How to Write a Business Plan: Executive Summary
The executive summary is probably the most read part of your business plan. Another name for this section could be management summary or just summary. This section should embody the important parts of your business plan such as the problem statement, company information, target market, pricing strategy, financial highlights and funding request.
What is an Executive Summary for a Business Plan?
The executive summary is a summarized version of your business plan. This section should be no longer than one page. The main objective for this section is to succinctly describe the totality of your business. The main challenge for this section is identifying the most important parts of your business plan and re-summarizing the information into the short document. The two most important parts of this section is the problem statement and the funding requests.
Why is an Executive Summary important?
Executive summary is probably the most important part of your business plan. This is important for several reasons. First, most people do not read past the executive summary. Investors often make a determination as to whether they will investment company are not based solely on the executive summary. A second reason this is a critical portion of the document is because it will highlight the most important parts of your business. After reading this document, investors should come away with a broad understanding of your company and a vision for how and why it will be successful.
What needs to be in the Executive Summary?
There are specific aspects of the business plan that need to be represented in the executive summary. We already covered the two most important, which were the problem statement and funding requests. Other important components in the executive summary should include a brief business description, management experience, target market, pricing strategy and location where the company will operate.
When to write the Executive Summary?
The executive summary should be written last. Once the full business plan is complete, going through the document and point out important aspects of your business plan is usually one of the easiest parts. However, if the executive summary is not carefully crafted, then important decision-making pieces of information may be left out. This would lead to an investor passing on your opportunity.
How to write the Executive Summary?
When I write an executive summary, I always start with the problem statement. With this statement, I make sure to keep it to only four or five lines. I almost always start with identifying what the problem is. From this, I discuss why this is a problem. The next part is where I discuss issues that may arise if the problem is not taking care of. Finally, I end the problem statement with how this particular business will solve our customers problem.
The end of the problem statement should always flow into the company description. For the company description, I always leadoff with identifying the name of the company and where the company will be located. From this, discuss products and services that the company will offer. Further, highlight management experience with solving this problem and operating your type of company.
Executive Summary: Problem Statement and Funding Request
The problem statement should be the very first thing a person reading the documents sees. The problem statement will describe what the problem is that your company or business is trying to solve. For example, if I had a bicycle company, then the problem limit businesses attempting to solve his exercise and entertainment for children.
The final section of the executive summary should always be the funding requests. After the arguments are laid out for why your business is important, how your business will be structured, where the funds will come from for your business, then you absolutely must ask for the money. This is where the funding request comes in. Make sure to be specific as to how much money you are looking for and how funds will be repaid to the investor.
Executive Summary and Strategy
With this complete, I then examine the pricing strategy and one or two important business model components. This section is important because readers need to know that there is a strategy, however brief, behind the business plan. In other words, readers want to know that owners have some type of understanding on how the business will operate.
Executive Summary and Financial Highlights
If the executive summary is the most read section of a business plan, then the financial highlights is probably the most read section of the executive summary. In this section, readers are going to want to see whether the company is making money and how long it will take for them to make money. Because of this, make sure to discuss revenues and profits for the first several months and the first year. And for heaven’s sake, if the company is not showing a profit, then address why this is an issue. Just because a company is not shown a profit does not mean the company will not be profitable.