what is the difference between project plan and business plan

Business Plan vs. Business Proposal

The terms “business plan” and “business proposal” are sometimes used interchangeably, however, they are very different. The main difference between a business plan and a business proposal is that a business plan documents your growth strategy while a business proposal is a specific ask for someone to take an action you desire (e.g., buy your product/service, invest in your company, partner with you, etc.).

In this article, we will define a business plan and a business proposal and give you examples of when each is appropriate for you to use.  

What is a Business Plan?

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Business Plan Structure

Typically, the business plan structure contains the following 10 components:

• Executive Summary
• Business Description & Overview
• Market Research & Analysis
• Customer Analysis
• Competitive Analysis
• Marketing Strategy & Plan
• Operations Plan
• Management Team
• Financial Projections & Plan

It is recommended that a business plan is updated annually to adjust for changes in the industry trends and the business itself.  

What is a Business Proposal?

In terms of what you are asking from them, it can be anything that involves funds and time on their end including cash investment, product development assistance, and even employees if they have applicable skill sets.  

Business Proposal Structure

An invited business proposal is written in response to an RFP. A request for proposal (RFP) is a document that invites potential suppliers to submit business proposals. How to write a business proposal depends on the format requested and the questions included in the RFP.

The following are the components that usually make up a business proposal:

• Brief description of your company’s services/products as the proposed solution to the goals of the RFP
• Reiteration of the scope of the particular project
• Responses to questions asked in the RFP
• Cost of the project, including drafting services, materials, tools, labor, delivery and other expenses

An unsolicited business proposal is essentially the same format, but it will solicit the client’s business while anticipating the clients’ concerns and issues. A business proposal is more of a marketing document than an offer because it attempts to persuade the potential client to do business by demonstrating your value proposition and a call to action.  

So, What’s the Difference Between a Business Proposal vs. a Business Plan?

In a business proposal, company representatives typically work with the customer to tailor a business proposition that is attractive to both parties. This usually comes in the form of a written document detailing the services and cost associated with fulfilling an offer or request but can also include electronic contracts.

In contrast, a business plan is a description of your company on the executive and operational levels aimed at investors for raising financial support or other stakeholders in order to facilitate long-term growth. For example, an investor will want to know about how different departments within your business interact with one another, while somebody who will be implementing your product probably only needs more limited information such as design specs because they are not going into production themselves.

A business proposal may provide you with more details of the project, but it does not include information about your company’s operations or future plans.  

Examples of Business Plans vs. Business Proposals

• When you give a potential investor your business plan which includes all sorts of information about how we will achieve your goals together as well as the amount of money it’s going to take. The business proposal is for them to write you a check in return for interest/principal payments or a percentage of your company.
• You might be getting partners involved in your business who will help with product development and distribution. You are offering them a business proposal to work together. However, they may request to see your business plan to better understand your goals, potential profitability, and how you plan to reach these goals before deciding to work with you.
• Your existing business has been so successful that you decide to outsource the social media marketing efforts to a freelancer to free up more of your time. The freelancer would provide a business proposal stating their terms and conditions along with the agreed-upon pay arrangement for their services. This change in organizational structure may be noted in your business plan to demonstrate expansion and financial stability to continue growth.
• In your business plan , one of your goals is to grow your client base by 5% each month. You identify potential clients in need of your services or products and send an unsolicited business proposal to demonstrate how your products or services can benefit them in order to develop a new prospective client list.

The business plan is a roadmap for your company’s present and future, while the business proposal has to do with what you are asking someone else for money.  Applying this difference into practice can be difficult at times because business plans are often marketed as business proposals. However, it is important to be able to identify the difference between a business plan and business proposal in order to maximize their effectiveness and importance with potential investors or partners.

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Business Plan vs. Business Proposal

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 27, 2023 Updated on August 18, 2024

A business plan and a business proposal are similar documents. In fact, in some cases the terms can be used interchangeably, such as when both aim to attract investment. 

But generally speaking, a business proposal tends to have broader scope, and this handy guide lays out precisely how these two common terms differ. 

• What is a Business Plan?

A business plan is a detailed document laying out how the business will function and develop in its first few years. The key is the “plan” part of the name, as it will specify how you will launch, gain customers, operate, make money, and, with any luck, expand. 

Yet what many first-time business owners seem to forget is that a business plan is not a static document. The initial version is based largely on assumptions, supported by research. But as you run your business you’ll learn what works and what does not and make endless tweaks to your plan.

Thus, creating a business plan is not a one-time action – it’s a dynamic and continuous process of crafting and adapting your vision and strategy. 

Components of a Business Plan

A business plan is generally much more detailed and broader than a business proposal, and has several elements :

• Executive Summary  
• Company Description/Overview
• Products or Services Offered 
• Market Analysis 
• Marketing and Sales Strategies
• Operations and Management  
• Financial Plan
• What is a Business Proposal?

A business proposal is created in connection to a specific business deal being offered by one party to another. As mentioned, when you take a business plan to an investor, you’re proposing a business relationship, so in this case a business plan and a business proposal are much the same.

But a business proposal could also be for others purposes, including:

• Bringing on a partner
• Proposing a management contract to a person you want to hire 
• Proposing a business relationship with a potential customer 
• Proposing a partnership with another company
• Suggesting a deal to a member of your board of directors

A business proposal may offer specific terms for the potential relationship, or it may be just about the benefits the relationship will bring, with terms to be negotiated later. Essentially, it’s a sales tool to get people or companies to do business with you in some way. 

Business proposals can be structured in various ways, but usually, they’ll include a summary of what your company can offer, a scope of the work to be done together, and sometimes, a price quote or a proposed structure of the business relationship.

Clearly, a business plan and a business proposal are similar – and can even be one and the same. At the same time, they can also serve very different purposes. Unlike a business plan, a business proposal can have a variety of aims and thus does not have a “one size fits all” structure. 

Whichever one you need, be sure to take your time with the research and writing so your business has the best chance for success. 

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The difference between a business plan and planning.

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A business plan is the result of thinking, researching, strategizing, and reaching conclusions about how to pursue opportunities. It may exist only in the head of the planner, but it’s better when written down.

Whether elaborate or simple, a written business plan is an assembly of facts, ideas, assumptions and projections about the future. Here are three ways to use a written plan:

1. Document the due diligence on a new business or the future of an existing one.

2. Evaluate opportunities and challenges and compare them with your strengths and weaknesses.

3. Assist when getting a bank loan and is essential when courting investors.

So how does a static, written plan work when a business is always in motion? It works when you turn your plan into planning. A plan is like a parked car; planning is taking that car on a trip.

Planning is measuring your business motion against the baseline of assumptions and projections you made in your plan. Planning allows you to see how smart you were when the plan was written, or where your research and assumption skills need work. It also highlights external forces you face.

Written business plans often become collateral damage during challenging economic times. But you can’t allow planning to meet the same fate. Indeed, when things slow down there is even greater need to check your position than when things are rocking and rolling.

Here is a critical two-step planning activity that is the heart of a business plan and the essence of planning. Beginning with these will help you operate more successfully anytime, but especially when things are slow.

-Build a 12-month cash flow spreadsheet in a program like Excel so you can project and track the monthly relationship between cash collections and cash disbursements from all sources. This planning tool will provide a rolling picture of cash flow in any given month.

-Look at the “Ending cash” number at the bottom of each month’s column. A negative number in any month means you’ll need to add cash from sales, reduce expenses, add cash from another source, like a bank loan, or some combination.

A banker once told me that if I could bring him only one financial document with a loan request it should be a 12-month cash flow projection that includes both how the borrowed cash would be used and the debt service. I always listen to my banker, and you should too.

Write this on a rock… A business plan is important, but planning is essential.

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What is a Business Plan? Definition, Tips, and Templates

Published: June 28, 2024

Years ago, I had an idea to launch a line of region-specific board games. I knew there was a market for games that celebrated local culture and heritage. I was so excited about the concept and couldn't wait to get started.

But my idea never took off. Why? Because I didn‘t have a plan. I lacked direction, missed opportunities, and ultimately, the venture never got off the ground.

And that’s exactly why a business plan is important. It cements your vision, gives you clarity, and outlines your next step.

In this post, I‘ll explain what a business plan is, the reasons why you’d need one, identify different types of business plans, and what you should include in yours.

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What is a business plan?

What is a business plan used for.

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Purposes of a Business Plan

What does a business plan need to include, types of business plans.

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A business plan is a comprehensive document that outlines a company's goals, strategies, and financial projections. It provides a detailed description of the business, including its products or services, target market, competitive landscape, and marketing and sales strategies. The plan also includes a financial section that forecasts revenue, expenses, and cash flow, as well as a funding request if the business is seeking investment.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

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Business Plan and Proposal: Everything You Need to Know

A business plan and proposal are two different documents with two different purposes and functions. 3 min read

A business plan and proposal are two different documents with two different purposes and functions. A business plan is a document that clearly spells out how a business intends to realize its objectives and goals, while a business proposal is a sales document that a business entity uses to request a contract from a client.

Business Plan vs. Business Proposal

A business plan and a business proposal are different from each other by content, goals, writing style, and structure. The major difference between both is that a business plan is a document that presents facts, while a business proposal is a request for a deal and a quotation of prices.

A Business Plan

You can think of a business plan as the documentation of a company's grand vision. Business plans are naturally tactical. It's like stating where and when you want to start, when you want to get to the next point in view, and how you intend to accomplish that progress. A business plan includes descriptions of how the business is intended to run, the details of financial goals, possible business rivalry, marketing strategy, executive summary, and other factors that affect a company's planned business growth.

A business plan is particularly effective in making potential investors interested in a company (especially a startup company that's yet to make a name in its industry). Additionally, a business plan can provide an idea of what a company requires for professionals such as attorneys, accountants, and potential employees. A business plan distinctly describes the scope of the business, and in so doing, clears your thoughts as a business owner.

The business plan should be honestly made because it's the outline of the company's vision. It indicates whether or not the business goals of the company are realistically achievable. Experts say an effective business plan would take approximately six weeks of thorough research and groundwork to create. In other words, you typically can't create an effective business plan in one day, present it to potential investors the next day, and achieve desired results.

A Business Proposal

A business proposal goes to a prospective client directly from an established business. It's an attempt to sell a business entity's service or product to a client, and not an attempt to sell the business itself. Also, a business proposal isn't an estimate. Though costs and certain other details will be provided in the business proposal, an estimate is a lot more unofficial and simply a provision to skim over the costs. It doesn't present the entire picture.

Basically, business proposals show a particular idea, such as a new, profitable undertaking. The proposal is intended to get investors to support the particular business endeavor being suggested. For instance, a well-known eatery chain may wish to extend its business to a nearby state. Such an eatery would have to compose a business proposal in order to get the financial support of its target investors.

Though the business proposal provides an overview of what the company does (similar to a business plan), its major objective is to provide the details of the suggested business idea, including providing answers in advance for any concerns that could be raised by potential investors.

Components of a Business Plan

Basically, a business plan has three components: business model description, sales tactics, and financial goals. However, more elaborately, it has the following sections of information:

• Executive summary
• Description of products and services
• Industry analysis (analysis of possible business rivalry)
• Marketing strategy
• Operating plan
• Structure of leadership
• Internal analysis
• Built-out plan
• Introduction of management
• Financial goals (deliberations on monetary concerns, and how to address them and achieve expected results).

Solicited vs. Unsolicited Business Proposals

A solicited business proposal, when presented in response to a request for proposal (RFP), should be in the format requested by the client in their RFP. The same format may or may not be used for an unsolicited business proposal. Its purpose is to suggest and develop a business idea. Therefore, it's recommended to use the same format or some other format that's well-known in the field of endeavor.

An unsolicited business proposal offers a business entity the flexibility to choose what structure they deem appropriate. However, the proposal is expected to meet industry standards, no matter what format is used. For instance, it should emphasize major areas of interest, be thoroughly researched, offer a proposition of value, and feature a call to action.

If you need help with a business plan and proposal, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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A business plan is a document that outlines a company's goals and the strategies to achieve them. It's valuable for both startups and established companies. For startups, a well-crafted business plan is crucial for attracting potential lenders and investors. Established businesses use business plans to stay on track and aligned with their growth objectives. This article will explain the key components of an effective business plan and guidance on how to write one.

Key Takeaways

• A business plan is a document detailing a company's business activities and strategies for achieving its goals.
• Startup companies use business plans to launch their venture and to attract outside investors.
• For established companies, a business plan helps keep the executive team focused on short- and long-term objectives.
• There's no single required format for a business plan, but certain key elements are essential for most companies.

Investopedia / Ryan Oakley

Any new business should have a business plan in place before beginning operations. Banks and venture capital firms often want to see a business plan before considering making a loan or providing capital to new businesses.

Even if a company doesn't need additional funding, having a business plan helps it stay focused on its goals. Research from the University of Oregon shows that businesses with a plan are significantly more likely to secure funding than those without one. Moreover, companies with a business plan grow 30% faster than those that don't plan. According to a Harvard Business Review article, entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don't.

A business plan should ideally be reviewed and updated periodically to reflect achieved goals or changes in direction. An established business moving in a new direction might even create an entirely new plan.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. It allows for careful consideration of ideas before significant investment, highlights potential obstacles to success, and provides a tool for seeking objective feedback from trusted outsiders. A business plan may also help ensure that a company’s executive team remains aligned on strategic action items and priorities.

While business plans vary widely, even among competitors in the same industry, they often share basic elements detailed below.

A well-crafted business plan is essential for attracting investors and guiding a company's strategic growth. It should address market needs and investor requirements and provide clear financial projections.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, gathering the basic information into a 15- to 25-page document is best. Any additional crucial elements, such as patent applications, can be referenced in the main document and included as appendices.

Common elements in many business plans include:

• Executive summary : This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services : Describe the products and services the company offers or plans to introduce. Include details on pricing, product lifespan, and unique consumer benefits. Mention production and manufacturing processes, relevant patents , proprietary technology , and research and development (R&D) information.
• Market analysis : Explain the current state of the industry and the competition. Detail where the company fits in, the types of customers it plans to target, and how it plans to capture market share from competitors.
• Marketing strategy : Outline the company's plans to attract and retain customers, including anticipated advertising and marketing campaigns. Describe the distribution channels that will be used to deliver products or services to consumers.
• Financial plans and projections : Established businesses should include financial statements, balance sheets, and other relevant financial information. New businesses should provide financial targets and estimates for the first few years. This section may also include any funding requests.

Investors want to see a clear exit strategy, expected returns, and a timeline for cashing out. It's likely a good idea to provide five-year profitability forecasts and realistic financial estimates.

2 Types of Business Plans

Business plans can vary in format, often categorized into traditional and lean startup plans. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These are detailed and lengthy, requiring more effort to create but offering comprehensive information that can be persuasive to potential investors.
• Lean startup business plans : These are concise, sometimes just one page, and focus on key elements. While they save time, companies should be ready to provide additional details if requested by investors or lenders.

Why Do Business Plans Fail?

A business plan isn't a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections. Markets and the economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All this calls for building flexibility into your plan, so you can pivot to a new course if needed.

How Often Should a Business Plan Be Updated?

How frequently a business plan needs to be revised will depend on its nature. Updating your business plan is crucial due to changes in external factors (market trends, competition, and regulations) and internal developments (like employee growth and new products). While a well-established business might want to review its plan once a year and make changes if necessary, a new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is ideal for quickly explaining a business, especially for new companies that don't have much information yet. Key sections may include a value proposition , major activities and advantages, resources (staff, intellectual property, and capital), partnerships, customer segments, and revenue sources.

A well-crafted business plan is crucial for any company, whether it's a startup looking for investment or an established business wanting to stay on course. It outlines goals and strategies, boosting a company's chances of securing funding and achieving growth.

As your business and the market change, update your business plan regularly. This keeps it relevant and aligned with your current goals and conditions. Think of your business plan as a living document that evolves with your company, not something carved in stone.

University of Oregon Department of Economics. " Evaluation of the Effectiveness of Business Planning Using Palo Alto's Business Plan Pro ." Eason Ding & Tim Hursey.

Bplans. " Do You Need a Business Plan? Scientific Research Says Yes ."

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

Harvard Business Review. " How to Write a Winning Business Plan ."

U.S. Small Business Administration. " Write Your Business Plan ."

SCORE. " When and Why Should You Review Your Business Plan? "

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Business Plan vs. Business Proposal: Everything You Need to Know

“Ok, so you sell things.”

Well, honestly, I wasn’t surprised or peeved at the half-baked knowledge of my friend’s father when he made a snap judgment and conveniently labeled my marketing profession as sales.

After all, this wasn’t my first time when someone tagged me as a salesperson. So, I took a deep breath and explained to him how sales are different from marketing.

We, humans, dwell in a herd mentality and hone our word skills from our surroundings. Sometimes, we are simply careless, sometimes oblivious, but most of the time, we actually don’t know that the word has a different meaning.

This can be ignored in a casual conversation, but using the wrong words in a business space can change the implied meaning and lead to miscommunication. For example, cost vs. price , digitization vs. digitalization , warranty vs. guarantee , machine learning vs. artificial intelligence , etc.

“Don’t use words too big for the subject. Don’t say ‘infinitely’ when you mean ‘very’; otherwise you’ll have no word left when you want to talk about something really infinite.” – C. S. Lewis

This Process Street guest post untangles the confusion between two crucial terms – business plan and business proposal. These are used interchangeably in the business world, but their meaning and application are pretty different.

