Q: My business is up and running and doing pretty well. A prospective customer told me I needed to submit a business proposal to them. Is that the same as a business plan? If not, what's the difference?

A: A business plan isn't the same as a business proposal. Both are used for sales, but it's important to understand the differences. A business plan is used to sell your business to investors. It outlines your business, your management team, your market and how you intend to deliver your product or service. On the other hand, you use a business proposal to offer your product or services to a client. Proposals address a specific need of a specific client. As with a business plan, a good proposal demands careful attention

Before writing a proposal, do your homework. Who are you writing for? What is the problem your customer is trying to solve? Do they have any special needs or requirements in the timing or format of your proposal? If your customer is the government, you will find they have specific formats and time tables you must follow to be considered as a vendor candidate. Many companies let you submit a free-form proposal, but if they ask for a certain format, follow it. For example, a company I do business with had asked five Web design firms to bid on a project. They asked that the proposal follow a certain outline with a development and deliverable timeline. Three firms submitted proposals that didn't follow the outline and didn't even address the timeline requirement. The company discarded those proposals. They thought that a firm that couldn't meet the specs for a proposal wasn't likely to produce a final product that met specifications.

Within the proposal itself, you need to introduce your company, in similar fashion to an executive summary, outlining who you are and what you do. But rather than outlining your entire business, your main purpose is to establish credibility. Let your prospect know a bit about what you've done before and why it prepares you to fulfill this client's needs.

Also summarize the problem being solved. Use the client's own language and terminology, and make sure you understand how the client views the problem. Then discuss how your product or service solves it.

Pay attention to logistics as well. If you're delivering a product, let the client know how, where and when to expect fulfillment. If you're delivering a service, address your timetable and the terms of your service delivery. If your prospect has any special logistics needs, address those.

A good proposal demonstrates that you understand how your client thinks: how they think about their problems, special needs they have and so on. The more your proposal meshes with the way the client thinks about the problem, the easier it will be for the client to see that your product or service meets their needs.

As an entrepreneur, technologist, advisor and coach, Stever Robbins seeks out and identifies high-potential start-ups to help them develop the skills, attitudes and capabilities they need to succeed. He has been involved with start-up companies since 1978 and is currently an investor or advisor to several technology and Internet companies including ZEFER Corp., University Access Inc., RenalTech, Crimson Soutions and PrimeSource. He has been using the Internet since 1977, was a co-founder of FTP Software in 1986, and worked on the design team of Harvard Business School's "Foundations" program. Stever holds an MBA from Harvard Business School and a computer science degree from MIT. His Web site is a http://www.venturecoach.com.


The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.