BONUS CHAPTER: – Are you in the process of raising capital or seeking sponsorship for your business projects and you need a sample business proposal template? Then below is an in-depth guide on how to write a compelling fundraising proposal without paying a dime to a consultant.
One of the skills every entrepreneur should have is the ability to write compelling business funding proposals. Without it, you will find it very hard to raise funds for your business from external sources that require proposal submissions.
In today’s competitive business environment, getting loans and grants, and sealing merger and acquisition deals is becoming increasingly difficult. Yet, many businesses need funds from these financing options in order to stay afloat. Many loan and grant proposals are written by business owners every day, but only well-prepared proposals will be successful.
This section aims to identify the key points you need to enable you to produce a proposal that will match the requirements of any potential funder or creditor; be it the government, a local authority, an international organization, a non-governmental organization, a commercial bank, or a company.
What is a business funding proposal?
A funding proposal is a form of business proposal submitted to a government or civilian entity that outlines a proposed business project, shows the financial requirements of the project, and requests monetary (or other) assistance required to complete the execute the project successfully.
In other words, a proposal helps to communicate the needs of your business to potential funders or creditors. And it is largely on the basis of the written proposal that most funders will decide whether or not to support your business.
A business funding proposal could also be a grant proposal, a loan proposal, a joint venture proposal, a merger proposal, and so on; depending on what form of assistance is being requested.
How to Write a Fundraising Proposal – Sample Business Proposal Template
Writing a business funding proposal is a somewhat lengthy process that involves the following steps:
- Planning your approach
- Targeting your proposal
- Deciding on the content of the proposal
- Deciding how much to ask for
- Writing the proposal
- Getting in touch
1. Planning your approach
When thinking of how to structure your proposal, you will need to consider who you are planning to approach, what their priorities and interests are, how you are going to make your approach, what procedures they adopt for assessing applications and proposals, what you need to say about yourself and your business in order to boost your chances of success, and when you will submit your proposal.
You will also need to consider certain important factors at this stage, and some of them are discussed below:
- Method of approach: You should ascertain whether the funder requires the submission of proposals or application forms. You should also find out if the proposals are required to be submitted in any specific format.
- How many funders do you plan to approach: If you are sending the proposal to multiple funders or creditors, you must tailor a proposal specifically to each funder. The simplest way to achieve this is to have a standard (generic) proposal, but accompanied by a cover letter tailored to the recipient. The cover letter will highlight how the project will particularly fit within the funder’s guidelines, interests, and concerns.
- The size of the funder: Large funders, such as government funding programs and international organizations, will be interested in a great deal of detail and evidence of need and professionalism in delivery. Smaller funders, such as companies and smaller foundations, usually do not have time to read mountains of paper; they want everything shortened and simplified; a few pages, at most.
- The likelihood of success: The larger the amount requested for, and the greater the likelihood of success, the more time and effort you will need to put into the proposal. Conversely, for smaller sums or where your chances are slim, then you will need to limit the time you put into preparing the proposal. You should follow the general rule of fundraising: put more effort into fewer things rather than scattering your efforts widely.
2. Targeting your proposal
Whom to send your proposal will depend on the following factors:
- Urgency: If you need the money very urgently, then your best bet may be to approach funders or creditors who have supported your business in the past, since they are familiar with your business and are more likely to support it again.
- How many funders to approach: Most funders are always interested in knowing whether you have approached other funders and whether they have already agreed to support your business (because they frown at multiple applications). The general rule is that you should select your target funders carefully, based on your assessment of who is more likely to support your business. If this is made clear in your proposal, the funder will take it more seriously than a proposal mailed out to several funders.
- Type of project: Some funders, such as banks and other creditors, would prefer to support existing businesses that have reached certain milestones, while foundations and non-governmental organizations usually favor new businesses. If you are just starting a new business, then you should approach funders that are likely to support your business, and address their concerns in an innovative way. This is often simply a matter of presentation.
- Personalized approach: Most funders turn down proposals that seem to have been written by robots. So, you should try to add human touch to your proposal as much as you can, as the personal approach is more likely to be successful. You can refer to previous contacts and any previous support your business may have won. Match your proposal to their interests as evidenced by their stated interests and policies. And try to make them feel that you are writing to them personally. This is much easier to do if you are writing individual proposals to just a few funders.
3. Deciding on the content of the proposal
Before writing your proposal, you will need to answer the following series of questions:
20 Questions that Funders Will Need Answers to Before Supporting your Business
- What is the problem or need that is to be met by your business?
- What are the aims and objectives of the project?
- What working methods will be used to meet these aims?