Words are the building blocks of communication. There is a French phrase for using the right word – le mot juste .

Let us strive for le mot juste !

Hop on and be a part of this fantabulous journey.

What is a business plan?

What is a business proposal, business plan vs. business proposal: what are the differences.

• Bonus: How to make ‘wow’ business plans and business proposals?

Winding-up: Key takeaways

Here we go!

A business plan is a formal guide that acts as a blueprint, deciphering every root and branch to make a business successful. It is a written document that provides insights to internal and external stakeholders on business vision, goals, and strategies to achieve those goals.

“Without a plan, even the most brilliant business can get lost. You need to have goals, create milestones and have a strategy in place to set yourself up for success.” – Yogi Berra

A business plan, at its core, is an explanation of the below questions –

• Who are we?
• What are our offerings?
• Who are our customers?
• Who are the competitors?
• What is our competitive advantage?
• What are the business projections?
• What is the roadmap to achieve the goals – marketing, operations, research and development, manufacturing, and financial plans?
• What are the funding/investment requirements?
• What is the return on investment?

Why do you need a business plan?

A business plan is not a bag of puffery statements. It is a document with factual information necessary for the survival of a business. You can create a business plan with the right tools or opt for a good business coach to get you started.

Let’s see what Tim Berry , business plan expert, founder and chairman of Palo Alto Softwar and bplans.com , has to say on business plans.

“What I love most about business plans is the business planning: like walking, it’s constant correction and review and revision. Planning, done right, is steering a business, managing growth, aiming the business towards the right future.” – Tim Berry ,  Small Business Trends

According to a study done by Palo Alto Software, those who create business plans double their chances to succeed in business .

Let us get down to brass tacks and understand why a business plan is super-duper important.

Record and present business information The primary intent of a business plan is to record and communicate information. It must document the business goals and the methods to attain those goals in a structured manner. It keeps businesses on track with their objectives.

A blueprint for seeking business investment ️ Whether you are a fledgling start-up or an established business seeking expansion or diversification, writing a winning business plan acts as a magnet to attract investors. It builds confidence and trust among investors about the lucrativeness of a business idea.

Lay down the right path ✔️ Not everything discussed verbally at an ideation stage transforms into reality in a pragmatic environment. Jotting down a business plan differentiates achievable from impracticable based on market dynamics, opportunities and threats, and company’s strengths and weaknesses. It sets the right track for business growth.

Establish short-term and long-term goals A business plan sets down short-term and long-term goals and the direction to accomplish them, right from baby steps to giant leaps. It becomes a basis to revisit the goals from time-to-time and make iterations depending on the present scenario.

“Any business plan won’t survive its first encounter with reality. The reality will always be different. It will never be the plan.” – Jeff Bezos, CEO of Amazon

Get clarity on your business A frequent question that pops-up in business discussions is: “Are we doing it right?”

A well-articulated business plan brings insightful knowledge on each aspect of a business – from what it has to offer to how to market the offerings.

Make informed decisions A business plan is a reality check to track what is being fruitful and what is causing hindrance. It paves the way to make a business sustainable.

Predict future financial performance Financial projection is the spotlight of a business plan. It’s the carrot that captivates the eyeballs and tickles investors to fund a new business.

A promising business plan talks about the company’s future financial performance – expenditure, profit, revenue, etc.

Explore new business opportunities A business plan is a flexible document that enables learning on the go. It bolsters research and infuses businesses with new and more feasible business opportunities. It gives organizations a fresh outlook and ushers them to be a howling success.

How to prepare for a business plan

Now that we have answered the ‘what’ and ‘why’ of a business plan, let us move forward to solve the next riddle – how do you prepare it?

Identify your company’s vision, mission, and values Start by answering and figuring out your business personality:

• What do you desire to be?
• How do you want to be perceived?
• What values put your business in motion?

This is your organization’s compass that acts as a foundation for the succeeding steps.

Know your target audience ‍ Dig deep into:

• Whom are you going to cater to?
• What is your target market?
• What is the size and potential of the target market?
• What are the needs of a prospective customer?
• How are the needs addressed presently?

Learn market trends Identifying market trends keeps businesses ahead of the game. Analysis of industry data leads to business growth and profitability in the long run.

Weigh in the impact of unforeseen circumstances From financial turbulence to natural calamities and pandemics – a lot can go wrong in the future and leave a business shaking. Expect the unexpected and gird your loins for these testing times.

How to write a business plan

Creating a winning business plan increases the chances of success and spurs investors to fund your business.

According to a study published in Small Business Economics , entrepreneurs that create a plan are 152% more likely to start their business and appoint a registered agent and 129% more likely to push forward with their business beyond the initial start-up phase and grow it.

Here are the key components of an excellent business plan:

Executive summary First impression is the last impression!

An executive summary is a crucial part of this document. It provides the essence of the whole plan:

• Company details;
• Size and scope of business opportunity;
• A description of your offerings and how it will solve the problem;
• Growth projection;
• Financial requirements.

It should be informative and able to spark readers’ interest to know more about the business plan.

Overview of the business This section lists down information on:

• Your business;
• Your target market;
• Description of your products/services;
• Why and how your offerings are a great fit for prospective customers;
• Your capabilities to handle the demands;
• Your value proposition and competitive advantage.

…and all other related details.

Market analysis and strategies Put forth a strong case built on the solid rock of data analysis and statistics – present data on target market size, industry trends, sales forecasts, and marketing strategy.

Operating plan The operating plan highlights the operational requirements for the smooth functioning of a business. It includes facilities, supply chain management, inventory, manufacturing, shipment, logistics, staff management – everything under the sun that covers capital and expense (CapEx) requirements.

Growth plan This section answers the question: “Where do you see the business going in the next few years?” It provides visibility to investors on the milestones and how you will make money in near future.

Marketing plan Thee marketing plan section describes how to market the offerings to create and fulfill customers’ needs (who are the customers, product positioning, pricing policy, and promotional strategies?)

Management plan This section outlines how your organization is structured and basically how strong you are together. It describes the skills, background, and responsibilities of the management team. It builds conviction that the business is in good hands and has a proficient human capital.

Financial plan and projections This is the part where numbers become the king.

It draws up deets on inflow and outflow of money, sales forecast, profit and loss statement, balance sheet, cash flow statement, and budget expense. It discloses and forecasts the company’s financial goals, profitability model, and charts a course for the coming years.

Conclusion and appendix Conclude the business plan by succinctly bringing out the key pointers – the business’s vision, mission, goals, strengths, and growth trajectory. Make it compelling and to-the-point. Add relevant appendices to strengthen your business plan.

Pro tip: Use an all-inclusive ready-made business plan template document and Process Street ‘s business plan workflow to create unbeatable business plans.

Business Plan Workflow

Click here to access the Business Plan Checklist!

Types of business plans

There are varying types of business plans depending on the purpose and usage:

• Business plan for start-ups A winning start-up business plan can be a game-changer to attract funding from investors. It should weave all key components to make it a promising investment – company overview, products/services, estimated costs, market evaluation, competition insights, risk analysis, cash flow projections, marketing strategies, and the management team’s strengths.
• Strategic business plan It lays down the details of a company’s strategies to fulfill its goals. It outlines the company’s vision, mission, strategy, and goals, the driving force for success, and the timelines.
• Internal business plan This plan moves the needle and steers focus on in-house planning and growth. It ensures that everyone grasps the company’s overall plan for growth. It prepares organizations to move forward by identifying and removing any blockages and assess and revise the strategies when required.
• Operations business plan It is an internal plan that maps out the nitty-gritties of a company’s operations plans and activities.
• Development business plan This is a development or an expansion plan of a business. It is used for both internal and external purposes. An external growth plan is written to attract investment from external sources. An internal development plan counts on its own business capabilities, revenue, and resources. It works as a guide to provide the right directions.
• Feasibility business plan A company scouts out a feasibility study when it plans to foray into a new venture, new product, or a new market. It articulates: How well will the product or service perform? Is the business promising? What is the expected return on investment (ROI)?
• What-if business plan At a point where you face unordinary conditions, you need a variation on the existing plan. A what-if business plan arranges to fall back on a contingency plan when things go sideways. For example, an unexpected surge in demand, new competition, drop in market size, etc.

A business proposal is the mantra that draws you closer to win a customer or bag a project.

Generally, it is a formal response to a Request for Proposal (RFP) sent by a prospective client looking for the right solution to their problems. It explains the particulars of a seller’s offerings and convinces the buyer that the proposed solution is the gateway to their business’s success and productivity.

“And, after all, winning business is what writing proposals is all about.” ― Tom Sant, Persuasive Business Proposals: Writing to Win More Customers, Clients, and Contracts

A business proposal comprises of four main points :

• What are the challenges of prospective clients?
• How can our solution solve their problems?
• Why should they choose us over others?
• What are the best pricing options available?

Why do you need a business proposal?

A business proposal is a testimony in itself that asserts, “I am the best you can get.”

Here are the reasons why you should and must make a business proposal :

• Create or leverage a business opportunity The prime motive is to win, win, and win! It is a medium to encash a business opportunity by putting forward an I-can’t-say-no-to-this proposal.
• Stand out from the competition It persuades the prospects that you are way ahead of other rivals in the industry in terms of the value you offer.

How to prepare for a business proposal

The heart of preparedness is research and further research. After all, the devil is in the details.

Talk to prospective customers, visit their website(s), read published articles, and be a know-it-all for your prospective clients.

Sort out the ‘who’ First and foremost, dig every possible information about the client:

• Who is the client (its vision, mission, and goals)?
• What does it produce?
• What are its key markets and target customers?
• What are its business growth plans?
• Which markets is it presently serving?
• Also, figure out the kingpins of a proposal approval process. This will help you to create a comprehensive proposal with all the necessary answers expected by the decision-makers.

Understand the challenges Find what’s bothering them and what is causing hindrance to their business success. Learn about their existing solution and its challenges.

Stitch the glitch and offer the best solution After a thorough review of all the points mentioned above, find the best solution to your prospective client’s problems.

List down key differentiators This will help you to beat the competition in the dust. It draws a comparison chart and puts you in a superior position.

According to Gray Mackenzie, founder of GuavaBox ,

“Prior to submitting a proposal, make sure you have clearly defined all the major points verbally with the potential customer. By discussing the scope, cost, timeline, and details prior to submitting a written proposal, you can uncover objections earlier in the process.” – Gray Mackenzie, 10 Sales Experts Share Their Best Business Proposal Tips

How to write a business proposal

Let’s get down to the fundamental elements that form a business proposal. Learn how to create a business proposal that stands out and close sales.

Title page/Cover page The name says it all.

Pretty easy-peasy thing to understand, right? After all, you have been creating the title pages since school days.

Still, make a note: Always write a gripping title that intrigues prospective clients’ interest and urges them to read on.

Other components that should be included on the title page are:

• Your company name and logo;
• Prospective customer’s name;
• Submission date.

Table of contents (TOC) As the name suggests, a TOC is a well-structured layout of the document. It helps to skim and scan and navigate speedily through different sections of a business proposal.

Executive summary It sets the tone for a proposal and makes the reader inquisitive about reading subsequent sections. It sums up the entire business proposal – the purpose of sharing the proposal and why and how your solution is the right fit for the prospective client. Leave no stone unturned to boast about your offerings in the executive summary.

Details of offerings This is an in-depth description of the products or services your company has to offer.

How will the offerings solve the client’s problems? This explains why your products/services are the right fit to address a prospective client’s needs and why it is a better alternative than the competition.

The methodology/implementation of offerings This section is a blanket explanation of how the promised deliverables will be executed. It provides step-by-step clarity on each action along with timelines. It gives the client peace of mind and builds trust and confidence in the offering.

Pricing, payment, and legal matters Here, you talk about the pricing structure, applicable taxes, payment schedule, cancellation policy, and how you plan to solve the legal matters (if any arise in the future).

Here are some tips for this section:

• Ensure that the pricing details are concise and complete.
• Providing a comparison chart with different pricing options helps to make decisions faster.
• Don’t go overboard with pricing, and also, don’t underrate yourself.
• Always refer to the RFP and verify if every request has been fulfilled.
• Separate out and create a new legal section if your business demands an extensive list of legal requirements.

Details about your company This is an exhaustive overview of your company. Don’t forget to add relevant customer testimonials, case studies, or success stories to build your case among prospective customers.

Signatures and Call to action This is the moment that gets butterflies in your stomach; the closure. This is the concluding part of a business proposal. Here (if all your prayers get answered), you and your client sign the proposal and secure the deal. Hurray!

Pro tip: Once you send the business proposal, don’t sit idle in your cocoon day-dreaming of winning the proposal. Always proactively do follow-ups with the prospective clients and clarify their doubts.

For start-ups or small businesses, drafting a business proposal can be an unnerving experience. They work fingers to the bone to write a perfect business proposal. Spending too much time on it might lead to missing the deadline and eventually losing out on a golden opportunity.

According to a report by Better Proposal , sending a business proposal within 24 hours increases the likelihood of winning the deal by 25%.

Here’s the secret sauce to speedily create flawless business proposals :

First, pick a professionally vetted and ready-to-use business proposal template and draft a business proposal like a cakewalk. Such as the Business Proposal Template included below.

Next, always use Process Street ‘s super-powered business proposal template checklist and ensure no step gets missed in the process.

Business Proposal Template Checklist

It even turns out a blessing for big businesses since they have to draft multiple proposals all the time. Templates and checklists save a lot of time, enhance productivity, and increase the chances of success.

Types of business proposals

Majorly, there are two types of business proposals:

Solicited business proposal Also known as an invited business proposal, it comes into play when a buyer, or a company, outlines its requirements and requests suppliers to present an offer. It can be a response to a public tender issued by big corporations or government agencies.

Alternatively, a solicited business proposal can also be submitted as a response to the RFP shared by a prospective client.

The difference between the two is that while the earlier one is open to all bidders, the latter’s scope is limited as it is shared with shortlisted suppliers.

Pro tip: Do a thorough check before submitting an invited business proposal. Missing out on-minute details can kick you out from their consideration list.

Unsolicited business proposal An uninvited or unsolicited business proposal is a proactive attempt to create a business opportunity. This proposal is sent to prospective clients without being asked.

The good news is, there are slim chances of your rival sending a business proposal simultaneously, so less or no competition.

The bad news is, it might breathe in the customer’s inbox for a few days and then, without being read, depart to the heavenly abode -the trash folder.

But still, like a cold call, it leaves some impression on prospective clients and shoots up the chances to cut a deal in the long run.

Pro tip: An unsolicited business proposal is mostly sent through emails. Make certain to write an attention-grabbing headline and a convincing explanation to draw attention.

Here’s a comparison chart that distinguishes between business plan and business proposal:

Bonus: How to make ‘wow’ business plans and business proposals

Here are the secret ingredients to make awesome and captivating business plans and proposals:

Follow the principle of KISS (Keep it simple, silly)

This is not the right place to brag about your vocabulary skills. You want the prospective customer to focus on reading rather than wasting time looking up for a word.

Always remember! Communication is the key.

So, go simple and ditch those heavy jargons.

Don’t wear-out the pupils of your prospects with long-winded documents. Capitalize on the multisensorial abilities of humans as well.

Visuals increase people’s desire to read content by 80%.

Leverage the power of visuals and make your document easily graspable by adding graphs, infographics, flowcharts, tables, images, and videos.

Add social proof

Do not forget to add positive feedback or customer testimonials. If similar projects have been delivered in the past, do add relevant links and case studies of that work. It helps to build trust and strengthen your case.

“Make sure you have great success stories that you can share with potential clients. At the end of the day, most, if not all, potential clients want to know you will provide value to them and generate positive ROI.” – Mathew Bivens, Podcast and marketing consultant,  10 Sales Experts Share Their Best Business Proposal Tips

Proofread ️

Ensure the document is free from grammar and spelling errors.

Follow brand guidelines

Your document should reflect your brand. Bring consistency in all your documents and design them as per the brand guidelines.

Use document builder tools ️

Time is money!

The likelihood of getting a ‘yes’ on your business plans and business proposals depends on how fast you can create a flawless document.

Empower your organization with a smart and all-in-one document builder tool like Revv – create, communicate, collaborate, and close your documents in no time.

Business plans and business proposals are two different worlds with distinct purposes and goals. But, both play a prime role in increasing the odds of business success.

People often get the wrong end of the stick and ask for a business plan when they mean business proposal or vice-versa.

But, we don’t need to worry about that since we are now clear on what is what.

Cheers to us!

P.S: Don’t forget to subscribe to the Process Street blog to get notified of our upcoming articles. We also have a podcast “Tech Out Loud” featuring content written by respected industry leaders such as Peep Laja , Sujan Patel , Tomasz Tunguz , and more!

What is your take on business plans and business proposals? Have you ever got your wires crossed with these two terminologies? Don’t forget to post your comments below.

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Molly Stovold

Hey, I'm Molly, Junior Content Writer at Process Street with a First-Class Honors Degree in Development Studies & Spanish. I love writing so much that I also have my own blog where I write about everything that interests me; from traveling solo to mindful living. Check it out at mollystovold.com .

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• What is project planning? (Plus, 7 ste ...

What is project planning? (Plus, 7 steps to write a successful project plan)

Organize your projects with project plans to keep things on track—before you even start. A project plan houses all the necessary details of your project, such as goals, tasks, scope, deadlines, and deliverables. This shows stakeholders a clear roadmap of your project, ensures you have the resources for it, and holds everyone accountable from the start. In this article, we teach you the seven steps to create your own project plan.

