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Six Steps to an Effective Business Proposal

Guest post by: Edward Abel

Article Overview: For many businesses, especially service based businesses, a proposal is necessary to communicate the price of the service to the client. It becomes the formal document that describes what the service provider will be doing for the client and it also sets the client's expectations for the project. Though the proposal is only one of many steps contained within the sales process, it is an important decision-making point for the client to ultimately decide whether to buy from you or not.

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Six Steps to an Effective Business Proposal

For many businesses, especially service based businesses, a proposal is necessary to communicate the price of the service to the client. It becomes the formal document that describes what the service provider will be doing for the client and it also sets the client's expectations for the project.


Though the proposal is only one of many steps contained within the sales process, it is an important decision-making point for the client to ultimately decide whether to buy from you or not.



When writing a proposal, you will need to decide how formal, detailed, and lengthy it needs to be. Proposals that are formal, detailed, and lengthy usually apply if:
If you serve dozens or hundreds of clients each year and what you offer is fairly straight forward, your written proposals will probably be simple and brief, or entirely verbal. Find a balance between the time and effort that goes into preparing your proposals with the income they potentially generate. Spending twelve hours writing a proposal for a client that will generate $500 in revenue doesn't make sense, but if the proposal will generate $50,000 in revenue, your time writing the proposal is well spent.


The length and detail of your proposals will depend on what you offer and the income you will generate. For proposals that are on the more complex, detailed, or lengthy end of the spectrum, consider including the following sections in your proposals:
  1. The Client's Situation - describe the client's situation and why the client needs the product/service you offer.
  2. The Solution - describe the solution you propose, especially the features and benefits, and the deliverables (if applicable) you will be providing the client.
  3. Timeline - if appropriate, describe how long the solution will take to design, develop, implement, and so on.
  4. Terms - describe the cost and payment process. If possible, provide options. Whenever possible, offer three options and list them in this order:
    1. The most expensive option. Most people will avoid this one. That's okay, because this is not the one you are most interested in selling. It is here primarily for the sake of comparison, although some people will want this option.
    2. The least expensive option. When they read this option, it will stand in such stark contrast to the most expensive option, it will feel disappointing. That's okay, because your goal is to create a sense of disappointment so that the mid-priced option appears attractive.
    3. A mid-priced option. Your mid-priced option is the one that is the best value for the client and it's the best value for you. It is the one you really want to sell. By positioning it third in this list of options, you are actually positioning it to be the one your potential client is most likely to buy.
  5. Responsibilities and Agreements - describe your responsibilities, the client's responsibilities, and any additional agreements that are relevant to the situation.
  6. Acceptance - If the client accepts the proposal, convert it to an agreement by having the client sign to accept it. This keeps you from having to prepare a separate agreement.
If proposal-writing is part of what needs to be done in your business to acquire clients, establish a standard template and modify it, as needed, so you can easily prepare new proposals. Proposal-writing can be a time-consuming process. Do your best to save time without compromising quality.

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Article Tags: business proposal, sales process, service provider

About the Author: Edward Abel
RSS for Edward's articles - Visit Edward's website

Ed Abel has invested more than three decades learning how to build a successful, thriving business. At age 24 with a $5,000 loan and the energy and passion of a young entrepreneur, Ed was ready to take on the world. And he did, only to emerge seven years later at the top of a $36 million organization with 585 employees. Inspired by the challenges that led him to success, Ed went on to build other multi-million dollar businesses, yet he missed the passion he experienced "in the trenches" of his formative years.

Determined to find a way to educate and advise others in the construction and sustainability of a vital business, he founded ABEL Business Institute. Over the course of this process, he developed The SkillPreneur Business System, a systematic approach to the construction, maintenance, and growth of a business's--an approach that has become the philosophy and methodology of ABEL Business Institute.

Ed is an adjunct professor of entrepreneurial studies at New York University (NYU) as well as the Director of the business division at the world class Institute for Professional Excellence in Coaching (iPEC). At iPEC, Ed directs the business division that is responsible for supporting the graduate coaches in their business development process.




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