The Executive Summary

The executive summary is often the only part of a business plan that an investor ever reads. Essentially, you have five minutes to grab the attention of your reader with a concise description of your opportunity and motivate them to read further.

A successful executive summary presents the highlights of your basic business concept and opportunity. 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 projections
• An excellent chance for investors/lenders to receive a healthy return

Your executive summary should:

• Provide a clear, concise and compelling summary of your business
• Outline your unique advantages for achieving success
• Demonstrate why your business concept will work
• Simply and clearly demonstrate management's objectives
• Incorporate powerful key sentences from other parts of your plan
• Be written in a positive and confident tone
• Be brief, no more than 2 to 3 pages - able to be read in less than 5 minutes
• Stand alone as a type of "mini" business plan within your business plan

The format and organization of your executive summary will vary based upon which issues are most important for your particular business. 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. This is often best achieved by explaining why your business is different or unique. 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 Description
Describe your product or service in terms of its benefit to your potential customers. How does it work? What is it used for? Where is it sold? How much does it cost? How does the customer benefit? Remember to limit yourself to highlights in this section. Be brief.

The Market
Who is your customer? How large is your market? Who are the competitors? 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 Executive Summary

The Management Team
Describe the principals of your business and how they will lead to your success. Is it clear your team is well-rounded with the experience, expertise and capabilities to achieve the goals outlined in your business plan? 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 investment? What specific return do you offer an investor? What is the exit strategy, in terms of both time and return?

What to avoid in an Executive Summary:

Here are several common mistakes that can make your executive summary less effective:

• Lacking a specific focus
• Too long and wordy, and failing to get to the point
• Trying to be all inclusive (it should be a powerful summary)
• Failing to demonstrate a special or unique opportunity
• Failing to outline the terms of the investment sought
• Failing to generate enthusiasm in the reader

Some suggestions to combat these problems:

• Limit your executive summary to a maximum of 3 pages (at the very most)
• If possible, attempt to present your executive summary on 1 or 2 pages
• Focus on the opportunity you are presenting your investor and explain why it is special
• Make certain that the opinions and claims in your executive summary are fully supported
• Attempt to use only concrete facts and figures that explain your business concept, market niche and financial projections
• Don't forget to include the details of your investment (the amount you need, what you will spend it on, and the return you offer your investor)
• Keep your reader in mind - why are they reading the plan and what response/action to you hope to generate?