Project plans are essential to keeping your project organized and on track. A great project plan will help you kick off your work with all the necessary pieces—from goals and budgets to milestones and communication plans—in one place. Save yourself time (and a few headaches) by creating a work plan that will make your project a success.

What is project planning?

Project planning is the second stage in the project management process, following project initiation and preceding project execution. During the project planning stage, the project manager creates a project plan, which maps out project requirements. The project planning phase typically includes setting project goals, designating project resources, and mapping out the project schedule.

What is a project plan?

If you're still unsure about what a project plan is, here's how it differs from other project elements:

Project plan vs. work plan: A project plan and a work plan are the same thing. Different teams or departments might prefer one term or another—but they both ultimately describe the same thing: a list of big-picture action steps you need to take to hit your  project objectives .

Project plan vs. project charter: A project charter is an outline of your project. Mostly, you use project charters to get signoff from key stakeholders before you start. Which means your project charter comes before your project plan. A project charter is an outline of a simple project plan—it should only include your project objectives, scope, and responsibilities. Then, once your charter has been approved, you can create a project plan to provide a more in-depth blueprint of the key elements of your project.

Project plan vs. project scope: Your project scope defines the size and boundaries of your project. As part of your project plan, you should outline and share the scope of your project with all project stakeholders. If you’re ever worried about scope creep , you can refer back to your pre-defined scope within your project plan to get back on track.

Project plan vs. agile project: Agile project management is a framework to help teams break work into iterative, collaborative components . Agile frameworks are often run in conjunction with scrum and sprint methodologies. Like any project, an Agile project team can benefit from having a project plan in place before getting started with their work.

Project plan vs. work breakdown structure: Similar to a project plan, your work breakdown structure (WBS) helps you with project execution. While the project plan focuses on every aspect of your project, the WBS is focused on deliverables—breaking them down into sub-deliverables and project tasks. This helps you visualize the whole project in simple steps. Because it’s a visual format, your WBS is best viewed as a Gantt chart (or timeline), Kanban board , or calendar—especially if you’re using project management software .

Why are project plans important?

Project plans set the stage for the entire project. Without one, you’re missing a critical step in the overall project management process . When you launch into a project without defined goals or objectives, it can lead to disorganized work, frustration, and even scope creep. A clear, written project management plan provides a baseline direction to all stakeholders, while also keeping everyone accountable. It confirms that you have the resources you need for the project before it actually begins.

A project plan also allows you, as the person in charge of leading execution, to forecast any potential challenges you could run into while the project is still in the planning stages. That way, you can ensure the project will be achievable—or course-correct if necessary. According to a study conducted by the  Project Management Institute , there is a strong correlation between project planning and project success—the better your plan, the better your outcome. So, conquering the planning phase also makes for better project efficiency and results.

7 steps to write a project plan to keep you on track

To create a clear project management plan, you need a way to track all of your moving parts . No matter what type of project you’re planning, every work plan should have:

Goals and project objectives

Success metrics

Stakeholders and roles

Scope and budget

Milestones , deliverables , and project dependencies

Timeline and schedule

Communication plan.

Not sure what each of these mean or should look like? Let’s dive into the details:

Step 1: Define your goals and objectives

You’re working on this project plan for a reason—likely to get you, your team, or your company to an end goal. But how will you know if you’ve reached that goal if you have no way of measuring success?

Every successful project plan should have a clear, desired outcome. Identifying your goals provides a rationale for your project plan. It also keeps everyone on the same page and focused on the results they want to achieve. Moreover, research shows that employees who know how their work is contributing to company objectives are 2X as motivated . Yet only 26% of employees have that clarity. That’s because most goal-setting happens separate from the actual work. By defining your goals within your work plan, you can connect the work your team is doing directly to the project objectives in real-time.

What's the difference between project goals and project objectives?

In general, your project goals should be higher-level than your project objectives. Your project goals should be SMART goals that help you measure project success and show how your project aligns with business objectives . The purpose of drafting project objectives, on the other hand, is to focus on the actual, specific deliverables you're going to achieve at the end of your project. Your project plan provides the direction your team needs to hit your goals, so you can create a workflow that hits project objectives.

Your project  plan  provides the direction your team needs to hit your goals, by way of your project objectives. By incorporating your goals directly into your planning documentation, you can keep your project’s North Star on hand. When you’re defining your project scope, or outlining your project schedule, check back on your goals to make sure that work is in favor of your main objectives.

Step 2: Set success metrics

Once you’ve defined your goals, make sure they’re measurable by setting key success metrics. While your goal serves as the intended result, you need success metrics to let you know whether or not you’re performing on track to achieve that result. The best way to do that is to set  SMART goals . With SMART goals, you can make sure your success metrics are clear and measurable, so you can look back at the end of your project and easily tell if you hit them or not.

For example, a goal for an event might be to host an annual 3-day conference for SEO professionals on June 22nd. A success metric for that goal might be having at least 1,000 people attend your conference. It’s both clear and measurable.

Step 3: Clarify stakeholders and roles

Running a project usually means getting  collaborators  involved in the execution of it. In your project management plan, outline which team members will be a part of the project and what each person’s role will be. This will help you decide who is responsible for each task (something we’ll get to shortly) and let stakeholders know how you expect them to be involved.

During this process, make sure to define the various roles and responsibilities your stakeholders might have. For example, who is directly responsible for the project’s success? How is your project team structured (i.e. do you have a project manager, a project sponsor , etc.)? Are there any approvers that should be involved before anything is finalized? What cross-functional stakeholders should be included in the project plan? Are there any  risk management factors  you need to include?

Consider using a system, such as a  RACI chart , to help determine who is driving the project forward, who will approve decisions, who will contribute to the project, and who needs to remain informed as the project progresses.

Then, once you’ve outlined all of your roles and stakeholders, make sure to include that documentation in your project plan. Once you finalize your plan, your work plan will become your cross-functional source of truth.

Step 4: Set your budget

Running a project usually costs money. Whether it’s hiring freelancers for content writing or a catering company for an event, you’ll probably be spending some cash.

Since you’ve already defined your goals and stakeholders as part of your project plan, use that information to establish your budget. For example, if this is a cross-functional project involving multiple departments, will the departments be splitting the project cost? If you have a specific goal metric like event attendees or new users, does your proposed budget support that endeavor?

By establishing your project budget during the project planning phase (and before the spending begins), you can get approval, more easily track progress, and make smart, economical decisions during the implementation phase of your project. Knowing your budget beforehand helps you with resource management , ensuring that you stay within the initial financial scope of the project. Planning helps you determine what parts of your project will cost what—leaving no room for surprises later on.

Step 5: Align on milestones, deliverables, and project dependencies

An important part of planning your project is setting milestones, or specific objectives that represent an achievement. Milestones don’t require a start and end date, but hitting one marks a significant accomplishment during your project. They are used to measure progress. For example, let’s say you’re working to develop a  new product for your company . Setting a milestone on your project timeline for when the prototype is finalized will help you measure the progress you’ve made so far.

A project deliverable , on the other hand, is what is actually produced once you meet a milestone. In our product development example, we hit a milestone when we produced the deliverable, which was the prototype. You can also use project dependencies —tasks that you can’t start until others are finished. Dependencies ensure that work only starts once it’s ready. Continuing the example, you can create a project dependency to require approval from the project lead before prototype testing begins.  

If you’re using our free project plan template , you can easily organize your project around deliverables, dependencies, and milestones. That way, everyone on the team has clear visibility into the work within your project scope, and the milestones your team will be working towards.

Step 6: Outline your timeline and schedule

In order to achieve your project goals, you and your stakeholders need clarity on your overall project timeline and schedule. Aligning on the time frame you have can help you better prioritize during strategic planning sessions.

Not all projects will have clear-cut timelines. If you're working on a large project with a few unknown dates, consider creating a  project roadmap  instead of a full-blown project timeline. That way, you can clarify the order of operations of various tasks without necessarily establishing exact dates.

Once you’ve covered the high-level responsibilities, it’s time to focus some energy on the details. In your  work plan template , start by breaking your project into tasks, ensuring no part of the process is skipped. Bigger tasks can even be broken down into smaller subtasks, making them more manageable.

Then, take each task and subtask, and assign it a start date and end date. You’ll begin to visually see everything come together in a  cohesive project timeline . Be sure to add stakeholders, mapping out who is doing what by when.

Step 7: Share your communication plan

We’ve established that most projects include multiple stakeholders. That means communication styles will vary among them. You have an opportunity to set your expectations up front for this particular project in your project plan. Having a communication plan is essential for making sure everyone understands what’s happening, how the project is progressing, and what’s going on next. And in case a roadblock comes up, you’ll already have a clear communication system in place.

As you’re developing your communication plan, consider the following questions:

How many project-related meetings do you need to have? What are their goals?

How will you manage project status updates ? Where will you share them?

What tool will you use to manage the project and communicate progress and updates?

Like the other elements of your project plan, make sure your communication plan is easily accessible within your project plan. Stakeholders and cross-functional collaborators should be able to easily find these guidelines during the planning and execution phases of your project. Using project planning tools or task management software that integrates with apps like Slack and Gmail can ensure all your communication happens in one easily accessible place. 

Example project plan

Next, to help you understand what your project management plan should look like, here are two example plans for marketing and design projects that will guide you during your own project planning.

Project plan example: annual content calendar

Let’s say you’re the Content Lead for your company, and it’s your responsibility to create and deliver on a content marketing calendar for all the content that will be published next year. You know your first step is to build your work plan. Here’s what it might look like:

Goals and success metrics

You establish that your goal for creating and executing against your content calendar is to increase engagement by 10%. Your success metrics are the open rate and click through rate on emails, your company’s social media followers, and how your pieces of content rank on search engines.

Stakeholders and each person’s role

There will be five people involved in this project.

You, Content Lead: Develop and maintain the calendar

Brandon and Jamie, Writers: Provide outlines and copy for each piece of content

Nate, Editor: Edit and give feedback on content

Paula, Producer: Publish the content once it’s written and edited

Your budget for the project plan and a year’s worth of content is $50,000.

Milestones and deliverables

Your first milestone is to finish the content calendar, which shows all topics for the year. The deliverable is a sharable version of the calendar. Both the milestone and the deliverables should be clearly marked on your project schedule.

You’ve determined that your schedule for your content calendar project plan will go as follows:

October 15 - November 1: The research phase to find ideas for topics for content

November 2 - November 30: Establish the topics you’ll write about

December 1 - January 1: Build the calendar

January 1 - December 31: Content will be written by Brandon and Jamie, and edited by Nate, throughout the year

January 16 - December 31: Paula will begin publishing and continue to do so on a rolling basis throughout the year.

You’ll have a kick-off meeting and then monthly update meetings as part of your communication plan. Weekly status updates will be sent on Friday afternoons. All project-related communication will occur within a  project management tool .

How ClassPass manages project plans from start to finish

Kerry Hoffman, Senior Project Manager of Marketing Operations at  ClassPass , oversees all marketing projects undertaken by the creative, growth, and content teams. Here are her top three strategies for managing project plans:

Identify stakeholders up front: No matter the size of the project, it’s critical to know who the stakeholders are and their role in the project so you ensure you involve the right people at each stage. This will also make the review and approval process clear before the team gets to work.

Agree on how you want to communicate about your project: Establish where and when communication should take place for your project to ensure that key information is captured in the right place so everyone stays aligned.

Be adaptable and learn other people’s working styles: Projects don’t always go according to plan, but by implementing proper integration management you can keep projects running smoothly. Also, find out how project members like to work so you take that into account as you create your plan. It will help things run smoother once you begin executing.

Write your next project plan like a pro

Congratulations—you’re officially a work planning pro. With a few steps, a little bit of time, and a whole lot of organization, you’ve successfully written a project plan.

Keep yourself and your team on track, and address challenges early by using project planning software like Asana . Work through each of the steps of your project plan with confidence, and streamline your communications with the team.

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Business Plan vs. Business Proposal

Business Plan Template

• May 15, 2024

When you start a new business or own a young company, you often hear terms like business plan or business proposal. But the question is: do you need a business plan? Or is it a proposal that you need? Or both?

Being new to the game, these terms can seem quite intimidating, and you probably don’t know where to start.

Don’t worry. We’ve created a simple business plan vs. business proposal comparison so you can determine which one to prioritize.

Let’s start by defining them!

What is a business plan?

A business plan documents a company, its business objectives, and how it plans to achieve them. It includes data regarding business goals, marketing strategies, products, services, market research, financial projections, and the dream team.

Pretty much everything a company will use to achieve its intentions.

Okay! And what about the business proposal?

What is a business proposal?

On the other hand, a business proposal is a document that describes your business’s offerings, like a product or service, to help you win potential clients and partners.

It also outlines your business, including its unique value proposition and how your company can help solve customers’ specific problems.

Now that we know the two business documents aren’t the same let’s see how they are different and in what ways.

Business plan vs. business proposal: How are they different?

Even though used interchangeably (and wrongly), a business plan and proposal are poles apart. Here’s how:

Before you ask why you need a business plan , it’s, first and foremost, to legitimize a business idea that you’ve been brewing in your head.

But it’s also to document company strategies, objectives, and operations that help you create a clear idea on how to achieve your company goals. All that data becomes one source of truth that works as a communication tool. That becomes your golden ticket to wooing investors and lenders.

On the other hand, a business proposal’s purpose is entirely about convincing a potential client and partner that your project is worth their time and money.

Unlike a business plan, it only focuses on a specific product, service, or opportunity instead of the entire business.

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2. Components and Structure

When you write your business plan , it will typically follow a specific structure containing the following components:

• Executive summary: This summary summarizes your entire business plan, highlighting the most important aspects, such as your company’s mission, financial projections, and vision statement.
• Company description: It reveals your company’s history, mission, value proposition, detailed description of products and services, achievements, and target market.
• Industry or market analysis: This is an analysis of the industry landscape to gain statistics about market needs, size, trends, competitors, and target demographics.
• Marketing plan: This includes different marketing strategies and approaches your company will take to market its products and services. It can be your pricing strategy, sales and distribution plan, and unique selling proposition.
• Operations plan: This component reveals how a company’s operations would look on a day-to-day basis.
• Organizational structure and management team: This section provides an overview of your company’s structure and how its management teams will execute the operations plan effectively.
• Financial projections and goals: This section contains a company’s financial performance, including income, sales goals, cash flow projections, and balance sheets.

Similarly, when you write a business proposal , you’ll typically encounter a structure as well. It goes like this:

• Cover or title page: To make a first impression. It can contain aesthetic visuals.
• Introduction: To introduce yourself and your company. Also, briefly explain how your product or service will solve a specific problem.
• Statement of the problem or project: To explain your understanding of the customer’s need, its importance in addressing it, and your right-fit, proposed solution.
• Table of contents: To make your data essay accessible.
• Project details: To communicate essential data, including objective, scope, timeline, key stakeholders, disclaimers, cost, and conclusion.
• Agreement with a signature box: To obtain the client’s signature.

3. Audience

A business plan’s target audience is internal stakeholders, investors, and lenders interested in your company’s long-term goals and path to success.

On the flip side, business proposals go to potential clients from established businesses. They target external or new clients, partners, or funding agencies with a specific focus on:

• Addressing customer needs
• Solving customer problems
• Or seizing opportunities

Do you know how many types of businesses exist today? Two words: Too many!

Now, that implies there are many different types of business plans . But here’s a quick list of the most common types:

• Startup business plan: This plan describes the foundation of a new business with room to adjust as the company grows. It’s given to potential investors to ask for startup funding.
• Internal business plan: In this plan, company leaders communicate business goals, strategy, and performance. The aim is to keep the board and the team in sync regarding business objectives.
• Strategic business plan: This plan documents the framework required to keep long-term goals and company vision intact.
• Growth business plan: Also known as an expansion plan, this plan describes how a company is trying to grow and hence requires greater resources like more employees, funds, materials, etc.

Business proposal types can be broadly divided into two categories:

• Solicited business proposals: In this case, a prospective client requests the informational document from you directly or expects to receive it—implicating their interest in your products or services.
• Unsolicited business proposals: Here, no client requests the documents. Instead, you take the cold email approach and send your unsolicited proposals to people you think are prospective clients or partners.

Business Proposal and Planning Best Practices

It’s already challenging to overcome market entry barriers in saturated markets and persuade potential investors. Creating a compelling business proposal and plan shouldn’t be too!

Here’s how to go about it:

• Clearly define your business goals and objectives.
• Make sure you get your audience right. (Business plans and proposals have different audiences, remember?)
• Conduct in depth research and analysis.
• Use pictures along with words, such as visuals and statistics, to support your claims and projections.
• Pay attention to the writing style, structure, and tone depending on your audience and purpose.
• Use software like an AI business plan generator or proposal templates to save time and effort.
• Review and revise regularly.

Start creating effective business plans and proposals using Upmetrics

It’s okay if you were confused about the difference between a business plan and a proposal before today. You now know the distinction between the two lies in their purpose, components, structure, audience, and type.

While a business plan provides a thorough overview of the entire business and targets internal stakeholders, investors, and lenders, a business proposal focuses on specific projects or opportunities and targets external clients, partners, or funding agencies.

When you understand these differences and employ the best practices in creating both documents, your business can effectively communicate its vision, strategy, and value proposition, securing a solid spot in this competitive world.

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Frequently Asked Questions

What is the difference between a business plan and a business idea.

