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— Kirk
A: In his excellent book, Writing Winning Business Proposals, author Richard C. Freed says this about
business proposals:
Similarly, not a few business proposals come across my desk. Some are excellent and some are not.
So here then are my 7 Tips for Creating a Great Business Proposal:
Remember: When people begin reading the proposal, they have little or
no idea what you are proposing, so you have to walk them through the
process. You do so by starting at the beginning and clearly, simply, and
logically moving forward by making your points one at a time.
Start with the big picture and drill down as you go along.
The best way is to marshal the top facts and arguments in your favor.
Have a theme and reinforce it again and again. Take the reader down a
path that leads but to one conclusion — that hiring you makes the most
sense for them.
You also have to put yourself in the readers' position, think of what
counter arguments they may be considering, and deal with those potential
obstacles honestly. That makes you trustworthy.
3. Show your Personality: Far too often, business proposals are devoid of
life, as if the person writing it is some Employeetron 3000, programmed
to say nothing, be boring, and not offend.
I say, let your personality come through. Of course this is business and
you have to follow some business conventions, but as you do, also let the
reader see who you are. Share your enthusiasm for your business, their
business, the idea, something.
5. Don't Oversell: Avoid hyperbole. As soon as you cross the line from
understandable pride to obnoxious overstatement, you lose credibility.
Once readers think you're not shooting straight with them, they may
question the truthfulness of everything in your proposal—all that they
read so far, and all that is still to come.
If it is clear that you didn't give the proposal your best effort, why would
your readers think you would give their project your best effort?
Business Plan
The Cafe Deluthe & Gourmet Bakery
Financial Analysis
The Cafe Deluthe & Gourmet Bakery is basing their projected baking, baked goods,
coffee and espresso sales on the financial snapshot information provided to them by All
Bros. Coffee Company. Internet sales were estimated by calculating the total number of
hours each terminal will be active each day and then generating a conservative estimate
as to how many hours will be purchased by consumers.
Cost of Goods Sold: Total cost of goods sold for coffee and baked goods-related products
was determined by the "retail profit analysis" we obtained from All Bros. Coffee Company.
The cost of bakery items is 20% of the selling price. The cost of Internet access is $250
per month, paid to _________________ for networking fees. The cost of e-mail accounts is
25% of the selling price.
Fixture Costs: Fixture costs associated with starting The Cafe Deluthe & Gourmet Bakery
are the following: 2 computers and wireless hubs $3,000, two printers $1,000, one
scanner $400, one espresso machine $10,700, one automatic espresso grinder $895, two
coffee/food preparation counters $1,200, one information display counter $1,400, one
drinking/eating counter $900, sixteen stools $1,600, six computer desks w/chairs $3,400,
stationery goods $500, two telephones $200, decoration expense $14,110 for a total
fixture cost of $39,305.
Baking Kitchen: (See the complete business plan in Fimark's Business Plan
Writing Tool Kit)
Salaries Expense: The founder of The Cafe Deluthe & Gourmet Bakery, ________________,
will receive a salary of $24,000 in year one, $36,400 in year two, and $49,040 in year
three.
Payroll Expense: The Cafe Deluthe & Gourmet Bakery intends to hire six part-time
employees at $5.75/hour and a full-time technician at $10.00/hour. The total cost of
employing seven people at these rates for the first year is $7,240/month.
Rent Expense: The Cafe Deluthe & Gourmet Bakery is leasing a 1700 square foot facility
at $.85/sq. foot. The lease agreement The Cafe Deluthe & Gourmet Bakery signed
specifies that we pay $2,000/month for a total of 36 months. At the end of the third year,
the lease is open for negotiations and The Cafe Deluthe & Gourmet Bakery may or may
not re-sign the lease depending on the demands of the lessor.
Utilities Expense: As stated in the contract, the lessee is responsible for the payment of
utilities including gas, garbage disposal, and real estate taxes. The only utilities expense
that The Cafe Deluthe & Gourmet Bakery must pay is the phone bill and dedicated Phone
line for Internet access The basic monthly service charge for each wireless hub provided
by Verizon is $17.29. The 13 wireless hubs used to connect the modem will make local
calls to the network provided by Verizon resulting in a monthly charge of $224.77. The
two additional lines used for business communication will cost $34.58/month plus long
distance fees.
The Cafe Deluthe & Gourmet Bakery assumes that it will not make more than
$40.00/month in long distance calls. Therefore, the total cost associated with the two
business lines is estimated at $74.58/month and the total phone expense at
$599.35/month.
Marketing Expense: The Cafe Deluthe & Gourmet Bakery will allocate $5,000 for
promotional expenses at the time of start-up. These dollars will be used for advertising in
local newspapers, magazines and online in order to build consumer awareness.
Insurance Expense: The Cafe Deluthe & Gourmet Bakery has allocated $1,440 for
insurance for the first year. As revenue increases in the second and third year of
business, The Cafe Deluthe & Gourmet Bakery intends to invest more money for
additional insurance coverage.
Legal and Consulting Fees: The cost of obtaining legal consultation in order to draw up
the paper work necessary for an LLC is $1,000.
Depreciation: In depreciating our capital equipment, The Cafe Deluthe & Gourmet Bakery
used the Modified Accelerated Cost Recovery Method. We depreciated our computers
over a five-year time period and our fixtures over seven years.
Taxes: The Cafe Deluthe & Gourmet Bakery is an LLC and, as an entity, it is not taxed.
However, there is a 15% payroll burden.
Accounts Payable: The Cafe Deluthe & Gourmet Bakery acquired a $24,000 loan from a
bank at a 10% interest rate. The loan will be paid back at $750/month over the next
three years. The $9,290 short term loan will be paid back at a rate of 8%.
Get the complete Business Plan along with an easy to use step by step Business Plan
Writing Form complete with Business Plan Tutorial, Research interface access,
Assumptions and Financial Summary Creator and Business Startup Timeline Checklist in
Fimark's Business Plan Writing and Startup Tool Kit
Define Annuity
A form of contract sold by life insurance companies that guarantees a fixed or variable
payment to the buyer at some future time, usually at retirement. Annuity is the annual
payment of an allowance or income. The right to receive this payment or the
obligation to make this payment.
Define Asset
Anything owned that is convertible into cash. Usually divided into two broad classes:
1) Real assets/property; computer, equipment, inventory, etc., 2) Financial
assets/money; cash, bank account, mutual funds, etc.
Define Bankers Acceptance
Short terms financing that are a cost effective vehicle for domestic and international
commerce. One advantage of a banker's acceptance is that it does not need to be
held until maturity, and can be sold off in the secondary markets.
Bridge financing is needed at times when a company plans to go public. Often bridge
financing is structured so that it can be repaid from the proceeds of the public
underwriting. Companies are able to expand using a bridge loan program.
Define Budget
An estimate of income and expenses for a specified period. Your business plan should
include a monthly, quarterly and annual budget plan.
A blueprint of your business mission, goals, projections and how these will be
attained. A written instrument to help the owner to operate the business. A road map to
tell others how you expect to reach projected goals. You may require a business plan
to get a loan or attract investors.
Define Capital
Wealth, net worth in money and/or property. Any form of wealth employed or capable
of being employed in the production of more wealth. A subset of Assets. Thus
business capital.
Define Currency
The metal or paper medium of exchange that is presently used.
Define Debt
Debt consists of long or short-term loans that may be secured, unsecured, or partially
secured, fixed or variable rate, etc. There are many variations of debt, and a whole list
of terms and conditions that may be applicable.
Define Dividend
Distribution of earnings to shareholders, the amount is decided by the company's
board of directors and is usually paid quarterly. Dividends must be declared as income
in the year they are received.
Provided to companies that have expended their initial capital and require funds to
initiate full-scale manufacturing and sales. May be debt or equity.
Define Earnings
Corporate profit remaining after paying taxes and bondholder interest.
Define Equity
Equity is not a loan, but an investment made by an individual, group, or an
organization.
A business plan should include a time frame and a mechanism for realization of
shareholder value.
Define Financing
The manner in which a proposed purchaser intends to make up the difference between
cash on hand and the purchase price. A method of financing in which a company
issues shares of its stock and receives money in return.
Define Franchising
Companies transferring the right to conduct business under its trademark.
Define Goodwill
The difference between the (higher) price at which a firm has been acquired and either
its reported net book value or its estimated fair value.
Define Inflation
A sustained rise in the prices of goods and/or services. Two common measures of the
Inflation Rate are the Consumer Price Index and the Producer Price Index.
Define Inventories
Raw materials, work in process, and finished goods not yet sold, reported in the
balance sheet as current assets.
Define Investment
The use of capital to create more money. Usually includes the idea that safety of
principal is important.
Define L.L.C.
Limited Liability Corporation
Define Liabilities
What a firm's shareholders collectively owe on the date of the balance sheet.
Define Licensing
Companies can license their product to distributors with established sales, thus
avoiding the cost of building its own sales infrastructure.
Define Market
The world of commercial activity where goods and services are bought and sold.
Define Margin
It is an important measurement of management’s efficiency, and also the profitability
and performance of a company.
Define Mortgage
Mortgages are available for new construction, acquisition, and refinancing purposes.
Term of loans is usually fully amortized over fifteen to thirty years.
Define Multiplies
Ratios used to value firms.
Define Note
A debt security acknowledging a creditor relationship with the issuing firm and
stipulating the conditions and terms under which the money was borrowed. Same as
promissory notes.
Define Projection
A prediction made by extrapolating from past observations
Define Purchases
Cost of goods sold plus change in inventories minus production costs.
Define Principal
Face amount of a debt security (Bond or Mortgage) on which interest is owed or
earned. Investment Principal: basic amount invested, exclusive of earnings.
Define Quick Ratio
Cash plus accounts receivable divided by current liabilities. Same as acid test. A
measure of liquidity.
Define Recapitalization
Alteration of a corporation's Capital Structure, such as an exchange of bonds for
stock, or of preferred stock for common stock, or of one type of bond for another.
Define Sale/Leasebacks
A transaction that involves the sale of an asset (such as Real Estate or Equipment) to a
leasing or finance company and a subsequent lease of the same asset back to the
original owner, who continues to use the asset.
Define s-Corporation
A form of corporation, allowed by the IRS for most companies with 75 or fewer
shareholders, which enables shareholders to enjoy limited liability status.
Define Sector
A set of businesses that are buying and selling such similar goods and services that
they are in direct competition with each other.
Define Security
Certificate (or a book entry in the security holders account) issued by a firm that
specifies the conditions under which the firm has received the money.
Define Shares
A stock, also referred to as a share, is commonly a share of ownership in a
corporation.
Define Speculation
Signifies a much higher degree of risk than investment, though often having better
odds than gambling.
Define Variables
Difference between direct And indirect costs.
Yield
The annual rate of return on an investment, expressed as a percentage