Many small business owners, and even employees of larger corporations must be able to convey the need for funds, most commonly in the form of ‘why’ their venture should be chosen. Many aspiring businesspeople get hung up on the ‘how’, the strategy, the bells and whistles – but the truth of it is bells and whistles will rarely, if ever get you funded; the ‘why’, the potential return and the (reassuring) understanding of the need will get you funded.
A proposal is a before-the business plan document for many, where a shorter less refined picture of a business concept is put together for feedback on whether a business plan is even required. Its not mandatory, but with the growing number of requests for private investment, Angel Investors are looking for a ‘higher-level’ overview before getting all the details; many individuals have already successfully adopted this approach by using email, and conference calls with investors to introduce themselves and their ideas.
What makes a proposal?
There are four key ingredients, in short.
One: Demonstrate that you understand, and can justify the business problem or need.
Just like when you are deciding on buying a new house, investors looking to move big sums of money have a certain amount of angst. (It doesn’t matter if they show it or not.) They [private investors] know that even a well-intentioned vendor may end up wasting their time or their money or both. One way to reduce their anxiety and minimize their perception of the risk of moving forward with you is to demonstrate that you clearly understand their problems, issues, needs, opportunities, objectives, or values. Whatever is driving the client’s interest, you must show that you understand it and have based your solution on it.
Two: A clear recommendation for a specific approach, program, system design, or application that will solve the problem and produce positive business results.
It may surprise you to learn that most proposals contain no recommendation at all. What they contain instead are descriptions of products or services, or worse a strategy.
What’s the difference?
A recommendation explicitly links the features of a product or service to the client’s needs and shows how the client will obtain positive results. And it contains language that unmistakably shows that the vendor believes in this solution: “We recommend…” or “We urge you to implement…”
Three: A compelling reason for the client (in need) to choose your recommendation over any others – how are you better than the rest?
Common mistakes…
Most proposals don’t contain any value proposition at all. They contain pricing, but no estimation of the rate of return the client will get from choosing you. Failing to address the client’s needs and failing to present a compelling value proposition are the most serious mistakes you can make in writing a proposal.
This is your value proposition.
Remember that you may write a proposal that is completely compliant with the customer’s requirements, that recommends the right solution, that even offers the lowest price, and still lose.
Why?
Because a competitor made a stronger case that their approach offered a higher return on investment, lower total cost of ownership (TCO), faster payback, or some similar measure of value that matters to the customer.
Four: Evidence of your ability to deliver on time and on budget
Most proposals are pretty good in this area.
You want to show the substantiating evidence that helps answer the question that all investors have, “Can they really do this?”
Good evidence includes case studies, references, testimonials, and resumes of key personnel. You may also include excerpts of project plans / management plans, company expertise, and other forms of evidence (white papers, awards, third-party recognition).