A business idea is a concept’s initial spark for a product, service, or opportunity. However, a business plan is a detailed document outlining how a business idea will be executed and managed.

How many pages is a business proposal?

A good proposal is 10-20 pages long. However, it can be longer based on the industry, buyer requirements, product or service type, the scale of buyer needs, and other aspects unique to the business.

What comes first, a business plan or business proposal?

The business plan comes first since it legitimizes a business idea. Then comes a proposal because it’s specific to a particular project or opportunity and not the business as a whole.

Do I actually need a business plan?

A business plan is a detailed roadmap for your entire venture. It helps you gain investments, beat competition, make sound decisions, communicate with stakeholders, and identify risks. So, yes, you need a business plan.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Difference Between a Business Plan & a Business Proposal

• Small Business
• Business Planning & Strategy
• Business Plans
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Why Create a Business Plan?

How to rescind a business letter, 6 types of business plans.

• How to Create a New Business Plan
• How to Conclude a Business Plan

A business plan and a business proposal are very different documents, with different purposes and goals. A business plan is a factual broad description of a company on the executive and operational level. A business proposal is a focused sales document intended to describe how a company will approach a project, state the value of the project to the client and solicit the client's business. A business plan is a written presentation of fact. A business proposal is a quote and call to action.

Reasons for a Business Plan

A business plan documents your vision for your business and how you intend to achieve that vision. It contains financial projections of what the business will cost to develop and operate plus an estimation of the revenues to be generated. Its purpose is to provide a reasonably detailed explanation of your business for use by potential investors, suppliers, prospective employees, accountants, attorneys and other people who need a quick but comprehensive understanding of what your company does and its potential for success. The primary reason for a business plan is to record and convey information.

Reasons for a Business Proposal

Proposals may be unsolicited business ideas presented to a potential customer or partner, or they may be answers to requests for proposal submitted to your company by a potential client. They are limited in scope to a particular project or need. A business proposal also generally has a specific audience. The primary reason for a business proposal is to solicit or develop a business opportunity.

Business Plan Structure

A business plan has three elements: description of the business model, the marketing model and financial projections. It consists of informative sections, including the executive summary, business description, marketing model, analysis of industry competition, build-out plan, operations plan, introduction of management, and a discussion of financial issues and projection of results. It is introduced by an executive summary, which can be a dense abstract or a longer marketing tool to attract interest in the business plan. The business plan is an informational document designed to factually display your company's operations and potential.

Business Proposal Structure

A business proposal written in response to a Request for Proposal (RFP) should follow the format requested in the RFP. Generally, this involves a quick description of your company's services and products that are relevant to the goals of the RFP, a reiteration of the scope of work, answers to specific questions posed in the RFP and a quote detailing materials, tools, labor, delivery and other elements of the cost of the project.

An unsolicited business proposal intended to create and develop a business opportunity follows essentially the same format but anticipates questions the potential client might have. A proposal is more of a marketing document, designed to convince the audience to do business by presenting a value proposition and a call to action.

• Entrepreneur: An Introduction to Business Plans
• Forbes: The Difference Between a Business Plan and Planning

Victoria Duff specializes in entrepreneurial subjects, drawing on her experience as an acclaimed start-up facilitator, venture catalyst and investor relations manager. Since 1995 she has written many articles for e-zines and was a regular columnist for "Digital Coast Reporter" and "Developments Magazine." She holds a Bachelor of Arts in public administration from the University of California at Berkeley.

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Difference Between a Business Plan and a Business Proposal

Table of contents

It’s natural to get confused between a business proposal and a business plan if you are planning to turn your idea into reality. While business proposals and plans may sound similar on the surface, they have differences — such as distinct purposes and formats. 

A business plan describes your business goals, strategies, and financial projections. A business proposal, on the other hand, proposes a specific solution to a problem or opportunity and helps you persuade the relevant stakeholder to invest in your business. 

However, writing a business proposal or a business plan can be challenging, especially if you are confused about their purpose. In this blog, we will explain the difference between a business plan and a business proposal and its major components.

Business Plan

A business plan tells the investors how you plan to ship your product to enough people to clock revenue. It’s about the strategies that will make you the first buck. 

A business plan keeps your team on the same page — you can use it as a guiding light. It can help you track the progress of your business, give you a roadmap, and help you make decisions about your business’s future.

Plus, it can be helpful when it comes to pitching your business idea to a third party, for example, when seeking a loan.

Components of a Business Plan

A business plan is majorly divided into three sections, which include an executive summary, a sales and marketing strategy, and a financial plan. 

An executive summary is a brief, clear, and compelling overview of your business. It is usually the first section of the document, and it contains the most important information, such as your strengths. 

These can be further broken down into the following sections:

• Description of products and services, including mission, vision, and objectives of the business
• Target market
• Competitive advantage
• Industry and Competitor Analysis
• Marketing strategy
• Operating plan
• Team structure and qualifications
• Internal business analysis
• Management introduction 
• Financial analysis
• Cash flow statement or sales forecast
• Break-even analysis

Business Proposal

A business proposal is a separate written document that outlines a specific business opportunity, project, or idea and presents it to potential clients. 

It intends to persuade them to take action, such as accepting a business deal or entering into a partnership, thereby helping you get new customers or partners. 

A business proposal should be customized to the needs and interests of the receiver. A generic proposal will rarely help you meet your business goals. 

At the same time, ensure your proposal is well-organized, persuasive, and creative. Check out these free business proposal templates to impress your clients. 

Solicited and Unsolicited Business Proposals

Proposals are solicited from you, or you send them on your initiative. 

You write a solicited proposal in response to a prospect’s or customer’s request for a product. They may ask you verbally, or they may issue a written request for proposals (RFP). A solicited business proposal contains a detailed description of the product, service, or solution that you offer to solve the customer's problem or need. It’s generally easier to write because you know what the customer wants or expects. 

But if you’re writing the proposal on your own, which is the case with unsolicited business proposals, then you’re convincing the receiver to work with you or buy from you. Such proposals are often challenging to write because you have to convince them they have a problem and you have a solution.

Components of a Business Proposal

The following are the key components of a business proposal :

• Executive summary
• Introduction
• Problem statement
• Scope of work
• Benefits of Return on Investment (ROI)
• Call to Action (CTA)

Business Plan vs. Business Proposal

While a business plan outlines your goals and explains how you will achieve them, a proposal sells your product to potential customers.

In the following table, we have summarized the main differences between a business plan and a business proposal:

Streamline the proposal creation process

To wrap up, a business proposal is a document that pitches your products or services to a potential client, while a business plan outlines your goals, strategies, and financial projections for your business. 

With business management software like Cone, you can easily streamline and automate your proposal creation while ensuring your proposals are bespoke and customized. Sign up for free and experience the seamless proposal creation process for yourself. While you’re at it, check out other business proposals and management resources we have for you.

Your current User-Agent string appears to be from an automated process, if this is incorrect, please click this link:

Project Plan Vs Project Management Plan

Fahad Usmani, PMP

January 6, 2024

A few months back, I attended a local PMI chapter seminar. This topic arose while conversing with other professionals: “Are project plan and project management plan the same?”

This discussion led us to some interesting discoveries, which I will share, along with my research on the topic.

During our conversation, we concluded that there was no standard difference between the project plan and the project management plan.

The organization you work for determines the difference. They may decide to stick with only one term, both terms may be used as synonyms for each other, or they can refer to different types of plans.

Let’s discuss these two plans in detail.

Project Plan

The project plan is also called a work plan in some organizations.

A project plan can simply be defined as a formal, approved document used to broadly guide the project and facilitate communication among the stakeholders . The project plan takes its objective from the project charter and the scope statement .

The project plan speaks in general, for example:

• Why was the project undertaken?
• What value will it add to the organization?
• What will the output or deliverables of the project be?
• Who will be involved in the project?
• What is the deadline?
• What are the project milestones ?
• What are the scope, budget, and schedule?
• What technology is going to be used to accomplish the objective?

Project Management Plan

The project management plan is a formal, approved document that guides you precisely on how the work of a project will be done.

For example:

• How will the project work be carried out?
• How will the scope be managed?
• How will you monitor and control the various project activities?
• How will you deliver the product and close the project?

A project management plan comprises many subsidiary plans, such as scope management, cost management, risk management , and procurement management plans.

The project management plan is a meta-plan of the project plan. It contains the plan that guides the project management team to complete the project successfully.

The Difference Between the Project Plan and Project Management Plan

Some of the differences between these two plans are as follows:

• The project plan describes the plan broadly with less attention to detail. It deals with high-level planning, while the project management plan uses every possible detail.
• The project plan deals with the “what” part of the project, while the project management plan deals with the “how.”
• The project plan is a visionary document, while the project management plan is executed to achieve the vision.
• The project plan gives you the vision to complete the project successfully, while the project management plan defines and develops the system to be used to complete the project successfully.
• These two terms differ for large projects but can be merged for smaller projects.

Please note that the PMBOK Guide does not differentiate between the project plan and the project management plan; therefore, this topic is not very important for the PMP exam . I have written this blog post because I thought it would be a good read for you, and you should now be able to differentiate these two terms if you ever encounter them.

A project plan and a project management plan can refer to the same thing or be different. In some organizations, you may see a distinction between these terms, and others will use them interchangeably. You should speak with your seniors to find out how the company uses these terms.

How about your organization? Do you differentiate, or is there no difference at all? Please share your experience through the comments section.

I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.

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23 Comments

Thanks for sharing really appreciate. If possible fo you have template or sample of what a High-Level Project Plan will look like

Hello Fahad. I am pmp professional and currently preparing for CCM. for me project management plan deals with the goals of the project within the organization objectives that’s aligned with the objectives of the organization and the program iwhich this project is part of. A project plan is dealing with safely constructing the project components to achieve the bigger picture( the project management plan)- project plan deals with the constructability of the project, safety, mobilization, commissioning, projects as built drawing and handover proceedures. its a contractor and CM at risk responsibility to execute construction plan while its the owner agent’s responsibility to execute the project management plan to make sure owner put his investment in the right spot. generally speaking prject plan is site specifi while management plan is organization specific.

Thanks Hatem for sharing.

Do’n you think the content of Project Plan as mentioned above similar to the content of Charter? If this is the case then why we are creating 02 separate documents i.e. Project Plan and charter?

The project charter is only one or two page document while the project plan is more detailed.

what is the difference between Project Management Plan & Statement of Work (SoW) ?

Project management plan is a detail plan about how are you going to accomplish the task. The project statement of work is a document which explains high level description of the deliverables of the project.

What is the difference between Project schedule and schedule baseline?

Project schedule is your performance and schedule baseline is what your performance should be.

how about Project Management Plan Vs Project Charter ? can u explain details?

Read about the project charter:

https://pmstudycircle.com/2012/05/project-charter-a-document-to-formally-authorize-the-project/

Who approves Project Management plan (PMP) ? Is it a PM or Sponsor or both? As PM prepares the PMP, is it sponsor who approves it?

Most of the times, sponsor is worried about deliverables not the plan. Usually the approved by the senior management of your company.

I agree with you to differentiate Project Plan and Project Management Plan. Project Plan is a high-level document which is usually prepared by a consultant who works for BOD or the company’s owner before a project manager is assigned to handle the next process of the project. Project Plan is sometimes called Project Execution Plan. Project Plan usually consist of strategy, policies, and other important information required by a project manager who will handle the project. Starting with reviewing the Project Plan, the project manager will prepare Project Charter dan Project Management Plan. That’s why Project Plan is not included in PMBOK.

I hope it might get included in a future version of the PMBOK Guide.

Hi Fahad, What is the difference project Management Plan and Project Document? Please explain with examples.

Thank you so much. Neil

Management plan help you run the project; for example, cost management plan, risk management plan, etc. While any document can be a project document such as risk register, stakeholder register, issue log, etc.

thanks for your explanation but i have a question. what is the relationship between project and planning? am waiting your answer thank youuu sooooooooo

To complete any project you develop the project plan.

Below blog posts will help you understand the concepts better:

https://pmstudycircle.com/2012/01/project-plan-vs-project-management-plan/

https://pmstudycircle.com/2012/03/what-are-the-project-and-operation-difference-between-them/

https://pmstudycircle.com/2012/03/project-management-vs-program-management-vs-portfolio-management/

Hi Fahad, Thanks for this. Is the project plan the same with project charter? Contractor call it as project plan while project owner call it as project charter?

Or would you please explain what is the Project Charter in the view of the contractor?

Thanks in advance.

No, project charter is not same as the project plan. Project plan is a detail description about how you’re going to complete your project. On the other hand, the project charter is a document which authorizes the project existence, and give the project manager authority to run the project. Project charter is consist of just one or two pages.

Visit below link to read about the project charter:

so the project plan is considered as statement of work (SOW) from contractors point of view?

Statement of work includes only job description. While the project management plan describe how you are going to achieve it.

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Difference Between Business Plan and Business Proposal

One of the most searched queries on Google is "business proposal vs business plan", and we are here to break the confusion.

April 13, 2023

What's Inside?

You are starting a new business, and you aren't sure what you need to do. You heard that you needed a business proposal and a business plan, but you weren't sure what's the difference between them.

You did some research and couldn't find what you are looking for... You decided to create both of them, but you need weeks to write and refine them.

Don't worry, we are here to remove this confusing process. Let's see what's the difference between them. You may, and probably do need both of them. But which one should be your priority?

The Difference Between a Business Plan and a Business Proposal

When you're starting a business, one of the most important things you'll need to do is create a business plan . This document will outline your company's goals and strategies for achieving them over the next five years.

A business proposal , on the other hand, is a sales document that you put together to pitch potential projects to clients. It's not the same as a business plan, and it usually includes cost quotes for potential projects.

The main difference between a business proposal and a business plan is that, while a business plan is informative, a business proposal is intended to showcase operations, goals, and potential.

Executive Summary

The executive summary of a business plan will include information about the company leadership structure or the introduction of management. Generally, business plans include an executive summary part while business plans don't.

We have seen some samples that use executive summaries but since the main goal is to close a deal. We suggest keeping them short and clean.

The business proposal format depends on whether the business is solicited or unsolicited . Details of products and services offered, the scope of work and responses to specific questions in an RFP are included in a business proposal.

A business plan documents the vision of a business and how it will be achieved. A business proposal offers comprehensive information for potential investors, suppliers, accountants, etc.

A proposal shows the external player what the company is all about and how it intends to carry out its project. Keep these differences in mind when you're putting together your next business presentation --you'll need to tailor your content accordingly!

What Are Business Plans?

A business plan is a document that outlines the business goals, strategies, and tactics a company will use to achieve those goals. The business plan also includes an overview of the company, its management team, the target market, and the products and services the company plans to offer.

It usually includes information about the company's products and services, target market, marketing plans , financial forecasts, and management team bios.

Here's a sample template to use while creating a detailed business plan.

What Is The Purpose of a Business Plan?

A business plan is a key document for any business. It lays out the goals and strategy of the business and helps to ensure that everyone involved in the business is on the same page. It can also be used as a tool to help secure funding from investors or banks.

A business plan is a document that outlines the strategy and goals of a company. It can be used as a planning tool , to track progress, or as a basis for making decisions . A well-written business plan provides a roadmap for the business , and it can help attract investors or partners.

There are many reasons to create a business plan. Some of the most common reasons include:

• To track progress - A business plan can help you track your progress and ensure that you are on track to achieve your goals.
• To make decisions - A business plan can provide guidance when making decisions about the future of your company.
• As a planning tool - A business plan can help you identify potential problems and solutions, and it can be used to forecast future growth.
• To attract investors or partners - A well-written business plan can help you attract investors or partners who share your vision for the company.

What is a business proposal?

A business proposal is a written document that offers a solution to a problem or a way to achieve a goal. It is often used to sell products or services to a potential customer. A business proposal must be well-written, clear, and concise in order to convince the reader to take the desired action.

A business proposal is a formal response sent to an RFP (request for proposals). It is a way for the seller to convince the buyer that their proposed solution is the right one in order to win business. Business proposals are meant to persuade a prospective client.

A business proposal typically consists of four main points: what are the challenges, how your solution solves the problems, why they should choose you over others, and the best pricing options available. The price is typically stated in the document. If a business is requesting proposals, they should be sent in their format. An RFP response should include specific details about the scope of work and the cost estimate.

Here's a sample template to use while creating a detailed business proposal.

Why do you need a business proposal?

A business proposal is a key part of the business development process . It is a document that outlines the business goals, strategies, and tactics that will be used to achieve those goals. A proposal is used to convince potential clients or partners that your business is the best option for them.

It's typically used to pitch an idea to a potential client or customer. A well-crafted proposal can help you win new business and close deals.

Your company might be expanding into a new market and need to propose a new product or service. Or, you might be approached by another company with an opportunity you'd like to explore. Maybe you've identified a gap in the market and want to propose a new product or service to fill it.

How To Prepare For a Business Proposal?

Well, we do have a comprehensive guide to business proposal creation with templates and examples, but if you need a more brief explanation, keep reading!

When preparing for a business proposal, it is important to do your research and understand the client's needs. You should also have a clear understanding of your own company's capabilities and what you can offer the client. Additionally, it is important to be well-organized and to have a strong pitch.

You should have a clear understanding of your target audience and what will appeal to them. You also need to have a good grasp of the competition and what they are offering. In addition, you should be familiar with the terms and conditions of any potential contracts that may be involved.

Your proposal should be neatly formatted and easy to read. It should also be free of grammatical errors and typos. Be sure to proofread your work carefully before submitting it.

