Starting a business or retooling an already existing firm means developing a comprehensive strategy to achieve success. After defining what overall success will be with a clear mission statement, a business plan must be generated then implemented. This broad strategy helps managers ensure their business can achieve its mission. On a day to day basis, initiatives to bolster business goals start with their own business proposals. The difference between a plan and proposal is, therefore, in the details.
Understanding how a business can be successful is the essential function of a business plan. In the beginning of a business or rebirth of an already existing firm, a business plan provides a roadmap to success by outlining what the firm must do to achieve success in order to establish a stable, viable company. Certainly, business plans require great detail and well-considered objectives, yet the business plan cannot predict what will actually happen over the life of the business nor describe how a firm can adapt to a changing environment on a daily basis.
A business proposal is, however, the basis for a broad range of business needs and initiatives. Long before an actual business is planned, a proposal is required to offer up a possible entity. Once the company has been firmly established, different types of business proposals are used to develop relationships with outside interests. When dealing with sources of capital, such as lenders, a business proposal helps these outside interests determine how solid a venture may be. For partnerships with other firms, a proposal sets in motion the process that leads to joint ventures.
Aside from purpose, business plans and proposals differ in what they attempt to accomplish. A business proposal can be somewhat short-term and limited in scope; whereas, a business plan is often long-term and broad in addressing the company’s overall existence. As such, business proposals need to address specific functions of the company while a business plan may contain components of many proposals to be executed throughout the life of the firm. The business proposal, therefore, exists to target specific projects or initiatives.
The details in a business plan will also vary from those found within a business proposal, because the purposes of these tools are different. A business plan is a playbook to offer guidance for the overall business while a business proposal exists to help present new ideas and possibilities. Granted, business plans and proposals both need to be adapted for changing conditions; however, business plans are used to chart the course of the company while business proposal must be used to executive daily operations and open doors to new opportunities.