Words, Words, Words: Business Plan, Business Proposal, What's the Difference?

In my ask-the-expert efforts I do regularly get questions about how to write a business proposal. My problem with that question is that the phrase "business proposal" means different things to different people.

To me a business proposal has no formal size or length or content, it's as vague and ill defined as the simple meaning of the words. I've done many a business proposal as a few sentences in email. I've also done more formal and elaborated proposals for consulting engagements, usually as 5-10 page documents detailing the work to be done, fees, background and qualifications, and schedule for deliverables. And some people use the phrase "business proposal" for what I would call a "business plan."

Most people understand a business plan as a plan including a summary, description of the company, its market, its product or service or both, its strategy, its people, and its financial projections, plus specific details of what's to be done, when, by whom, and how much it costs. These days that definition is changing a bit, getting looser, less formal, less printed, less elaborate, and more alive, changing, and more process than just a simple plan document. If you're interested in the latest on business planning, I posted here earlier a link to my interview with Guy Kawasaki.

So for a business proposal, to help you with that, during my years as a planning consultant, my standard proposal would be as follows:

• Executive Summary. Usually describes the initial contact, meetings, with a brief summary of key points.
  
• Benefits (to the client). I like bullet points for this section. What benefits does the buyer get?
  
• Scope of the Work. This is important for both provider and buyer. What's to be done. You need to define it well. Beware of "scope creep" that can hurt the business of service providers. Keep it specific.
  
• Specific Deliverables with Schedule. I usually avoid dates for deliverables because things can slip at no fault to the service provider. Instead, I put weeks from the previous deliverable, or weeks from the previous milestone.
  
• Schedule of Costs and Fees. Make it clear, don't be shy, lay down what you're going to charge including all expenses and also the dates that money is due. Don't let this be vague.