Make sure you provide complete contact information, as well as an outline of your proposed solution or service. If possible, include testimonials from past clients who have been satisfied with your work.

Remember that you are offering a valuable service that can help the reader achieve their goals. Believe in yourself and your ability to succeed, and you will be able to deliver a winning proposal every time

How To Write a Business Proposal?

When writing a business proposal, make sure to follow this brief outline:

- Introduce yourself and your company

- Outline the proposal's purpose

- Explain the problem that you're trying to solve

- Describe your solution

- Explain the benefits of your solution

- List your qualifications

- Request a meeting

It should include an overview of the product or service, information about the company proposing it, financial projections, and terms and conditions. A well-crafted proposal can help your company win new contracts and increase sales.

Here's another sample template you can use while creating a business proposal:

Business Proposal Template Checklist

Here's a story of our customer John who joined the Decktopus community 2 years ago.

John had been working in sales for years, but he had never worked in a company that sold products. When he was hired by a new startup, he was excited about starting making sales and increasing profits. However, he soon realized that there was no one in the company who knew how to sell. The founder of the company told him that he would need to create a presentation template to share with the other reps.

John wasn't sure where to start. He read article after article, trying to gather information about what made a good business proposal. After weeks of research, he finally created a template that he felt confident in sharing with his fellow reps. He was excited to see how it would help them increase sales and profits.

This is the outline we gathered while our support team helped him along the way:

-Executive Summary

-Problem/Opportunity Statement

-Business Plan

- Marketing Plan

-Financial Plan

Types Of Business Proposals

An unsolicited proposal is one in which the company offers a product or service to a potential customer who has not solicited it. Here's an unsolicited proposal template .

A solicited proposal is one in which the company responds to a request for proposal (RFP) from a potential customer. Here's a solicited proposal template .

A proposal to bid is a document that a company submits to a potential customer in response to an RFP.

The purpose of the proposal to bid is to persuade the potential customer that the bidder's product or service is the best option among those being considered.

Here's a proposal to bid template .

Business Plan Structure

A business plan has three main sections: the executive summary, a description of the business model, and financial projections.

The first section is an introduction that should be no more than one or two pages long. It should include a brief overview of your company, its products and services, and how you plan to make money.

The second section, a description of the business model, provides details about your company's competitive landscape, industry trends, and how you plan to reach your target market.

The marketing model is an informative section that should include detailed information about the industry competition and build-out plan. This part of the document can be several pages long and will help investors understand your company's place in the market.

While all three sections are important, remember that potential investors will likely focus on the financial projections most closely when deciding whether to invest in your company. The financial projections section is important because it shows potential investors how you expect your business to grow over time.

A well-crafted business plan can help convince potential investors to put their money into your company.

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Other Resources:

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Discover the best AI pitch deck generators to streamline creating decks for investors. Ideal for entrepreneurs and startups, these AI tools help craft the perfect pitch deck effortlessly.

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Business Plan vs Proposal: An In-Depth Comparison

Explore the distinguishing factors and circumstances that make a Business Plan or Business Proposal more fitting for driving success and growth in your enterprise. Gain insights into the purpose, audience, and strategic value of each document, and learn when it’s best to utilize a Business Plan or pitch with a Business Proposal.

Table of Contents

What is the Main Difference Between a Business Plan and a Business Proposal?

The main difference between a Business Plan and a Business Proposal is that a business plan is a formal document that outlines the company’s goals, strategies, market analysis, financial needs, and projections for the future, aimed at providing a roadmap for the business’s success and often used to secure funding or guide the management team. On the other hand, a business proposal is a tailored document created to pitch a specific product, service, or solution to a potential client or partner, detailing how the business can fulfill a particular need or solve a specific problem for the recipient, often with the goal of initiating a transaction or project.

Understanding Business Plans and Business Proposals

A Business Plan is a comprehensive document that outlines a company’s objectives, strategies, market analysis, financial forecasts, and operational structures. It primarily serves as an internal roadmap for the company’s strategic direction and helps to attract investors by showcasing the company’s potential for growth and profit. Business plans are often developed during the foundational stages of a company and updated periodically to guide the company through different stages of growth.

A Business Proposal , on the other hand, is a targeted pitch provided to a specific client or partner to convince them to do business with you. Unlike a business plan, a business proposal is not a broad overview of the entire company. Instead, it is a customized suggestion that outlines how your business can solve a particular problem or meet a specific need of the prospective client. The proposal highlights the benefits of selecting your company’s products or services and typically includes pricing, terms, and conditions for a potential engagement or project.

Key Differences between a Business Plan and a Business Proposal

• Purpose : A business plan is primarily used for strategic planning and securing investment, while a business proposal is aimed at winning a specific contract or project.
• Audience : The audience for a business plan is typically potential investors, stakeholders, or company management. On the other hand, the business proposal is directed towards a specific client or partner.
• Focus : A business plan covers the entire company’s goals and operations, whereas a business proposal targets a specific offering for the client.
• Details : While business plans include detailed financial projections and market analysis, business proposals focus on how your company can meet the client’s needs and the costs associated with your proposition.
• Frequency : Business plans are created infrequently, often at startup or significant growth stages, while business proposals are generated as needed when pursuing new business opportunities.
• Structure : Business plans have a standard structure, including an executive summary, company overview, products/services, and financials, whereas proposals are tailored to the client’s request.
• Standardization : Business plans tend to follow a similar format from one to the next, while proposals are highly customized to align with the potential client’s requirements.
• Duration : The time horizon in a business plan can span several years, reflecting long-term planning, but a business proposal typically concerns the timeframe for a specific project or service offering.

Key Similarities between a Business Plan and a Business Proposal

• Strategic Elements : Both documents outline strategic approaches, whether for the company as a whole or a specific project.
• Research : Thorough market research is essential in creating either a business plan or a business proposal to ensure feasibility and competitiveness .
• Objective Setting : Each document includes clear objectives that the company wishes to achieve, be it long-term company goals or objectives of a contract.
• Persuasive Nature : Both are meant to be persuasive documents that convince the reader to invest in the company or to hire the company for services/products.
• Professional Presentation : A business plan and a business proposal should both be presented in a professional manner, well-organized and free of errors, to make the best impression.
• Financial Information : Financial aspects are crucial in both; while a business plan may have more comprehensive financial projections, a proposal should still outline costs and pricing models.
• Action Plan : Action steps or milestones are outlined in both to guide the intended strategy into practical steps or to give the prospective client a clear timeline for project completion.

Advantages of a Business Plan Over a Business Proposal

• Clarity and focus : A business plan provides a clear roadmap for your company , detailing your objectives, strategies, and financial projections. It enables you to stay focused on your long-term goals and the steps required to reach them.
• Risk assessment : It allows for a thorough risk assessment, helping you foresee potential challenges and devise strategies to mitigate them.
• Investor attraction : A well-crafted business plan is essential for attracting investors and lenders as it showcases the viability and profitability of your business idea.
• Strategic planning : The business plan acts as a strategic planning tool, helping you to align your short-term and long-term goals with the overall vision of the business.
• Operational guidance : It provides detailed operational guidance, outlining day-to-day activities, management responsibilities, and the organizational structure.
• Performance tracking : By setting benchmarks and performance metrics, a business plan makes it easier to track progress and measure success over time.
• Market analysis : A business plan includes an extensive market analysis, offering insights into your target market, competition, and market trends, which are crucial for making informed decisions.

Disadvantages of a Business Plan Compared to a Business Proposal

• Inflexibility : A business plan can be quite rigid, with a focus on long-term strategies and projections that might not adapt well to rapid changes in the market.
• Time-consuming : Preparing a comprehensive business plan requires a significant amount of time and effort, potentially diverting resources from immediate business opportunities.
• Outdated information : A business plan might quickly become outdated if the market or the company’s circumstances change, requiring frequent revisions.
• Cost : The production of a business plan can be costly, especially if it necessitates the expertise of consultants or outside advisers.
• Overemphasis on planning : There’s a risk of over-planning and under-executing, where too much time is spent on creating the perfect business plan instead of taking action.
• Complexity : A business plan’s complexity might be intimidating or overwhelming for small business owners who may prefer the simplicity and directness of a business proposal.
• Less tailored : While a business proposal is often customized to the needs and interests of a specific client or investor, a business plan is a broader document that may not address specific concerns or questions from potential stakeholders.

Advantages of a Business Proposal Over a Business Plan

• Focus on Specificity : A business proposal is usually tailored to a specific client or project, which means it’s highly targeted and practical. This specificity allows the business to directly address the client’s needs and provide a customized solution that a general business plan cannot offer.
• Rapid Execution : Proposals tend to be shorter and more concise, which allows for quicker evaluation and a faster start on the project. Businesses can get to work immediately after the proposal is accepted, shortening the time from planning to action.
• Persuasive Element : A business proposal aims to persuade a particular client or investor to buy into the idea, product, or service. This persuasive nature means that proposals often focus on benefits and competitive advantages, potentially leading to a higher success rate in securing funding or partnership.
• Adaptability : Since a proposal is typically for a particular client or project, it can be easily adjusted for different opportunities or audiences without reworking an entire business plan. This adaptability makes it more versatile in responding to market changes.
• Ease of Preparation : A business proposal can be less daunting to create than a full-blown business plan as it generally does not require as much market analysis and financial forecasting. It allows the business to focus on the immediate opportunity rather than extensive strategic planning.
• Potential for Immediate Feedback : When you present a business proposal, you often do so in a setting that allows for immediate questions and feedback. This gives you the chance to quickly address concerns, modify your offer, and improve the chances of an agreement.
• Enhanced Relationship Building : Crafting a proposal requires understanding the client’s needs and objectives deeply, often leading to stronger client-business relationships. This rapport can be beneficial for both future business and referrals.

Disadvantages of a Business Proposal When Compared to a Business Plan

• Lack of Long-term Vision : A business proposal is often focused on the immediate project and may not outline the long-term strategic direction of the company as comprehensively as a business plan would.
• Limited Scope : Proposals generally address specific aspects of a business’s operations rather than providing a complete picture. This narrow focus might overlook broader opportunities or challenges that a business plan would typically account for.
• Missed Detail : While business proposals are succinct, the brevity can sometimes result in the omission of important details that would be standard in a business plan, such as thorough market analysis or full financial projections.
• Potential Dependency : If a company relies too much on individual proposals for direction, it might find itself without a cohesive strategy which a business plan is designed to provide. This can lead to a reactive rather than proactive business approach.
• Risk of Assuming Knowledge : Proposals may assume that the reader has a certain level of understanding about the company or product, which can be a risky assumption if the reader is new to the business or its offerings.
• Need for Customization : Each business proposal needs to be customized for its intended audience, which can be resource-intensive when dealing with multiple prospects or regular tender submissions.
• Limited Investor Appeal : Investors often prefer to understand the comprehensive strategy and the broader financial implications of a business, something a focused business proposal may fail to communicate in comparison to a detailed business plan.

Situations When a Business Plan Is Preferable to a Business Proposal

• Establishing Clear Direction : When a new business is just starting out, laying out a comprehensive business plan is crucial for establishing a clear direction and objectives for the business. It serves as a roadmap for where the owners want to take the company and how they plan to get there.
• Securing Funding from Investors : A business plan is generally required for entrepreneurs seeking investment or loans. It presents detailed financial projections, market analysis, and business strategies that are essential to convince investors or banks to finance the venture.
• Long-term Strategic Planning : For setting long-term goals and defining the vision of the business, a business plan is more appropriate because it takes a broader view of the business’s place in the market and its growth strategy over the coming years.
• Developing Comprehensive Financial Projections : A business plan includes detailed financial forecasts that cover multiple years. This level of detail is necessary for stakeholders to understand the financial trajectory and potential of the company .

Situations When a Business Proposal Is Preferable to a Business Plan

• Responding to Specific Client Requests : A business proposal is tailored to the needs and specifications of a potential client or partner. When a business wants to offer solutions to another company’s problem, a proposal is best suited for outlining how it will meet those specific needs.
• Competitive Bidding Situations : When entering a bid to win a contract, a business proposal is more advantageous as it focuses on why the business is the best fit for the project, detailing its approach, unique benefits, and value proposition.
• Establishing Partnership Agreements : If a company is looking to form a collaboration or partnership, a business proposal lays out the terms and benefits of the partnership, which is more specific than the broader scope of a business plan.
• Project-driven Opportunities : For businesses that operate on a project-by-project basis, such as construction or consulting, business proposals are the better tool. They provide prospective clients with a detailed breakdown of the objectives, strategies, and costs for each unique project.

What components should be included in a business plan?

• Executive Summary : An overview of the business and its strategy
• Company Description : Legal establishment, history, start-up plans, etc.
• Market Analysis : Industry, market and competitor research
• Organization and Management : Business and management structure
• Service or Product Line : Description of what you’re selling
• Marketing and Sales Strategies : How you’ll attract and retain customers
• Funding Request : Your current funding requirements
• Financial Projections : Balance sheets, cash flow statements, and income statement forecasts
• Appendix : An optional section that includes résumés, permits, and other legal documents

How often should a business plan be revised?

A business plan should be reviewed and revised at least annually, or more frequently if there are significant changes in the market, the business model, or if new challenges or opportunities arise .

In what scenarios is a business proposal unnecessary?

A business proposal may not be necessary when transactions are straightforward and do not require detailed explanations, such as standard retail sales or when there is already an established relationship with the client based on trust and familiarity.

Can a business proposal lead to a long-term relationship with a client?

Absolutely. If a proposal leads to a successful project and client satisfaction, it can serve as the foundation for a long-term business relationship and future projects or collaborations.

What is an unsolicited business proposal?

An unsolicited business proposal is one that is offered without an explicit request from the potential client. It often reflects the proposer’s initiative to identify potential needs of the recipient and offer solutions to unaddressed challenges.

How can you make a business proposal stand out?

To make a business proposal stand out, it should clearly articulate the unique value proposition, be tailored to the client’s specific needs, contain compelling and concise content, and demonstrate a deep understanding of the client’s industry and challenges.

Are there any legal considerations when drafting a business proposal?

Yes, a business proposal should ensure that all claims and statements are truthful and that no proprietary or confidential information is disclosed without permission. Additionally, the terms and conditions should be clearly outlined to avoid any misunderstandings, and if accepted, it can be the basis for a legally binding contract.

Business Plan vs Proposal Summary

The decision between a Business Plan and a Business Proposal hinges on the specific requirements, goals, and context of your enterprise. A Business Plan lays the foundation for your company’s long-term strategy, risk mitigation, and operational guidance, with an expansive view of the business’s aims and the means to attract investors. Conversely, a Business Proposal concentrates on the immediacy of client-specific projects, presenting a tailored solution with a persuasive edge to secure contracts and foster client relationships swiftly.

About The Author

Hidayat Rizvi

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Project management vs business management explained

Running a business requires both project management and business management skills, but they’re actually two different fields of management. The leadership roles within these fields come with different responsibilities.

In this article, you’ll learn about the significant differences between project management vs business management, and how they each contribute to achieving a business’s objectives and goals. We’ll also share how you can leverage many of monday.com’s project features to optimize your projects and manage your business better.

Project management vs business management: what’s the difference?

Ultimately, the key difference between project management and business management lies in the nature of the work.

Project management refers to the successful execution of one or several projects within limitations such as time, scope, cost, and quality. The project manager in question focuses on tasks such as coordinating resources, project planning, allocating the budget, acting as an intermediary between clients, and keeping the team motivated and on track to complete the project with optimal results.

Business management refers to the oversight of business operations in a specific area to ensure everything is running smoothly. This could include sales, marketing, manufacturing, and more.

Let’s take a closer look at what project management vs business management looks like side-by-side:

How does a project manager differ from a business manager?

A project manager focuses on tasks such as coordinating resources, project planning, allocating a budget, acting as an intermediary between clients, and motivating the team to complete a project with optimal results.

A business manager, on the other hand, focuses on daily operational tasks such as sales, marketing, manufacturing, and so on.

Let’s take a look at what the roles of a project manager and business manager look like side-by-side:

How to use project management to support positive business management

When you consider project management vs business management, you’re essentially comparing apples and oranges. While the necessary tasks in running a small business are to those of running a corporation, both will use some essential management skills to allocate resources, direct staff, and market their products.

For example, as a business grows, several operational aspects can lose efficacy. Signs of this can include:

• Missed deadlines
• Prioritization mistakes
• Conflicts regarding resources and effort
• Task planning and execution issues
• A lack of required information
• Poor communication and mediation with clients

A general business manager will often find themselves overwhelmed as operations grow and objectives change. Project management can help by implementing a structured framework by which a specific goal is achieved, which works by maximizing resources and productivity.

Generally speaking, project management gives businesses greater control over their operations by managing them on a smaller scale.

