to the other party. For example, if you’re looking for a partner to expand your geographic footprint, note what your partner will gain. Can you introduce them to new markets or clients? Do you have a strong advertising program that can help them build awareness? Point these assets out in your partnership proposal.
  • Close with a strong summary. Wrap up your proposal with a compelling summary that reinforces the benefits of the partnership. Highlight statistics and data that prove your capabilities, then close with a strong CTA. Make it clear that you want the prospective partner to take the next step by suggesting an exploratory meeting or call.
Writing a proposal for business partnership

Ref: humanrights.is

Writing a grant proposal for small business

If you run a small business and want to secure funds in a low-risk way, small business grants are an exceptional option. Grants can help you launch your business or catapult you to a higher level of growth and expansion. Grant proposals have some qualities in common with other business proposal types, but also some unique nuances.

Most grant proposals use formal, business language. However, depending on the nature of the grant, you may use a storytelling approach that shows how the grant money will impact people’s lives or the community in which you live in a positive way. Although you typically won’t have to repay any grant funds, you still want to show granting organizations that their money is being well spent.

  • Start with an attention-grabbing introduction. Like other proposal types, grant documents should start with a compelling summary, which you can often deliver via a cover letter. In your cover letter, explain why the specific grant you are seeking is a good match for your business or the project you plan to pursue instead of making a generic funding request.
  • Help readers navigate your document. To help guide reviews through your document, including a detailed table of contents. Add an executive summary that conveys the key points of your document. After your summary, you can include a problem statement or statement of need. This section explains why you are requesting the funds and how you plan to use them.
  • Describe expected results and how you will achieve them. Most organizations that provide grants seek to fund specific projects with clear objectives and potential outcomes. Your project description should state exactly what you hope to achieve with your grant funding. In addition, you must include your project management plans and timelines to demonstrate that you can put funds to appropriate use. Provide details on staffing to assure the granting entity that you have the right team in place to achieve your project goals.
Writing a grant proposal for small business


4. How to write a proposal, step-by-step

You can’t expect to use a one-size-fits-all approach for every potential audience. You need to understand the type of organization that will receive your proposal and the roles of the people who will read it.

Before writing your proposal start by asking yourself these questions about your intended audience:

  • What problem they are trying to solve?
  • What are their objectives?
  • What are they looking for?
  • How can your offer benefit them?

With the right mindset, you can create a proposal that truly speaks to the needs of the recipient organization. That audience-centric focus is key to helping you create business proposals that get results.

Although you’ll always tailor your business proposal to the situation, certain main elements will appear in every proposal you write, whether solicited or unsolicited:

  • state the problem the organization needs help solving
  • propose a solution
  • offer pricing structure

When beginning a new business proposal, start with a basic outline and, build from there. 

  1. Start with a title. Your title should clearly identify the problem or business need you intend to solve.
  2. Include a table of contents. Created at the end of the writing process, your table of contents helps reviewers navigate through sections of your document.
  3. Write an abstract or executive summary. This brief summary of your content appears at the front of the document and lets reviewers know what to expect.
  4. List benefits. Tell clients how they will benefit from your products, services, or solution. 
  5. Explain why the client should choose you. Clearly articulate that you understand the client’s problem and show them how you intended to solve it. Clarify your proposed solution in detail.
  6. Share pricing. Tell clients exactly what they will pay for the products or solutions you are proposing. You may want to include several options and pricing scenarios to give them a choice.
  7. Include terms and conditions. Proposals typically include a list of relevant terms and conditions (T&Cs). Your T&Cs may include delivery, invoicing, and payment terms, along with materials and information you may need from the client to perform the work described.
  8. Add a signature box. Always sign your offer and include a space for clients to sign as well. This approach lets clients endorse your document quickly if they agree to the terms you outline.

5. How to write an abstract for a proposal

After you finish writing your business proposal, there is one critical step to complete before sending it to your prospect. Draft a clear, concise proposal abstract that highlights key points in your document.

What is an abstract for a proposal?

Similar to an executive summary, a proposal abstract is a short write-up that sums up your business proposal and its purpose. Your abstract makes it easy for reviewers to find important information in your proposal with minimal effort. Also, an abstract gives readers a brief overview of your content and organizational capabilities. Think of your business abstract as a way to introduce your company and what makes it stand out from others in your space, while detailing the specifics of your offer.

Although an abstract will be placed at the beginning of your business proposal, you’ll want to wait until you’ve completed your content to draft your abstract. Why? You can only create an effective summary of your business proposal after the document itself is complete. If you write your abstract first, it may not sum up your content, and that can confuse reviewers.