- What are the short and long-term operational plans?
- What are the expected outcomes and achievements of the project?
- Do you have a clear budget for the work, and can you justify all the projected expenses?
- What will happen when the funding runs out? Will the project continue on a sustainable basis? Will you identify and develop alternative sources of funding? Or will the project come to a natural end?
- What sources of funding have you already identified?
- What have you committed to the project already?
- When do you need the money?
When answering these questions, you need to be as factual and honest as possible. You also need to demonstrate the importance of what you are planning to do and achieve.
The “Why” questions that your proposal should answer emphatically:
- Why is the need your business wants to fill important and urgent? And what consequences are likely to arise if this need is not met timely?
- Why do you think your company is in the best position to meet the need?
- Why do you think your method is the best or the most appropriate or the most cost-effective?
- Why are you likely to succeed? You can demonstrate this by showing some of the skills and resources you will bring as well as your previous successes.
More Questions on leverage:
- In case you need more funds, what other means of funding can be mobilized to add to the amount you will be granted?
- Will you need to mobilize the efforts of volunteers, and how much value will this add to the work being done?
- Will you need to involve the local community, and how exactly will they be involved?
- Will you be collaborating with other organizations and agencies to bring in additional skills and resources?
- Will the project become self-sustaining in some way? Does the sum requested represent an investment that will continue to bring benefit into the future?
- What are your plans beyond the project, to build on and develop from the work you plan to do during this next phase? (This should at least be considered, even if you have no firm plans at this stage).
4. Deciding how much to ask for
By way of research, you will need to find out how much a potential funder usually gives out to support businesses. Most of the time, this amount falls short of what you need. So, you will need to approach a number of funders, asking each to contribute part of the total, especially if you are unable to raise the remaining funds privately. There are multiple approaches to this:
- You can approach three different funders, asking each to contribute one-third of the total (or an appropriate proportion, depending on the size of each funder, or how much each funder typically releases).
- You can break down the project into separate components and make each component the subject of the proposal to a particular funder. In each application, you will highlight the importance of the component that you are asking each funder to support as well as the value of the whole project.
How to approach your potential funders is left to you. You can either approach all of them at the same time or approach one of them first and gain their support before moving on to others. Most importantly, you should have a funding plan. And you should be able to explain to any funder you approach how you intend to raise all of the funds you need.
5. Writing the proposal
When writing your proposal, there are a number of factors to consider:
Yes, there is a lot of information about your business that you want the funder to know. But the truth is, if you include everything, your proposal will be too long for most funders. If you are approaching a big money funder or pursuing a big money project, you may need to go into much detail about your business. But for less complicated projects and smaller funders, few pages will suffice (and you can append more detailed information or photos if you think they will be of interest to the funder).
b. The key points
At the heart of your proposal, you will describe the needs you’re trying to fill, the aims of your business project, and how you will achieve them. You should include as much detail as is necessary for someone who has no previous knowledge about your business or industry. You should also explain how you would measure the successful outcome of the project.
c. Your credibility
If you are starting a new business or the funder is not familiar with your business, you will be required to describe who you are and why they should support your business with the requested funds. This is because you have a low credibility, and you can overcome this in the following ways
- Providing CVs of your team members
- Listing your well-connected patrons or stakeholders in your proposal (if you have any)
- Mentioning the support you have previously received from other major funders or government bodies (this will help provide reassurance)
- Including the clippings of any press coverage you have had (if any)
- Including the results of an evaluation you have done on your business
- Including direct quotes of feedback from users, experts, or others
d. Recognition of the importance of the problem
If the problem itself is not widely recognized, then references to other respected reports, polls or endorsements by prominent people will help.
e. The budget
Every potential funder will scrutinize your budget, so it needs to be clear, complete, and accurate. Although most funders won’t show interest in small details such as your stationery or postage bill, they will always look into the major areas of expenditure and income. Your budget should include capital or other one-off costs, salaries, overheads, and major operational costs.
Similarly, income estimates will show the money you expect to generate from the project itself or through fundraising. Beyond this, you may need to show how you intend to raise the money you will need in the medium term, say over a period of three years. This may require a summary income and expenditure statement, both spread over the period.
In addition, if your business has been running for some time, you will need to provide your business’s audited accounts for the latest year for which they are available.
f. Information on the business and its status
For existing businesses, it is useful to include the formal and legal information about your business on the letterhead. This includes the registration details, names of trustees, board members, and patrons or stakeholders. This inclusion will help you create the impression that your business is well established or organized.
g. Language and jargon
Many entrepreneurs make the mistake of writing extremely boring proposals laden with technical jargon. Such proposals usually end up the funder’s trash bin because they are too complex to understand.