In other words, things like product or service quality, customer service, marketing, and more can be optimized by having a project manager prioritize specific tasks and assign teams to them. Not only does this free up time for business managers to focus on operational goals and productivity, it streamlines business growth by properly delegating tasks and resources — all within a specific timeframe.

monday.com features to optimize your project and business management

If you want to successfully implement project management strategies to complement your business management and overall operational goals, you’ll need a platform that will allow you to prioritize and streamline all of your tasks, tools, documents, and more.

monday.com can help you drive growth by enabling you to create effective workflows that bring your teams together to reach project goals more efficiently.

monday.com Work OS allows you to manage multiple projects from one place. From strategic planning to project management, these features help you and your team drive your projects home:

• Gantt charts: Create a project road map that keeps track of a project’s scope, schedule, milestones, dependencies, resources, and metrics.
• Project dashboards: Get access to real-time and high-level data for your project’s goals, budget, scheduling, resources, and more to make better-informed decisions in seconds.
• Workload View: Manage your team resources, assign tasks, and adapt to changing priorities.
• Milestone calendars: Mark and manage significant checkpoints in a project’s timeline and measure and share progress with clients and team members.
• Advanced integrations: Connect to your most important tools like Google Drive, Slack, and Salesforce to align teams across your business.
• Project templates: Choose from a variety of pre-designed templates from our template center that you can customize for every new project.

monday.com is also made me to be used by project managers and business managers alike. For example, you can use the Portfolio Management Template to manage multiple project dashboards and workflows.

What is the next role after a project manager?

After gaining experience and becoming a senior project manager, you have several options: You can become a chief operating officer (COO) of a company, management consultant, program manager, or even a portfolio manager.

Is PMO a stressful job?

Yes, project management can be very stressful. PMOs are responsible for on-time delivery of projects that are also on budget, meeting client expectations, and handling hefty to-do lists.

What is the career path of a project manager?

After gaining experience in the field, a project manager will typically be on track to senior- or executive-level positions in project management. This includes project management office (PMO) and director or chief operating officer (COO) positions and more.

Master project and business workflows with monday.com 

Strategic project management can complement your business management processes by zeroing in on priority tasks and ensuring they’re completed efficiently. This will give your business management team more time to focus on operational growth and other overall business objectives. It also ensures product and service objectives are delivered on time and surpass client expectations.

You can set up the solid processes and analysis you need for both project management and business management using monday.com.

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The Difference Between a Plan and a Strategy

Setting strategy should push your organization outside its comfort zone.

• Apple Podcasts

Planning is comforting but it’s a terrible way to make strategy, says Roger Martin , former dean of the Rotman School of Management at the University of Toronto. In contrast, setting strategy should push your organization outside its comfort zone – if you’re doing it right.

“Plans typically have to do with the resources you’re going to spend. Those are more comfortable because you control them,” Martin explains. “A strategy, on the other hand, specifies a competitive outcome that you wish to achieve, which involves customers wanting your product or service. The tricky thing about that is that you don’t control them.”

Key topics include: strategic planning, competitive strategy, risk management, innovation, and travel and tourism industry.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

• Watch the original HBR Quick Study episode: A Plan Is Not a Strategy (June 2022)
• Find more episodes of the HBR Quick Study series on YouTube .
• Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org

ANNOUNCER: HBR On Strategy .

HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. Today, we bring you a conversation with one of the world’s leading thinkers on strategy – Roger Martin, former dean of the Rotman School of Management at the University of Toronto.  In this episode, you’ll learn the difference between strategy and planning AND how to escape the common traps of strategic planning. Martin says starting with a plan is comforting to many of us, but it’s a terrible way to make strategy. His episode, called “A Plan is Not A Strategy,” originally aired as part of the HBR Quick Study video series in June 2022. Here it is.

ROGER MARTIN: This thing called planning has been around for a long, long time. People would plan out the activities they’re going to engage in. More recently, has been a discipline called strategy. People have put those two things together to call something strategic planning. Unfortunately, those things are not the same, strategy and planning. So,  just putting them together and calling it strategic planning doesn’t help. What most strategic planning is in the world of business has nothing to do with strategy. It’s got the word, but it’s not. It’s a set of activities that the company says it’s going to do.

We’re going to improve customer experience. We’re going to open this new plant. We’re going to start a new talent development program. A whole list of them, and they all sound good, but the results of all of those are not going to make the company happy because they didn’t have a strategy. So, what’s a strategy? A strategy is an integrative set of choices that positions you on a playing field of your choice in a way that you win. So, there’s a theory. Strategy has a theory. Here’s why we should be on this playing field, not this other one, and here’s how, on that playing field, we’re going to be better than anybody else at serving the customers on that playing field.  That theory has to be coherent. It has to be doable. You have to be able to translate that into actions for it to be a great strategy. Planning does not have to have any such coherence, and it typically is what people in manufacturing want– the few things they want, to build a new plant, and the marketing people want to launch a new brand, and the talent people want to hire more people– that tends to be a list that has no internal coherence to it and no specification of a way that that is going to accomplish collectively some goal for the company.

See, planning is quite comforting. Plans typically have to do with the resources you’re going to spend. So we’re going to build a plan. We’re going to hire some people. We’re going to launch a new product.  Those are all things that are on the cost side of businesses. Who controls your costs? Who’s the customer of your costs? The answer is, you are. You decide how many square feet to lease, how many raw materials to buy, how many people to hire.  Those are more comfortable because you control them. A strategy, on the other hand, specifies an outcome, a competitive outcome that you wish to achieve, which involves customers wanting your product or service enough that they will buy enough of it to make the profitability that you’d like to make. The tricky thing about that is that you don’t control them. You might wish you could, but you can’t. They decide, not you. That’s a harder trick. So that means putting yourself out and saying, here’s what we believe will happen. We can’t prove it in advance, we can’t guarantee it, but this is what we want to have happen and that we believe will happen. It’s much easier to say, I’ll build a factory, I will hire more people, et cetera, than I will have customers end up liking our offering more than those of competitors.

The tricky thing about planning is that while you’re planning, chances are at least one competitor is figuring out how to win. When US air carriers were busily planning what routes to fly and da-da-da, there was this little company in Texas called Southwest that had a strategy for winning. And at first, that looked largely irrelevant because it was tiny. What Southwest Airlines was aiming for was an outcome.

What they wanted to be is a substitute for Greyhound, a way more convenient way to get around at a price that wasn’t extraordinarily much greater than a Greyhound bus. Southwest said, everybody else is flying hub and spoke. They have hubs, and they fly hub and spoke. We’re going to fly point to point so that we don’t have aircraft waiting on the ground because you only make money when you’re in the air.

We’re going to only fly 737s, one kind of aircraft, so that our gates are set up for those, our systems are set up for those, our training, our simulations are set up. We’re not going to offer meals on the flights because we’re going to specialize in short flights. We’re not going to book through travel agents. We’re going to encourage people to book online because that’s less expensive for everybody and more convenient. So, their strategy ended up having a substantially lower cost than any of the major carriers so that they could offer substantially lower prices.

Because it had a way of winning, it got bigger and then bigger and then bigger and then bigger and bigger and bigger and bigger until it flies the most passenger seat miles in America. The major carriers were not trying to win against one another. They were all playing to play, as I say. They were playing to participate, maybe buy more planes, get more gates, maybe grow some, not having a theory of here’s how we could be better than our competitors.

And that was fine until somebody came along and said, here’s a way to be better than everybody else for this segment. And so that segment then goes. It’s gone. And the main playing to play players have to share a smaller pie that’s left over after Southwest takes whatever share it wants.

If you’re trying to escape this planning trap, this comfort trap of doing something that’s comfortable but not good for you, how do you start? The most important thing to recognize is that strategy will have angst associated with it. It’ll make you feel somewhat nervous because as a manager, chances are you’ve been taught you should do things that you can prove in advance.

You can’t prove in advance that your strategy will succeed. You can look at a plan and say, well, all of these things are doable. Let’s just do those because they’re within our control. But they won’t add up to much. In strategy, you have to say, if our theory is right about what we can do and how the market will react, this will position us in an excellent way.

Just accept the fact that you can’t be perfect on that, and you can’t know for sure. And that is not being a bad manager. That is being a great leader because you’re giving your organization the chance to do something great. The second thing I do is say, lay out the logic of your strategy clearly. What would have to be true about ourselves, about the industry, about competition, about customers for this strategy to work?

Why do you do that? It’s because you can then watch the world unfold. And if something that you say is in the logic that would have to be true for this to work is not working out quite the way you hoped, it’ll allow you to tweak your strategy. And strategy is a journey, what you want to have as a mechanism for tweaking it, honing it, and refining it so it gets better and better as you go along.

Another thing that helps with strategy is not letting it get overcomplicated. It’s great if you can write your strategy on a single page. Here’s where we’re choosing to play. Here’s how we’re choosing to win. Here are the capabilities we need to have in place.

Here are the management systems. And that’s why it’s going to achieve this goal, this aspiration that we have. Then you lay out the logic, what must be true for that all to work out the way we hope. Go do it, and watch and tweak as you go along.

That may feel somewhat more worry-making, angst-making than planning, but I would tell you that if you plan, that’s a way to guarantee losing. If you do strategy, it gives you the best possible chance of winning.

HANNAH BATES: That was Roger Martin — Professor Emeritus and former Dean of the Rotman School of Management at the University of Toronto. That video is part of the HBR Quick Study YouTube series – short takes on big topics in business and work. It was edited and produced by Scott LaPierre, with video and animation by Dave Di Iulio, Elie Honein, and Alex Belser. More HBR Quick Study videos can be found on YouTube or HBR.org. HBR On Strategy will be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. In the meantime, we have another curated feed that you should check out: HBR On Leadership . And visit us any time at HBR.org, where you can subscribe to Harvard Business Review and explore articles, videos, case studies, books, and of course, podcasts, that will help you manage yourself, your teams, and your career. This episode of HBR On Strategy was produced by Anne Saini, and me, Hannah Bates. The show was created by Anne Saini, Ian Fox, and me. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Anne Bartholomew, and you – our listener. See you next week.

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The Difference Between a Business Plan and a Business Proposal

A business plan and a business proposal are very different documents. If you do an Internet search for how to write a business proposal, the results are predominantly focused on writing a business plan. Nevertheless, the two documents have different purposes and goals. A business plan is a factual broad description of a company and its prospects. A business proposal is a focused sales document intended to describe how a company will approach a project, state the value of the project to the client, and solicit the client's business. A business plan is a written presentation of facts. A business proposal is a quote and call to action.

Reasons for a Business Plan

A business plan documents your vision for your business and how you intend to achieve that vision. It contains financial projections of what the business will cost to develop and operate plus an estimation of the revenues to be generated. Its purpose is to provide a reasonably detailed explanation of your business for use by potential investors, suppliers, prospective employees, accountants, attorneys, and other people who need a quick but comprehensive understanding of what your company does and its potential for success. The primary reason for a business plan is to record and convey information.

Reasons for a Business Proposal

Proposals may be unsolicited business ideas presented to a potential customer or partner, or they may be answers to requests for proposals submitted to your company by a potential client. They are limited in scope to a particular project or need. A business proposal also generally has a specific audience. The primary reason for a business proposal is to solicit or develop a business opportunity.

Business Plan Structure

A business plan has three elements: description of the business model , the marketing model, and financial projections. It consists of informative sections, including the executive summary, business description, marketing model, analysis of industry competition, build-out plan, operations plan, the introduction of management, and a discussion of financial issues and projection of results. It is introduced by an executive summary, which can be a dense abstract or a longer marketing tool to attract interest in the business plan. The business plan is an informational document designed to factually display your company's operations and potential.

Business Proposal Structure

A business proposal is written in response to an RFP--A request for proposal (RFP) is a document that solicits proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service or valuable asset, to potential suppliers to submit business proposals --should follow the format requested in the RFP.

Generally, this involves a quick description of your company's services and products that are relevant to the goals of the RFP, a reiteration of the scope of work, answers to specific questions posed in the RFP and a quote detailing materials, tools, labor, delivery and other elements of the cost of the project. An unsolicited business proposal intended to create and develop a business opportunity follows essentially the same format but anticipates questions the potential client might have. A proposal is more of a marketing document, designed to convince the audience to do business by presenting a value proposition and a call to action.

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27 comments on “ the difference between a business plan and a business proposal ”.

Great work! the topic is really an interesting one, well a business plan is something organizing your work like with QuickBooks tool hub, and the business proposal is the opposite of the latter one. For better account, management one should download the QuickBooks tool hub. keep it up the great work. looking towards your next blog.

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Yoruba angel

i have never found it broken down as easy as this before. Thank you. it’s very helpful

Amazing job! The best and most informative article explicitly calling out the purpose and goals of a Business Plan and a Business Proposal.

I really found it helpful. Thank you

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Very helpful and informative ,bunch of thanks

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I appreciate your thought there with that one, because of course I agree, but I’m confused with why you thought it should be added. Don’t you think plan vs. actual is included with point 3, “It’s specific. You can track results against plan,” and then point 8 “It has to bring the planning process with it, meaning regular review and course correction?”

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Project Planning v. Project Management

In this video, Jennifer Bridges discusses why project planning is not the same as project management—and why you need to know the difference.

In Review: Project Planning Isn’t Project Management

Jennifer discussed the definitions of project planning as compared to project management . The PMBOK® Guide, produced by the Project Management Institute (PMI) defines five processes that comprise the lifecycle of a project: initiation, planning, executing, monitoring & controlling and closing.

Planning your project is just one another phase in project management. We dig into more detail in our Ultimate Guide to Project Planning , but know now that the planning phase is made up of a whole host of other activities, such as:

• Developing the project plan
• Resource planning
• Scope Definition
• Cost Estimation

And that’s just to name a few! Each of those activities are practically fields of study in and of themselves and discreet skills that the project manager uses when managing a project. That’s why most project managers advise using a project planning software to keep track of all the planning phase activities.

Hopefully that clarifies. To learn more about the roles of a project manager, check out Jennifer’s video The Project Manager & Team Roles .

Thanks for watching!

Transcription

Hello, I’m Jennifer Whitt, Director of ProjectManager.

Hello and welcome to our whiteboard session today on why project planning isn’t project management. Have you ever wondered the difference? Well, it’s two terms that often get misused in the marketplace, and we wanted to take the time to distinguish the difference.

If you look on the board here, we have a diagram and it’s actually referenced from “The Project Management Body of Knowledge,” the Fourth Edition by PMI, the Project Management Institute. They have a great diagram there that distinguishes the two this way.

If you look at the diagram, we have the start of the project and the end of the project and a lot of things going on in between. There are five process groups identified by the Project Management Institute. There are the initiating processes, there are planning processes, executing processes, monitoring and controlling processes, and the closing processes. That’s five project management process groups here that make up the whole life cycle of the project.

As you can see, the project planning process group is only one of five. Here’s what happens in the planning process or the planning phase of the project. Here are some sample project planning activities. Developing the project management plan, so the project management plan includes all of the plans that identify how the project is run, when it’s run, by who, who does what, when, and where for each of the planning documents. In here also the project manager collects requirements, helps define the scope, creates a work breakdown structure, develops a schedule, estimates costs, defines the budget, and many other activities that go on in the planning process.

Then what happens in the project management process, so this is the whole thing. Sample project management activities include the application of knowledge, skills, tools, techniques to the project activities to meet the project requirements. You can actually see what the difference is. Many times you may see project managers who do all the planning for the project, and they actually sit those project plans on the desk and not use them. As you can see, the difference of this, the management part, the project management is actually utilizing these planning documents to execute, monitor and control, and actually close out the project.

You can see the difference between the two. You need both. Project planning isn’t project management.

If you need a tool to help you plan your project and manage it as well, then sign up for our software now at ProjectManager.com.

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Business Education

Business Model vs Business Plan: Main Differences

19 Aug, 2024

Distinguishing business models from plans is crucial for success. Models outline value creation and profit generation, while plans detail strategies, research, and projections. Together, they form the blueprint for long-term success and operational execution.

What is a Business Model?

A business model is the backbone of any company, detailing the plan for how it intends to operate, generate revenue , and make a profit. It's less about the nitty-gritty details found in a business plan and more about the overall concept of how the business creates value for customers and captures value for itself. Essentially, a company's business model describes the way the company sells its products or services and how it establishes and maintains customer relationships to achieve financial success.

At its core, a business model involves identifying the value proposition of the company, which is what makes its products or services attractive to customers . It also outlines the customer segments targeted, the key activities and resources needed to operate, and the channels through which it reaches its customer base. Importantly, it details the revenue streams the business will pursue to generate income and the cost structure that outlines the expenses involved.

What is a Business Plan?

A business plan is a detailed roadmap for building a successful business. Unlike the broader strokes of a business model that describes how a company creates and delivers value, business plans are a comprehensive document that outlines the specifics of business strategy. They serve as a guide to what the business intends to do and how it plans to do it and are often used to attract investors and secure financing.

The heart of a business plan includes an executive summary, which is a snapshot of the business and its plans for success. This section briefly explains the business idea, key objectives, and how the business will achieve its goals. It's followed by detailed sections that outline the business's structure, market analysis, value proposition, marketing and sales strategies, financial projections, and more.

Key components of a business plan include the business model canvas, which lays out the key resources and activities needed to operate the business. It also delves into the cost structure, detailing all the expenses the business will face. A thorough market analysis assesses the existing market, target customers, and competitive landscape. This helps in formulating a solid marketing strategy and establishing a unique value proposition that sets the business apart from its competitors.

Financial planning is also crucial, with sections dedicated to expected financial performance, revenue generation, and a detailed financial forecast. This helps potential investors and business owners understand the financial viability and growth potential of the business.