The six steps to writing a business abstract

Even if you can write business proposals well, you may have to learn some new writing approaches to craft effective abstracts. Follow these six steps:

  1. List the key points in your document and fundamental facts about your business. Focus on benefits to your proposal recipient.
  2. Summarize how your approach solves the recipient’s problems. Don’t hide details to entice reviewers to read further.
  3. Brainstorm phrases that someone may use to find information located throughout your content. Include these in your business abstract where appropriate.
  4. Create the first draft and let it sit for a few days to a week, if possible. 
  5. Read your complete business proposal, then come back to your abstract draft to refine it. Make sure it conveys the critical points of your proposal.
  6. Have someone review your abstract and incorporate their feedback before submitting your proposal.

Since an abstract is one of the first things reviewers will see, make an effort to create a powerful summary of your proposal. Be sure to allocate enough time to write your proposal abstract and don’t leave this step until the last minute.

Best practices for writing an abstract

As you can see, your abstract is a vital piece of your business proposal, even though it’s quite brief. When writing your abstract, keep these proven best practices in mind:

  • Ensure that the abstract conveys all the essential points covered in your business proposal
  • Keep your abstract concise and focused with no more than 250 to 500 total words
  • Include headings and subheadings for readability
  • Write at least two sentences for every problem, objective, and method
  • Avoid using ‘weasel words’ such as “could,” “should,” or “may,” as these can imply that you lack confidence in your business or approach

6. How to write a proposal cover letter

Often, you’ll have the opportunity to submit a cover letter with a proposal. For unsolicited offers, the cover letter, sometimes in the form of an email, maybe the write-up that helps motivate a recipient to read your full proposal.

But, how do you make your proposal cover letter effective?

Keep in mind that a cover letter is a sales letter that aims to capture the reader’s attention, build trust, and get them interested in reading more. Make sure that the first two to three lines are compelling and explain the main purpose of your business proposal. 

Keep these tips in mind every time you write a proposal cover letter

  • Include your name and contact information in the header
  • Address your cover letter to the actual person who will be reading the letter
  • Grab the reader’s attention right away
  • Share your background and professional credentials
  • Convey your interest in the proposed project and in building a working relationship with the potential client
  • Sum up with a clear conclusion
  • Add a signature to every cover letter

Seven tips for writing a winning business proposal letter

Proposals are important documents in the business world, and writing them is part art and part science. Yes, they need to be full of details and facts that prove you can complete the work at hand. But they also need to be appealing and engaging to help your audiences understand what makes your business unique.

No matter how adept you are at writing, you may need to learn some new techniques to perfect the craft of writing a business proposal. You can apply these notable best practices to achieve success:

  • Outline the major sections. At times, your potential client may offer very detailed guidance on how to structure your document. In other scenarios, you may have a blank slate. Either way, start with an outline that identifies sections and key points you want to make in each one.
  • Keep it simple. Although it’s tempting to want to showcase your knowledge with long, complex sentences, remember to focus on readability. Your target audience may be reading through dozens of dense documents in a short span of time. Use clear language and effective, short sentences.
  • Let your company’s personality shine. Often, potential clients aren’t just looking for products and services. They’re looking for a relationship with a partner they can trust. Let them know what makes your business unique and how working with you can benefit them.
  • Include compelling, quantitative data. Reviewers want to see that you have the right knowledge and experience to get the job done — facts and data can make the case. Whenever possible, explain how your products or services delivered a measurable return on investment (ROI) for past clients. Use data to show how you have helped clients save money, increase revenues, and improve operational processes.
  • Use a call-to-action. Your proposal should inspire reviewers to move forward. Sometimes, they dictate the process, but you can also help drive them to take the desired next step with a clear call-to-action (CTA). Tell the potential client exactly what you want them to do next, whether that means progressing your offer to the next round or awarding you a contract.
  • Give a deadline. It’s frustrating to put in the time and effort to develop a proposal and never hear back. If you don’t give your prospects a clear deadline, they may keep your offer under consideration and never make a decision. Provide a response date and compelling reason to engage, such as a need to reprice or reset timelines after your deadline.
  • Get it to proofread. Proposal reviewers analyze every word. If your document has spelling and grammar mistakes, these errors make you seem less capable. Investing in a professional proofreader can help avoid these unwanted gaffes so you can make an excellent impression. Find experienced freelance proofreaders who can help put the finishing touches on every business proposal.

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