Always try to write your proposal in simple, lively language; while concentrating on your strengths, the opportunities, the desirable outcomes, and your hopes for the future. This is far better than the drab complex language that most proposals are written in.
The proposal is meant for convincing the funder to support your business. So, you must avoid long sentences, long paragraphs, meaningless words and jargon (which have meaning to you but have no meaning to the reader). Instead, you should use short words, short sentences, short paragraphs, bullet points, bold text to emphasize key features, headings and subheads to effectively break the proposal into different parts, and so on.
After writing your proposal, it is advisable that you find someone else to read it before you send it to the potential funder. The best person is someone who knows little or nothing about your business, as that is the position of most of the people who will read and assess your proposal.
If the person reviewing your proposal finds it hard to understand some parts of it, then chances are that the funder will also have the same problem. So, make things clearer where necessary.
h. Facts and figures
It is important to back up your claims with facts and figures. From the extent of the need to the effectiveness of your solution and methods, everything; especially questionable statements in your proposal should be backed up with convincing proof.
Your proposed product may be “kickass” or “unique” or whatever adjective you choose to use, but you need to prove it. So, try to include, at least, a few selected facts and figures in your proposal. If necessary, you can also provide huge details in a background paper attached as an appendix to your proposal.
i. Case studies
You can include case studies and examples of how many people have been helped and what they eventually achieved as a result of your help. This will demonstrate clearly that your business is effective in helping people—which is what prompts most funders to support a business.
Though it may not be the most important aspect of your proposal, your presentation can make a huge difference. Each funder has their own preferred standards and expectations. A loan proposal directed at a bank will have a different feel from a grant proposal sent to an international organization. So, remember to tailor your formatting and style of communication to whoever you are talking to.
k. The outline of the proposal
Your fundraising proposal should be written in line with the following outline:
- Abstract: This is a brief summary, usually about one page long, that clearly but briefly describes your business; much like the executive summary of a business plan.
- Needs statement: This describes the need or problem that your business will address, including supporting evidence. It should focus on the problem you hope to solve with the funding you are requesting. It should also prove beyond doubt that the problem can be solved and is significant enough to warrant the funding requested.
- Project description: This part of the proposal describes your business idea or project and how it will solve the problem. Your major aim is to convince the reader that your solution is the best.
- Goals: This section should explain the desired outcome of your idea or project. Highlight long-term goals as well as specific, short-term objectives. Also explain the precise effect to be achieved and the measures you will adopt to achieve that effect. Overall, it should be measurable and time-bound.
- Evaluation: This describes how your business project will be monitored and how its results will be evaluated. It should explain the criteria for measuring progress; who will be in charge of the evaluation, and when or how frequently the evaluation will be done.
- Budget: This is where you will tell how much you need and how you intend to use the money. Your budget should be realistic and should include only eligible expenses. Make it detailed enough to satisfy anyone’s curiosity on how the money will be spent. And most importantly, you must ensure everything adds up.
6. Get in touch
It is important that you send your proposal only to funders that are likely to respond positively. For example, if your target funder already knows something about your business or idea and reputation, then that will be a huge advantage.
To ensure a greater chance of success, you need to conduct some research about the funder, as this will enable you to know as much as possible about them before approaching them. For example, you will need to know the following:
- What constraints are imposed by the funder as a matter of policy (so you won’t bother sending your proposal if their policies don’t support your kind of business).
- What sort of things have been supported in the past (so that you will know their particular interests and can tailor your proposal accordingly).
- Who to address your proposal to (the name and job title of the individual in charge of receiving or assessing proposals).
- Whether they expect to be given any recognition or benefit in return for their support (so you can think about this before sending them your proposal).
- Their decision making cycle, and the best time to submit proposals.
- Whether there are specific formatting guidelines.