Types of Business Models

There are many types of business models, each defining a unique way a company creates value for its customers and generates profits. Understanding different business models helps owners and entrepreneurs select the right approach for their business concept and target market. Here are some common business models:

• Subscription Services : This model offers customers regular, ongoing access to products or services in exchange for a recurring fee. Popular among digital services and software, it provides steady revenue and customer loyalty.
• Freemium Model : Common in the tech industry, the freemium model offers basic services for free while charging for advanced features. It attracts a large user base quickly, with the potential to convert a portion to paid versions.
• Product Sales : This traditional model involves selling goods directly to customers. It can range from retail operations to online stores, focusing on producing, marketing, and selling physical items.
• Service-Based Model : Professional firms and contractors often use this model, providing specialized services like consulting, design, or maintenance. Success relies on expertise, customer service, and reputation.
• On-Demand Model : Popularized by companies like Uber, this model provides goods or services directly on customer request, often facilitated through a digital platform or app.
• E-commerce : With the rise of the internet, many businesses operate online, selling products or services directly through their website or online marketplaces.
• Affiliate Marketing : This model pays external parties to generate traffic or leads to the company's products and services. It's a way to extend market reach without directly handling sales.
• Advertising Model : Media companies and websites often use this model, providing content or services free of charge, but generating revenue through advertisements.

Understanding these business models helps a company decide the best strategy for market entry and growth. Each model has its own set of operational details, target market strategies, and financial implications. Selecting the right business model is crucial for a company's success, aligning with its core values, customer needs, and long-term goals. As the business evolves, it may adopt multiple models or shift strategies to adapt to changing market conditions or customer feedback.

Business Model vs Business Plan: Key Differences

Understanding the difference between a business model and a business plan is crucial for anyone diving into the world of entrepreneurship or looking to scale their business. Here are the key differences:

• Business Model : A business model is an overarching concept that explains how a company creates, delivers, and captures value. It's about the company's core strategy for generating profits and includes elements like value propositions, customer segments, and revenue streams.
• Business Plan : A business plan is a detailed document that outlines the specific strategies, goals, and actions of a business. It's a comprehensive plan that includes market analysis, financial projections, and operational details aimed at guiding the business's trajectory and attracting investors.
• Business Model : Generally broader and more conceptual, a business model provides a high-level view of the business's approach to the market. It's about the fundamental structure of how the business operates and competes.
• Business Plan : More detailed and tactical, a business plan lays out the step-by-step plan for executing the business model. It includes in-depth information on planning, marketing, finances, and more.
• Business Model : Business models often need to be flexible and adaptive, especially in early stages or in rapidly changing markets. They can evolve as the business learns more about its customers and competition.
• Business Plan : While it's a detailed guide, the business plan is also a living document but typically requires formal revisions and updates as the business grows and market conditions change.
• Business Model : Primarily used internally to guide the company's strategy, but it can also be used to succinctly explain the business to external stakeholders and potential partners .
• Business Plan : Often intended for external stakeholders, especially potential investors, lenders, or partners who want a detailed understanding of the business's approach and potential for success.
• Business Model : Includes the business model canvas or similar frameworks detailing the company's value proposition, customer segments, channels, customer relationships, revenue streams, key activities, key resources, key partners, and cost structure.
• Business Plan : Includes an executive summary, company description, market analysis, organization and management structure, product or service line, marketing and sales strategy, funding request, financial projections, and appendices.

While a business model provides a conceptual framework for understanding how the company creates value and money, the business plan offers a detailed guide on how to implement these concepts and achieve specific business goals. Both are vital, but they serve different purposes and address different needs within the business's lifecycle.

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Project Management

Project vs. program vs. portfolio management: decoding the big picture.

August 15, 2024

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Although project, program, and portfolio management are commonly used in the workplace, the distinctions between them can be unclear.

While the terms sound identical, and some err on the side of using them interchangeably, they represent distinct levels of planning, organization, and execution. Think of them as different interrelated layers of management.

Understanding the nuanced differences between project vs. program vs. portfolio management will help strategize resource allocation, achieve long- and short-term goals, and maximize value delivery.

On that note, here’s a rundown of these terms, their differences, and how they contribute to overall organizational success.

Strategic objectives of project management

Roles and responsibilities of a project manager, skills and qualifications required for project management, strategic objectives of program management, roles and responsibilities of a program manager, skills and qualifications required for program management, strategic objectives of portfolio management, roles and responsibilities of a portfolio manager, skills and qualifications required for portfolio management, key differences between project, program, and portfolio management, clickup: managing projects to portfolios (and everything in-between), project, portfolio, or program—manage it like a pro with clickup.

What Is Project Management?

A project is a temporary endeavor undertaken to convert a brilliant idea into a viable, unique, and successful product, service, or result that aligns with the business vision. Project management involves coordinating resources and activities while managing stakeholders to deliver successful project outcomes.

To do this, project managers make use of software solutions for planning, organizing, executing, monitoring, controlling, and reporting on tasks within a project. At the same time, project managers are also responsible for managing stakeholder interests and expectations and cultivating strong relationships.

The Project Management Institute (PMI) defines project management as “the application of knowledge, skills, tools, and techniques to project activities to meet project requirements.”  

The key objectives of project management include:

• Submitting project deliverables on time, as per specifications, within budget, and within scope
• Maximizing resource utilization and ensuring resource availability
• Anticipating, identifying, assessing, and mitigating project risks
• Maximizing return on investment (ROI) while meeting or exceeding customer expectations
• Cultivating a culture of teamwork and collaboration among key stakeholders
• Ensuring adherence to best practices and quality standards while also employing project management hacks
• Improving project management practices, processes, and methodologies continuously

A project manager is typically involved in:

• Defining and documenting project scope , goals, constraints, and deliverables
• Developing and managing project plans , schedules, and budgets and adhering to these commitments
• Assembling and leading project teams , assigning key roles , responsibilities, and task ownership
• Allocating and managing project resources such as talent, budget, or time
• Forecasting, identifying, assessing, and managing project risks and preparing proactive risk mitigation plans
• Facilitating seamless communication and collaboration among internal and external stakeholders
• Tracking and controlling project progress and carrying out necessary interventions
• Ensuring that the project deliverables and outcomes are as per prescribed standards
• Conducting periodic project evaluations and identifying areas of improvement
• Closing a project formally by finalizing project deliverables, conducting project evaluation, and orchestrating handovers after successful completion

Here are some skills and qualifications that make you a good project manager :

• Leadership and interpersonal skills to inspire, motivate, and lead teams
• Strong written and verbal communication skills for conveying information and managing conflicts
• Organization and problem-solving for managing project complexities, innovating solutions, and adapting to change
• Time management to meet deadlines, prioritize tasks, and allocate resources
• Risk management and mitigation to navigate unforeseen challenges
• Technical skills to leverage project management platforms and underlying project management templates
• Certifications , such as PMP or PRINCE2, from the Project Management Institute

What Is Program Management?

Program management is project management at a higher level, where you focus on interrelated projects instead of a specific product or service. These are driven towards organizational change.

Program management calls for the centralized management of a group of related projects to achieve strategic organizational objectives. As with project management, the manager (a program manager, in this case) is responsible for planning, organizing, executing, monitoring, controlling, and closing a collection of projects—aka programs.

However, they do it at a larger scale while working on multiple projects across cross-functional teams and varied stakeholders. Program managers are also responsible for grouping similar or related projects with the same strategic goal to deliver better results and profitability for larger business goals.

Program management helps achieve strategic objectives as listed below:

• Aligning program goals with broader business strategy, goals, and objectives
• Maintaining coordination between different project teams and facilitating collaboration or knowledge-sharing
• Optimizing resource distribution and allocation across multiple projects to maximize ROI
• Coordinating and managing project interdependencies and relationships between related projects managed within the program
• Identifying, measuring, and delivering the expected value and benefits of a program vis-à-vis strategic business objectives
• Recognizing, managing, and mitigating potential risks proactively to ensure business sustainability
• Handling change management in processes, structures, and cultures in a coordinated manner to minimize disruptions
• Streamlining processes and eliminating redundancies in all the projects to improve operational efficiency
• Managing stakeholder expectations and improving relationships for higher satisfaction levels
• Measuring and controlling program performance

Program managers are largely tasked with the following items of work:

• Defining program vision and strategy and developing a realistic roadmap for strategic execution
• Building a program governance structure by assigning roles and responsibilities to support project managers in decision-making
• Illustrating the desired outcomes and correlating these with organizational impact
• Prioritizing and selecting the high-impact projects that contribute to meeting the program objectives
• Coordinating dependencies and interrelationships between projects and identifying any potential conflicts
• Allocating resources across multiple projects and programs to prevent resource competition and maximize value delivery
• Leading organizational changes originating from the program and ensuring execution success
• Measuring program performance against established key performance indicators and introducing adjustments as needed

To become a successful program manager, you’ll need the following skills and qualifications:

• Demonstrable success in managing multiple projects with varying complexities
• Certifications like PMP or PgMP, along with experience in a specific industry or domain
• Proficiency in program management tools and hands-on knowledge of program management templates
• Proven leadership experience to lead cross-functional teams and get them to work together
• Sharp managerial skills to take charge of stakeholders, risks, change, time, and finances
• Problem-solving and decision-making to resolve complex issues and make informed decisions
• Hands-on experience with change management to drive organizational change

What Is Portfolio Management?

When you zoom out further, programs give way to project portfolios—a collection of programs. 

Project portfolio management is the centralized end-to-end management of programs and projects. 

Simply put, portfolio management is essentially program and project management—just on a larger scale. It involves selecting, prioritizing, and controlling all the ongoing projects and programs and aligning them to achieve the strategic objectives of the organization as a whole. Portfolio managers have to work with cross-functional teams, manage risks at the portfolio levels, allocate resources like budget and timeline, and maximize the desired outcome.

Portfolio managers work to achieve the following objectives:

• Aligning the portfolio with the overarching business goals and objectives
• Optimizing resource allocation across projects and programs to maintain resource availability and uptime
• Managing project portfolios to balance risk and return for maximum profitability
• Selecting and funding high-priority, high-impact projects or programs across various verticals and business units
• Measuring portfolio performance using KPIs to assess portfolio health and carry out necessary adjustments
• Fostering a culture of innovation by encouraging and rewarding the development of new products, services, processes, or business models
• Handling stakeholder expectations and communicating the portfolio’s value and progress to those involved
• Making data-driven decisions and streamlining the portfolio life cycle throughout its various stages—initiation, planning, execution, monitoring, control, and closure

In the project portfolio management approach, a portfolio manager is tasked with the following roles and responsibilities:

• Ensuring alignment between portfolio and business objectives
• Designing a portfolio framework for managing resource requirements, mitigating constraints, and ensuring timely delivery
• Developing a comprehensive roadmap for portfolio implementation and monitoring it via a project portfolio dashboard
• Prioritizing projects and making strategic investment decisions based on anticipated returns and outcomes in relation to business goals
• Identifying, assessing, and mitigating risks at the portfolio level
• Measuring portfolio performance against prescribed values of KPIs and ensuring optimum portfolio health
• Building strong relationships with key stakeholders, obtaining their support, and communicating key details to parties concerned
• Establishing and maintaining standardized portfolio governance frameworks and processes and developing project portfolio management templates
• Steering and managing major changes to the portfolio as a function of the changing business or market conditions

Successful portfolio managers possess the following skills and qualifications for effective portfolio management:

• Ability to work on project portfolio management software and deploy its various features
• Strategic thinking to align portfolio and organizational goals
• Financial acumen for prudent budget management
• Analytical capabilities to measure portfolio health and performance
• Negotiation, communication, and interpersonal skills to build cohesive cross-functional teams
• Experience applying project management methodologies in different industries and sectors
• Proven leadership experience, especially while leading cross-functional teams
• Certifications like PMP or PgMP

Despite the close interconnection, project, program, and portfolio management follow distinct and well-defined levels of planning and execution. One can view them as a set of Russian dolls with project management nested inside program management, which is enclosed within portfolio management.

To better understand the correlation and difference, let’s examine the key characteristics of project, program, and portfolio management across different factors.

Generally, a project would have a well-defined scope with specific deliverables and outcomes. Given that programs are a collection of interrelated or similar projects contributing to a shared goal, their scope is wider than that of a project. Product portfolios represent the broadest scope as they encompass all projects and programs within the organization.

Project management solely focuses on the specific deliverables within permissible constraints, as envisioned in the project scope document. Program management is concerned with achieving strategic business objectives by coordinating a group of related projects. The portfolio level represents a holistic view of the organizational strategy and returns in relation to the overall investments.

Project managers work with clear start and end dates, and the duration between these endpoints is typically short. Program timelines feature a medium-term horizon that spans multiple projects. In contrast, portfolio management requires long-term commitment as it aligns with the organization’s strategic plan.

Value delivery

Project management delivers a tangible result, product, or service. Program management delivers business benefits that allow businesses to evolve and adapt in response to a change. Portfolio managers are responsible for sustainable growth and business development as they drive shareholder value through optimized investments and resource allocation.

Organizational level

Project management exists at the operational level and focuses on tactical execution. Program managers bridge the gap between operational and strategic levels by aligning projects with organizational objectives. On the other hand, portfolio management operates at the strategic level since it involves decisions about investments and resource allocation.

The well-defined boundaries, deliverables, and limitations make project management less complex. Program managers deal with moderate complexity due to the interplay of various projects. Portfolio managers operate at the highest level of complexity as they consider the entire organization’s strategic planning and project management.

Resource allocation

When it comes to managing resources, project managers primarily work on allocating dedicated resources to specific project activities. Program managers orchestrate resource sharing across multiple projects within the program. The portfolio manager is involved in a more strategic planning of resources as they aim to optimize resource utilization across the organization while maximizing the ROI.

To recap, here is a table representing the key differences between project, program, and portfolio management:

It’s no secret that ClickUp is a project management powerhouse. ClickUp for Project Managers offers project teams a comprehensive set of features to do everything—from preparing a work breakdown structure to project closure and handover. 

However, did you know that you can also use ClickUp for managing Portfolios and programs?

Yes! ClickUp is versatile and 100% customizable, so you can organize a particular project, track transformation programs, and analyze portfolio performance.

For instance, ClickUp Spaces is a centralized hub for managing your projects, programs, and portfolios. Such a flexible architecture offers a high-level view of all the ongoing activities so that nothing slips through the cracks. You have granular control to zoom in and zoom out when required.

Similarly, you get multiple Views on ClickUp that allow you to visualize your work your way. You can use the List view to see details of individual projects, define relationships between projects within a program using Mind Maps , or track projects and programs using Kanban Boards . 

Most importantly, ClickUp helps you get started with project, program, and portfolio management with its ready-to-use templates . Here are some top templates for every management need:

• ClickUp Project Management Template : Oversee and manage projects effectively by breaking down tasks, allocating resources, and tracking progress. This customizable Workspace template is an asset for all project managers

• ClickUp Program Management Template : Program managers can use this to visualize project dependencies, handle program-level resources, and monitor program performance against strategic goals

• ClickUp Portfolio Management Template : Empower portfolio managers with a high-level view of all activities. This template allows prioritizing initiatives, balancing resource allocation, and ensuring strategic alignment throughout the portfolio

• ClickUp Project Management Portfolio Template : This hybrid template allows project managers to manage projects within the context of a broader portfolio. It allows them to connect projects and programs to larger organizational goals

While the differences between project, program, and portfolio management may be nuanced, understanding this is crucial for business success. Equipped with this knowledge, you’ll be in a position to define clearer roles, responsibilities, and objectives at different levels. It also facilitates resource optimization, risk management, and more. This results in smoother collaboration, organizational alignment, and desired outcomes—all of which make businesses successful.

Specialized project portfolio management software like ClickUp can help you manage strategic initiatives across all three levels.

Sign up for ClickUp to experience how you can manage projects, programs, and portfolios in a single place!

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Planning Costs for Networks

After completing this lesson, you will be able to plan costs for networks .

Cost Planning for Projects

Cost planning in projects and networks.

You can plan costs for a project in the SAP Project System (PS) based on work breakdown structure (WBS) elements and/or network activities.

This lesson focuses on cost planning using activities. Some customers use networks without assigned WBS elements. However, most customers use networks and activities assigned to WBS elements. Planned costs are aggregated from activities to superior WBS elements.

A benefit of the network costing method is that it can be copied to a new project and, if parts of the project are moved, cost planning is moved automatically along with the activities. In addition, planning is done by means of cost elements and is period-based.

Network Costing

James and linda discuss costing in networks.

James is a project planner at Hybrid Machinery. Linda is the project controller. They discuss the costing process in a network.

Costing in Networks

When you plan dates and resources in network activities, the system can automatically determine the corresponding planned costs as a result of network costing.

Planned costs are determined for the following objects:

• Activity inputs for internally processed activities (internal activity)
• Primary costs for externally processed activities and service activities (external service)
• Primary costs for general costs activities
• Primary costs for material components

Activity elements are calculated in the same way as activities. Overhead costs are calculated according to the configuration of the network.

You can use network costing in the following ways:

• While saving the network
• With the specific network costing ( CJ9K transaction)

Costing of networks is also based on cost elements. Planned costs are distributed to periods according to the network schedule.

Plan Costs for Networks

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• Definition and characteristics
• Pros and cons

Townhouse ownership and costs

Who should consider buying a townhouse, what is a townhouse understanding this unique housing option.

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• A townhouse is a type of home that shares at least one wall with an adjacent dwelling.
• Townhouses can provide both the amenities of city living and the privacy of owning a single-family home.
• But they aren't a good fit for everyone. If you need more space or want to avoid an HOA, you might prefer a different type of home.

A townhouse can offer the best of both worlds when living in an urban environment — you get the proximity to the city and all its amenities, plus the freedom and space that comes with owning a single-family home. 

But buying a townhouse can mean different things depending on where you live and the community you're thinking about buying in. Let's take a closer look at what exactly a townhouse is and who this type of home could be a good fit for.

Definition and characteristics of a townhouse

What makes a townhouse unique.

The term "townhouse" can be used to describe a variety of different property types and styles. But its main distinguishing feature is that it's a home that shares at least one wall with an adjacent home.

Common architectural features of townhouses

Townhouses often have multiple stories and can be tall but narrow. They may have a small backyard. In big cities with high population density, townhouses are typically built in rows along the city's streets, with homeowners sharing a wall on both sides of their homes.

You can find townhouses in suburban areas, too, but they often look a little different. Where population density is lower, properties labeled "townhouses" may share a wall with just one other home and may only be one or two stories high. They often also have bigger yards and larger footprints compared to the townhouses you'll find in cities.

Differences between townhouses, condos, and single-family homes

Townhouses are often single-family homes, though in some cases, they can be condos. Confused? Let's define some things to clarify.

A single-family home is a dwelling that houses one family or household and has its own utilities and HVAC systems. Though the term "single-family home" is often used to refer to detached houses that stand alone, a townhouse is considered a single-family home as long as it's separated from adjacent units with a ground-to-roof wall, according to the U.S. Census Bureau .

Condos can come in many different forms, since "condominium" actually refers to a type of ownership. With condos, you only own the interior walls of your unit and everything within those walls. Everything else is co-owned by all the owners within the condo association. So, it's possible for a townhouse to be set up as a condo.

Townhouse HOAs

Many townhouses are part of homeowners associations, or HOAs. In neighborhoods that are governed by HOAs, homeowners have to pay a regular fee that covers the maintenance and repair of common areas. They also often have rules that the homeowners within the HOA have to follow, such as what types of changes can be made to the exterior of your home or how tall your grass can be.

Pros and cons of living in a townhouse

Advantages of living in a townhouse.

Owning a townhouse may be more achievable for first-time homebuyers compared to a detached home. Because townhouses typically have smaller footprints, they can be more affordable (though if you're buying in a major city in a sought-after neighborhood, you can expect townhouses to command top dollar). A smaller townhouse can also be easier for new homeowners when it comes to maintenance, especially if the HOA takes care of some of the exterior upkeep.

If you're looking for city living but want a little more of your own space, a townhouse could be a better fit compared to an apartment-style condo or co-op.

"People who value their privacy love townhouses," says Guy Hobson, a real estate agent with Coldwell Banker Warburg . "They come and go without the eyes of building staff and neighbors. The private garden comes in handy as a place to be outside without having to leave your property."

Potential drawbacks of owning a townhouse

"Townhouses are typically multiple floors and don't always have an elevator, so it is lots of up and down stairs," says Hobson. If climbing stairs every day isn't for you, a townhouse might not be the best fit.

Hobson also notes that these homes can be "natural light challenged" since they tend to be relatively narrow, with no side windows. 

Because you're sharing at least one wall with your neighbors, townhouses can be somewhat noisy. If you're worried about overhearing your neighbors as they go about their daily business (or having them overhear you), you might prefer a detached dwelling.

You should also consider whether you want to live in a community with an HOA. Not everyone likes HOAs since they can be expensive, and some HOAs have strict rules dictating what members can and can't do with the homes they own.

Be sure to get any townhouse you're thinking about purchasing inspected, especially if it's an older home.

"Historic houses can sometimes have real, hidden issues that can be costly down the line if not spotted by the inspector," Hobson says.

Typical costs associated with owning a townhouse

Owning a townhome is similar to owning any other type of home. If you use a mortgage to purchase the property, you'll make a monthly mortgage payment . Your monthly payment amount will be determined by how much you borrow and your mortgage rate . 

You'll also pay property taxes and homeowners insurance premiums. If you have a mortgage, your lender will typically include those costs in your monthly payment.

Homeowners insurance on a townhouse may be slightly cheaper than insurance for a freestanding home, depending on the size of the townhouse and its building materials. If your townhouse is a condo, you may only need insurance for the inside of the home if the condo association's insurance covers the exterior. This could be more affordable than a standard insurance policy for a single-family home.

Homeowners association (HOA) fees

HOA fees vary quite a bit; some homeowners may pay just $100 a month, while high-end communities can charge more than $1,000 a month. You can't skip out on this fee, so make sure you can afford it before you buy in a neighborhood with an HOA.

Shared responsibilities with neighbors

If you own a townhouse, you may need to collaborate with your neighbors from time to time on certain repairs. This is particularly an issue when it comes to shared roofs.

If the townhouse roof needs to be repaired or replaced, it generally makes more sense to have the entire job completed at one time. But that means you'll need to work with your neighbors to agree on how to get the job done and how to share costs. 

A townhouse can be a good fit for lots of homebuyers, but townhouses near city centers can be a particularly good fit for young professionals and smaller households. Being near amenities and public transportation while also having your own backyard is one of the benefits of townhouses that you won't often get with other types of housing. 

If you have a larger family or a lot of kids, a city townhouse could feel cramped compared to a detached home. But families might like townhouse-style living in less dense areas of the city or the suburbs, where units may be more spacious and affordable. Retirees may also like living in these types of townhouse communities, particularly in ones where the HOA takes care of most of the maintenance. 

What is a townhouse FAQs

You can't compare townhouses and condos because they're two separate concepts. Townhouses are a type of dwelling, while a condo refers to how a property is owned. When you own a condo, you own your individual unit, and everything else, including the land the condos sit on, is typically shared by the owners within the condo association. So a townhouse can be a condo.

Townhouses can be cheaper than freestanding single-family homes since they're often smaller. But they aren't always cheaper, especially if you're comparing townhouses in the middle of major cities to single-family houses in a cheaper nearby suburb. 

Whether you own the land in a townhouse depends on how ownership is structured. If a townhouse is a condo, you might share ownership of the land with other owners in your condo association. But if it's a single-family home on its own parcel of land, you likely own the land your home sits on. 

Maintenance responsibilities in a townhouse depend on whether you have an HOA and what the HOA is responsible for. Often, townhouse owners are responsible for their own exterior and interior maintenance, though some HOAs may provide services like lawn mowing or snow shoveling.

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Trump is putting mass deportations at the heart of his campaign. Some Republicans are worried

FILE - A member of the Texas delegation holds a sign during the Republican National Convention July 17, 2024, in Milwaukee. (AP Photo/Matt Rourke, File)

FILE - Republican presidential candidate former President Donald Trump speaks at a campaign rally March 16, 2024, in Vandalia, Ohio. (AP Photo/Jeff Dean, File)

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WASHINGTON (AP) — “Mass Deportation Now!” declared the signs at the Republican National Convention, giving a full embrace to Donald Trump’s pledge to expel millions of migrants in the largest deportation program in American history.

Some Republicans aren’t quite ready for that.

Lauren B. Peña, a Republican activist from Texas, said that hearing Trump’s calls for mass deportations, as well as terms like “illegals” and “invasion” thrown around at the convention, made her feel uncomfortable. Like some Republicans in Congress who have advanced balanced approaches to immigration, she hopes Trump is just blustering.

“He’s not meaning to go and deport every family that crosses the border, he means deport the criminals and the sex offenders,” Peña said.

But Trump and his advisers have other plans. He is putting immigration at the heart of his campaign to retake the White House and pushing the Republican Party towards a bellicose strategy that hearkens back to the 1950s when former President Dwight D. Eisenhower launched a deportation policy known by a racial slur — “Operation Wetback.”

Trump, when pressed for specifics on his plan in an interview with Time Magazine this year, suggested he would use the National Guard, and possibly even the military, to target between 15 million and 20 million people — though the government estimated in 2022 there were 11 million migrants living in the U.S. without permanent legal permission.

His plans have raised the stakes of this year’s election beyond fortifying the southern border, a longtime conservative priority, to the question of whether America should make a fundamental change in its approach to immigration.

After the southern border saw a historic number of crossings during the Biden administration, Democrats have also moved rightward on the issue , often leading with promises of border security before talking about relief for the immigrants who are already in the country.

And as the November election approaches, both parties are trying to reach voters like Peña, 33. Latino voters could be pivotal in many swing states.

Trump won 35% of Hispanic voters in 2020, according to AP VoteCast , and support for stronger border enforcement measures has grown among Hispanic voters. But an AP analysis of two consecutive polls conducted in June by the AP-NORC Center for Public Affairs Research shows that about half of Hispanic Americans have a somewhat or very unfavorable view of Trump.

Still, Peña, who described herself as a multiracial Hispanic person, has become a new and enthusiastic recruit for the GOP. She was drawn to Trump after seeing people debilitated by drugs in the public housing complex where she lives in Austin. She feels that government programs have failed low-income people and that the recent migration surge has put a pinch on public assistance like food stamps.

But Peña said she also feels concern when her fellow Republicans discuss ideas like barring children who don’t have permanent legal status from public schooling.

“Being Hispanic, it’s a difficult topic,” she said. “I feel like we need to give these people a chance.”

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Still, GOP lawmakers have largely embraced Trump’s plans. “It’s needed,” House Speaker Mike Johnson , R-La., said at a July interview at the conservative Hudson Institute.

Some, however, have shown tacit skepticism by suggesting more modest goals.

Sen. James Lankford , an Oklahoma Republican, pointed to over 1 million people who have already received a final order of removal from an immigration judge and said, “There’s a difference between those that are in the process right now and those that are finished with the process.”

Lankford, who negotiated a bipartisan border package that Trump helped defeat earlier this year, added that it would be a “huge” task both logistically and financially just to target that group.

Other Republicans, including Floridians Sen. Marco Rubio and Rep. Mario Diaz Balart, suggested Trump in the White House would prioritize migrants with criminal backgrounds.

Indeed, Trump entered office in 2016 with similar promises of mass deportation but only succeeded in deporting about 1.5 million people.

This time, though, there’s a plan.

Trump has worked closely with Stephen Miller, a former top aide who is expected to take a senior role in the White House if Trump wins. Miller describes a Trump administration that will work with “utter determination” to accomplish two goals: “Seal the border. Deport all the illegals.”

To accomplish that, Trump would revive travel bans from countries deemed undesirable, such as majority-Muslim countries. He would launch a sweeping operation by deputizing the National Guard to round up immigrants, hold them in massive camps and put them on deportation flights before they could make legal appeals.

Beyond that, Trump has also pledged to end birthright citizenship — a 125-year-old right in the U.S. And several of his top advisers have laid out a sweeping policy vision through the Heritage Foundation’s Project 2025 that would choke off other forms of legal migration.

The Trump administration, under those plans, could also grind to a halt temporary programs for over 1 million migrants, including recipients of the Deferred Action for Childhood Arrivals program, Ukrainians and Afghans who fled recent conflicts as well as others who receive temporary protection due to unrest in their home country.

The policies would have far-reaching disruptions in major industries like housing and agriculture, including in key battleground states.

“If the 75,000-plus immigrants who perform the hardest of work in Wisconsin’s dairy and agriculture were gone tomorrow, the state economy would tank,” said Jorge Franco, the CEO of the Hispanic Chamber of Commerce of Wisconsin.

Rep. Maria Elvira Salazar, a Florida Republican who has pushed legislation that would allow a path to citizenship for longtime residents, argued that large-scale deportations were now necessary because of recent surges in border crossings under President Joe Biden. But she also hoped that Trump could see the difference between recent arrivals and longtime residents.

“There is a group of congresspeople that will make sure that the new administration understands it because there’s another aspect: the business community,” she said. “The developers in construction … and the farmers, what are they going to say? They need hands.”

Meanwhile, Democrats feel that Trump’s threats are now motivating Latino voters.

“The mass deportation put a lot of people on high alert,” said María Teresa Kumar, the CEO of Voto Latino, a leading voter registration organization that is backing Democrat Kamala Harris .

Like many other groups aligned with Harris, Voto Latino has seen an outpouring of interest since she rose to the top of the Democratic ticket. Kumar said the organization has registered nearly 36,000 voters in the weeks since Biden left the race — almost matching its tally from the first six months of the year.

In a heavily Latino House district on the southern tip of Texas, Democratic Rep. Vicente Gonzalez said voters want to see better management of the border, but at the same time, many also have friends or family members who don’t have their immigration documentation in order.

“Much more could be done, in terms of good policy, that would help control surges at the border,” Gonzalez said. “But mass deportation, it just gives people heartburn.”

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How Democrats learned to love Project 2025

Tamara Keith

How Dems learned to love Project 2025

The Democratic National Committee projects images on Trump International Hotel in Chicago on Aug. 18, 2024 ahead of the party's convention this week. Jeff Schear/Getty Images hide caption

CHICAGO—When Democrats arrived on Sunday night for their party’s national convention, they were greeted with a special message projected onto the exterior of the Trump International Hotel and Tower.

It seems like Project 2025 is everywhere. But what is it?

“Project 2025 HQ.”

It was another sign of how the Democratic Party has worked to co-opt and weaponize a conservative action plan for Trump’s second term as a rallying cry and organizing tool for their supporters. The plan is playing a prominent role in the speeches and programming at the Democratic National Convention this week.

Nearly a year ago, Democrats began working to raise awareness of Project 2025 , an obscure document written by conservatives and for conservatives, to make it into a household name.

North Carolina voter Ina Schuner printed out Project 2025 and put it in a massive three-ring binder so she could study it. Tamara Keith/NPR hide caption

How Project 2025 entered the mainstream

The message reached North Carolina voter Ina Schuner, who had voted Republican her entire adult life until former President Donald Trump came on the political scene.

Earlier this year, she printed out the entire document and put it in a massive three-ring binder. It took more than a ream of paper.

“This is it,” Schuner said, pulling the binder out from the back seat of her SUV. “It’s very thick as you can see, 900 pages.”

“This is the destruction of democracy,” she said. “They literally wrote it down.”

The Heritage Foundation's Project 2025 booth at the National Conservative Conference in Washington, D.C., on July 8, 2024. DOMINIC GWINN/AFP hide caption

TikTok explainers played a major role

Project 2025 was produced by the Heritage Foundation, with contributions from former Trump administration officials. It includes plans for everything from cutting off access to medication abortion to “deconstructing the administrative state” by replacing tens of thousands civil servants with political appointees.

The fact that regular voters like Schuner know about it is a triumph for Democrats, who have been working to inject it into the American political bloodstream.

Schuner isn’t sure where she first heard about it. But she thinks it may have been TikTok, where there are thousands of explainer videos.

@splashofteal There is so much to unpack #Project2025 #greenscreen ♬ original sound - SplashofTeal

Harris campaign communications director Michael Tyler says back in the spring, the campaign noticed online conversations bubbling up organically, and saw a chance to make Project 2025 a shorthand for all things Trump.

“They're not necessarily going to go and Google every single policy proposal, but you say, ‘Hey: google Project 2025:’ that is a very easy way for folks to dig in and understand, writ large, the threat that Trump poses to our economy, our democracy, and our way of life,” Tyler said.

Taraji P. Henson speaks onstage during the 2024 BET Awards on June 30, 2024 in Los Angeles. Paras Griffin/Getty Images hide caption

Trump disavowed Project 2025. That spurred more interest

Then on June 30, Taraji P. Henson hosted the BET Awards, and told viewers to google it.

“They are attacking our most vulnerable citizens. The Project 2025 plan is not a game. Look it up!” Henson said.

And, look it up they did. The campaign even created a website for people to land on if they searched it.

Project 2025's director steps down, but the think tank says work will go on

Then, former President Donald Trump added rocket fuel by disowning the plan.

“I have no idea what it is,” Trump said in an interview with Fox News.

“It’s a group of extremely conservative people got together and wrote up a wish list of things, many of which I disagree with entirely. They’re too severe.”

An exterior view of The Heritage Foundation building on July 30, 2024 in Washington, DC. Andrew Harnik/Getty Images hide caption

Trump hasn’t been clear about which parts he supports and what he thinks is too extreme. But Democratic strategist Jesse Ferguson said the denials aren’t working.

“There’s a wise phrase that describes how voters saw Donald Trump’s approach to Project 2025: he who denied it, supplied it,” Ferguson said.

Back in May, the Democratic-aligned polling group Navigator found fewer than a quarter of people knew what Project 2025 was, Ferguson said. But now, 59% of people know what it is. The overwhelming majority view it unfavorably and most associate it with Trump.

“This plan has escaped from being simply a policy white paper in Washington into a household brand and a well-known blueprint,” Ferguson said.

Minnesota Gov. Tim Walz speaks at a press conference on July 17, 2024 in Milwaukee, Wis., about Project 2025 and Republican policies on abortion. Jim Vondruska/Getty Images hide caption

Now Project 2025 is part of Harris' stump speech

And it is now a regular part of Vice President Harris’s stump speech. As Harris toured swing states with her running mate, Gov. Tim Walz, she used Project 2025 to contrast Democratic values against those of Trump.

“Donald Trump has a different plan: just look at his Project 2025 agenda,” Harris said on Aug. 10 in Las Vegas, drawing a chorus of boos from the audience. “I keep saying, ‘I can't believe they put that in writing,’” Harris said, prompting laughter.

Heritage has been drafting plans for Republican presidents since the time of Ronald Reagan. But they’ve never before entered the mainstream, said Frank Luntz, a pollster who spent most of his career on GOP messaging.

“The Democrats were successful in defining and demonizing Project 2025 before anyone even knew what it was,” Luntz said.

NPR’s Alejandra Marquez Janse and Jordan-Marie Smith contributed to this story.

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