You have a great idea to start a new business or expand the current one. You have thought through all the problems and created a roadmap for success. Now all you need is the financing to put your dreams into action. But how are you going to secure that funding? You can’t just walk into a bank or sit in a committee meeting and hand them your notes and spreadsheets. You must write a business proposal to lay out your plans and request the funds.
You’re an entrepreneur, you think, not a writer! You’ve never written more than a business letter and a meeting agenda. Don’t worry. It doesn’t have to be an intimidating process, because there is a basic structure to every business proposal. Here are the four parts, in order: simply 1) introduce yourself; 2) demonstrate that you understand your customers/users and their needs; 3) describe how your goods and services meet those needs and present your expected expenses and profits; and 4) persuade the bank or committee that you have integrity and can be trusted with the money.
You also don’t need to start with blank pages. You can speed up the proposal writing process by using pre-built templates and samples, along with simple automation software.
The length of your proposal will vary depending on the complexity of the project you are proposing and the amount of funding you require. Obviously, it is easier to describe an expansion plan and present financial data for an existing business than it is to describe how a new business will be launched. Your proposal may be as short as ten pages, or you may need to include dozens of pages.
The secret to creating a successful financing proposal is to show a need or want on the part of your prospects/clients, and then show how you will meet that need and benefit from providing the solution. When applying for financing, you should also consider the needs of the bank or financing committee. Put yourself in the shoes of the other party. What does your prospective funder need or want? What are your concerns? How have you collected this information? What kind of information about your business experience and financial knowledge will the lender want from you before giving you the money? Lenders and grant committees want to understand your background and your plan to determine if your business is likely to succeed. A bank or investor will also want to see your plan to pay them back.
Begin your business plan funding proposal by introducing yourself and the proposal with a cover letter and title page. Your cover letter should be short: simply explain who you are, include all relevant contact information, and print the letter on your company letterhead. The title page should simply introduce your proposal and the specific project you are proposing. Some examples might be “Business Plan for New Panne Bella Italian Bakery,” “Proposed Expansion of Grayle Hardware Store,” or “Funding Proposal for New Downtown Art School.”
After the introduction section comes the section where you talk about your clients or clients: the people who want or need your goods or services. Here you will include topics that demonstrate your understanding of the business market. Depending on the complexity of the project you are proposing, you may or may not need to start with a detailed summary (called an Executive Summary or Client Summary). In this section, describe the market need you intend to fill and provide statistics and data to back up your claims. You must impress the readers of the proposal with your knowledge of the market. This is not yet the place where you talk about your goods or services. This section is all about proving a need or want for your business.
After the market-focused section comes the section where you explain how your goods or services will provide solutions to the needs you described. You’ll add pages with titles like Products, Services Provided, Benefits, Price List, Service Cost Summary, and so on. Include all the topics you need to describe exactly what you intend to provide and how much it will cost. Depending on the type of business for which you are requesting financing, you may also need to include descriptions of the facilities, equipment, and personnel you need for the proposed project.
For each step in this section, you’ll need to describe your expected expenses and returns. Depending on whether you are requesting financing for an existing business or asking for money to launch a new venture, you will need to prove your case by including pages with titles such as Request for Financing, Revenue Projection, Break-Even Analysis, Project Budget, Annual Budget, Cost Management, Cash Flow Analysis and Return on Investment. Also be sure to include a payment plan to show the bank or investor how they will be paid and potentially benefit from financing your business.
After you’ve described what you propose to do and how much it will cost, comes the final section, where you provide information about your business and its financial history. If you already have a business, you’ll need to provide a financial overview of that business, including pages like a Profit and Loss Statement. Your goal is to wrap up your proposal by convincing the prospect that they can trust you to deliver the goods or services you’ve described, succeed in their business, and return the funds. In this section, you will add pages like About Us/Company History, Awards, Testimonials, References, Ratings, Capabilities, Our Customers, Experience, etc. Include everything you need to convince the bank or financing committee that you know what you are talking about and can do what you promised.
After writing the proposal, take some time to make sure the pages look good too. You may consider adding color and graphics by incorporating your company logo, selecting custom bullets and fonts, or adding colored page borders. Don’t overdo it, though: keep the general tone of business.
Be sure to carefully review and spell check all pages. If your proposal seems sloppy, the reader may conclude that you are unprofessional and do not pay attention to detail. Recruit a proofreader unfamiliar with your proposal to do the final proof, because it’s almost impossible to catch errors in your own work. Please note that the spell checker cannot detect words that are correctly spelled but misused.
Save your proposal as a PDF file or print it and then submit it. If the bank or financing committee has specific rules, obey them to the letter. It’s common today to send PDFs via email, but a hand-delivered paper proposal can impress lenders more. If you have a lot of competition for limited funds in your area, put your best effort into the proposal and delivery.
You can see that each business plan financing proposal will include different pages because each should describe the market need, how the proposed project will meet that need, and why management is credible and can be trusted with financing.
But you can also see that all business plan funding proposals follow a similar format and structure. And remember, you don’t need to start from scratch—you can find templates for all the pages mentioned in this article in a proposal kit. A template kit will contain instructions and provide examples of information to include on each page. A proposal kit will also contain a variety of sample funding requests. Starting with a proposal template kit with sample business plan proposals will give you a great head start in creating your own winning business financing proposal.