11+ Additional Tips for Writing a Compelling Proposal for Funding
a. Be as clear as possible-: Before you write your proposal, you should try to summarize your business idea or project in two or three sentences, then show it to a lay person and check for understanding. If they have difficulties understanding your idea, then you need to rewrite it until they do. Don’t start writing your proposal until you can write this summary in an easy-to-understand form.
b. Strive to communicate, not impress-: If you have a good idea and you communicate that idea clearly and effectively, the recipients will be impressed. Trying to baffle them with sophisticated words or technical jargon will only make you lose ground. Always stick with simple words and layman terms. You will never be blamed for being simple.
c. Wherever using technical jargon is inevitable, explain it. And if your proposed project involves the use of technologies, be very careful with your explanation, as the recipient may have little or no technological background. So, simply explain your technology in terms of what it will do.
d. Make your proposal error-free-: Chances are your proposal will be competing with other proposals written by professional writers and designed by professional graphic designers. You may not be able to take yours through these professionals, but you can be fastidious about checking it for typing, spelling, grammatical, and style errors. Ask someone else to proofread your proposal before you submit it, or wait a few days after completing it before reading it again.
e. Package your proposal well. Print it on good quality, heavy-bond paper using a laser printer. Have it well backed and bound.
f. Use a good layout-: Format your proposal properly so that the body of the text appears in the right two-thirds of the page while the one-third of the page to the left contains titles and white space. The white space allows the reader to make notes. This may sound trivial, but it elicits positive reactions from recipients.
g. Include alluring visual elements throughout your proposal-: Logos, charts, graphs, tables, and other elements can greatly enhance the visual appeal of your proposal and make it easier to read and understand. Pages of pure text are tiring to the eye and can elicit boredom. Additionally, most people prefer to learn through imagery and not text.
h. Begin with a title page-: This page includes images (logo, etc.), the name of the potential funder, the name of your business idea or project, your company name and address, the date, and your copyright symbol.
i. Watch your use of words-: Avoid any word or language that can be construed as offensive to any group of people; including men, women, persons with disabilities, seniors, persons belonging to visible minorities, and so on. If you are not sure of the correctness of certain terminology, avoid them altogether or find out more about their correct usage before submitting your proposal.
j. Write for a global audience-: Your proposal should be written with the expectation that it may be reviewed by people living in other countries or those for whom English is a second language. Unless your proposal is local to a specific geographic area, you should avoid references that will not be understood by persons living in other areas. And avoid using slang and expressions from pop culture.
k. While writing your proposal, you may want to check out the sample loan proposals, grant proposals, and lots more available at proposalkit.com. Although you will pay a fee to get full access to these proposals, you can still gain free access to the outline and the first few pages.
Note that a business proposal is different from a business plan. While most investors will request a business plan, grant issuers will usually request a business proposal, which is less detailed than a business plan. In some other arrangements, funders will request a business proposal initially and then your business plan later. So, whether you should submit a business proposal or a business plan depends on the requirements of the funder. The simple rule is, if the funder requests a business plan, don’t submit a proposal.
Finally, you must bear in mind that a poor quality proposal will reflect badly on your business, undermine your funding efforts, and can let another business win the support that you were well positioned to win. A high quality proposal, on the other hand, will confirm your understanding of the funder’s concerns and boost your chances of getting the funding your need for your business.
If you follow the tips and recommendations given so far in this section, you will write more winning proposals. In conclusion, I believe this e-course has explained in detail how to go about raising capital for your business, be it seed capital or expansion capital. There are many business financing options available to exploit, of which some are easy and some are difficult. You have learned how to go about both the easy and difficult options in order to achieve success with any.
Throughout your entrepreneurial experience, you will have no cause to adopt some of the business financing options explained in this course. (Of course, no single business can adopt all of the options). But it’s very important that you understand how every financing option works. In fact, this understanding can open your eyes to other options you never knew you could adopt to raise funds for your business.
While having knowledge of all the financing options discussed in this e-course could tempt you into trying out all of them, doing this will only waste your time and effort. So, focus on only those options you are likely to achieve success with.
On a final note, you must bear in mind that, even though this e-course has discussed each financing option somewhat extensively, a great deal of information has been left out due to space and other reasons. In fact, one could go on to write a textbook on some of the options. But including every detail would have made reading the e-course boring and time-consuming. So, if you need additional information about each financing option that is not discussed in this e-course, then feel free to consult experts or resources available online.
Action Steps to Take Now
Now that you have read this e-course, you need take the following action steps if you are planning to raise funds for your new or existing business:
- Assess your business idea to ensure that it will likely turn out profitable. Without a promising idea, you will never be able to raise capital from third parties.
- Bear in mind that raising capital for your business is usually not an easy task. If you don’t have your mind prepared for the challenges involved, you will be discouraged quickly.
- Write a detailed business plan. Only with a solid business plan will you be able to get the funding you need.
- Decide whether you will be more comfortable with debt financing or equity financing.
- Choose the funding option that you think you are likely to achieve success with and give it a try. Do all you can to make it work for you.
- After getting the funds you need, implement your proposed business project and strive hard to make it work. Remember, if you fail, you will find it hard to get additional financing in the future.
I wish you all the best in your quest to raise funds for your business.