A business plan’s executive summary gives the reader an overview of the business opportunity. It explains the type of business the company operates and summarizes the key facts and strategies supporting the company’s growth. If presented for funding, the executive summary provides the lender or investor a quick snapshot which helps them determine their interest level and if they should continue reading the rest of the business plan.
This article provides a brief overview of business planning and then gives you detailed information on how to create a winning executive summary for your plan.
What Is a Business Plan and Why You Need an Executive Summary?
Every business requires a detailed business plan at various stages in its journey. Startups, if seeking funding, need one to explain to investors and lenders what the business is about and why they should fund it.
Established businesses need a business plan for expansion and/or to get the organization focused so it acts most efficiently.
Since your business plan is a detailed document that requires time to read, you first need to give readers an overview of what they should expect. This allows them to decide if it’s worth their time to keep reading. That is why your business plan’s executive summary is so important.
What is a Business Plan Executive Summary?
An executive summary of a business plan, as the name itself suggests, is a shorter and more concise version of your detailed plan. You need to keep it simple and succinct in order to grab the reader’s attention and convince them it’s in their best interest to keep reading.
Key Elements of a Well-Written Executive Summary
The following are the key elements to include in your executive summary:
- The problem statement – Generally there is a gap or a problem in the market which your company aims to solve. This is your problem statement and it must be included in the summary, as investors, particularly, want to understand if the world truly needs your company’s products and/or services.
- Your business idea – The next thing a reader would want to know is how you plan to approach the problem and solve it. This is your business model and it should briefly describe how your product or service can help solve the problem.
- Company history – The best indicator of future success is past success. Your company’s history helps the reader understand how your business has evolved and grown over the years and what you’ve been able to accomplish. Even startups have generally accomplished milestones like choosing a company name, conceiving products, finding a location, etc.
- Industry – here you will detail the industry in which you are operating, it’s size and if any trends are positively or negatively influencing it. This gives readers a sense of the size of the opportunity you are pursuing.
- The target customer/market – Every business has a target customer base or a market on which they focus. Here you will detail the types of customers you target and their demographic and psychographic profiles.
- Competition – When you venture into a market or an industry, there are generally other players with which you compete. Knowing your competition is important. Readers of your plan want to know who your competitors are, their strengths and in what areas you will have competitive advantage.
- Milestones – In addition to showing relevant milestones your company has achieved to date in your company history, you need to explain your timeline for key milestones into the future. Include dates you hope to launch products, achieve sales milestones, hire key employees, etc.
- Financial plan – If you are requesting funding from investors or banks, they will want to know how you are going to their funds. A brief description of how and where you plan to allocate the funds should be included in the summary. For existing businesses, you should also provide a history/summary of past financial performance. