Executive Summary: Newsletter
In the previous Newsletter we addressed the importance
of including a solid and realistic exit strategy in your business plan.
well-written exit strategy increases your chances of cashing in with
investors because it addresses one of their most important issues - how
they will ultimately cash out.
However, most potential investors will
never even bother reading your exit strategy if you can't grab their
attention from the start and excite them about your business.
How do you
Simple. Write a brilliant executive summary.
Never forget that capital sources are always buried
under a desk full of business plans and financing proposals.
many funding requests, the time dedicated to making an initial judgment
about a business plan is limited.
Investors normally remedy this backlog
of business plans by simply reviewing the executive summary to determine
if any further investigation is warranted.
To some degree, the executive
summary resembles a resume, allowing the reader to quickly decide which
business plans will receive serious consideration.
Your business plan may be outstanding.
It may look
wonderful and include colorful graphs and charts.
And it may be very
impressive and compelling if it was read from cover to cover.
But, to the
surprise of many entrepreneurs, the executive summary is often the only
part of your business plan that an investor ever reads.
have five minutes to grab the attention of your reader with a concise
description of your opportunity and motivate them to read further.
Following the tips listed below and avoiding bothersome pitfalls will help
keep your business plan from landing on the bottom of the pile, or even
worse, in the trash.
Your executive summary should:
- Provide a clear, concise and compelling summary of
- Outline your unique advantages for achieving
- Demonstrate why your business concept will work
- Simply and clearly demonstrate management's
- Incorporate powerful key sentences from other parts
of your plan
- Be written in a positive and confident tone
- Be brief - able to be read in less than 5 minutes
- Stand alone as a type of "mini" business plan
within your business plan
A successful executive summary presents the highlights
of your basic business concept and opportunity.
Which highlights should be
A good executive summary should demonstrate:
- A business concept that makes sense
- A clear plan for success
- A capable management team
- A clear, specific, and definable market
- Significant competitive advantages
- A solid and believable summary of the financial
- An excellent chance for investors/lenders to
receive a healthy return
The format and organization of your executive summary
will vary based upon which issues are most important for your particular
But regardless of the format, every executive summary should
include the following areas or subsections:
The Concept and Opportunity
It should immediately grab the attention of your reader.
often best achieved by explaining why your business is different or
Clarify your business advantages, how you can break into your
market first, the benefit of your proprietary product, or how research
supports a significant customer demand for your product or service.
Essentially, what differences or characteristics will lead to success?
The Product or Service
Describe your product or service in terms of its benefit to your
How does it work? What is it used for?
Where is it
How much does it cost?
How does the customer benefit?
limit yourself to highlights in this section.
Who is your customer?
How large is your market?
Who are the
Why are you better?
What are your market share projections?
Your reader must be convinced that potential customers will have the want,
need, and ability to purchase your product.
Don't try to avoid the fact
that you have competitors. Instead, explain how you can gain market share
with your business advantages.
The Management Team
Describe the principals of your business and how they will lead to
Is it clear your team is well-rounded with the experience,
expertise and capabilities to achieve the goals outlined in your business
Does your board of directors or advisors bring credibility and
experience to the table?
Fair warning - management weaknesses will ensure
that readers will go no further.
The Finance Requirements
How much money has been invested to date?
What are your earning
projections for the next three years?
What amounts are currently required?
What will the funds be used for?
From whom do you expect to receive your
What specific return do you offer an investor?
What is the
exit strategy, in terms of both time and return?
Now that we've outlined the issues to address in your
executive summary, lets consider the things you should avoid.
would lead a reader to the conclusion that you have a poorly written
executive summary? If you:
- Fail to identify your special or unique opportunity
- Fail to clearly demonstrate what your venture is
- Fail to identify what management will accomplish
- Make general and unsubstantiated claims
- Use wordy and unorganized language
At what point in the writing process is it best to
write your executive summary?
There are three schools of thought.
first says prepare it before you write the rest of the business plan.
second says write it before, then again afterward to combine the best of
The third says prepare the executive summary only after the rest of
the plan is complete.
Which approach is correct?
It's really a personal
decision, but it has been our experience that preparing the executive
summary when the rest of the business plan is complete is fairly
This allows us to summarize the plan after all the information
has been laid on the table with the hindsight of compiling the entire
We normally pick key sentences that highlight the product benefits,
market opportunities, and strategic advantages.
Think of it as 20/20
Remember to review your executive summary many times
and ask yourself whether it grabs the reader's attention.
Will they be
excited about your business?
Will they want to read the rest of the
If the answers to these questions are no, rewrite it.
it to a friend or business associate and ask them to be critical.
times after someone reads your executive summary they will say "It's
great, but what about...".
If you find yourself explaining important
information to someone after they have read your executive summary, then
it is likely that that information should be included in the document.