A business plan describes your whole business: market, operations, people and finances, usually for a lender, investor or yourself. A business proposal is a shorter document that offers a specific product or service to one buyer, such as supplying bread to a school canteen or cleaning an office. A proposal answers the buyer's need and asks them to say yes to one deal.
The main differences
Both documents describe your business, but they face in opposite directions. A plan looks inward: how will this business work and make money? A proposal looks outward: what does this buyer need, and why should they buy it from you?
A plan is mostly the same no matter who reads it. A proposal is written fresh for each buyer, using their name, their problem and their numbers. A plan can run to fifteen pages. A good proposal for a micro business is often two to five pages.
When you need a proposal
You write a proposal when someone could become a large or regular customer and wants to see your offer in writing. Common examples for small businesses:
- Supplying pandesal or snacks to a school canteen, office pantry or hotel.
- Catering a company's monthly events.
- Delivering water to offices or a condominium building.
- Laundry service for a dormitory, clinic or small hotel.
- Becoming a regular supplier to a restaurant or a group of sari-sari stores.
- Bidding to run a stall or canteen concession.
Sample business proposal structure
Use this order for most small business proposals. Adjust headings to fit the buyer's own request, and if they sent a request for quotation, follow their format first.
- Cover letterOne page addressed to the decision maker by name. Say what you are offering and why you are writing.
- Their needTwo or three sentences showing you understand the buyer's situation, in their terms: "Your canteen serves about [number] students each morning and needs fresh bread delivered before 6:30am."
- Your offerExactly what you will provide: products, quantities, schedule, delivery, and service standards.
- Price and termsUnit prices, total per week or month, payment terms, and how long the offer is valid. Fill in your own figures.
- Why youYour experience, location, capacity, and any references a buyer can call.
- Proof you are registeredList your DTI or SEC registration, mayor's permit and BIR registration, and attach copies. Many buyers need your invoices to record the expense.
- Next stepWhat you want the buyer to do: sign, schedule a trial week, or call you by a date.
Worked example: a bakery proposing to a school canteen
Example: a bakery in Iloilo City proposing to supply a private school canteen. This illustration uses blanks.
"Dear [canteen manager], [Bakery name] proposes to deliver [number] pieces of pandesal and [number] loaves of bread to your canteen every school day before 6:30am, starting [date]. Price: ₱____ per piece of pandesal and ₱____ per loaf, invoiced every Friday, payable within [number] days. We bake three blocks from your gate and can replace any short or damaged delivery within one hour. We are registered with DTI and BIR and hold a current mayor's permit; copies are attached. We would like to offer a one-week trial starting [date]. Please call [owner] at [number] to confirm."
The example names the buyer's need, states a schedule and a price, explains why this bakery is a safe choice, shows registration, and ends with a clear next step.
Common mistakes
- Sending your full business plan instead of a proposal. The buyer does not need your loan figures.
- A generic proposal with no mention of the buyer's own needs.
- No price, or a price with no validity period.
- Promising more than you can produce. Check capacity in your operations plan first.
- No proof of registration, so the buyer cannot record the purchase properly.
- No next step, so the proposal sits on a desk.
Business proposal checklist
- Address it to the decision maker by name
- Describe the buyer's need in their terms
- State exactly what you will deliver and when
- Give prices, payment terms and how long the offer is valid
- Attach proof of your DTI, mayor's permit and BIR registration
- Check you can produce the volume you are promising
- End with one clear next step and a date
Questions people ask
- Can I use my business plan as a proposal?
- Not as it is. Take the parts the buyer cares about, such as your product, capacity and registration, and rewrite them around the buyer's need. Leave out loan and investor details.
- Do I need to be registered to send a proposal?
- You can send one before registering, but most businesses and institutions want to see your registrations and need your invoices before they pay. Register first if you can. See how to register a business.
- How long should a proposal be?
- Two to five pages for most small deals, plus attachments. If the buyer gives a format or page limit, follow it.
- What is the difference between a proposal and a quotation?
- A quotation lists prices for items. A proposal includes the price but also explains the buyer's need, your offer and why you are the right supplier.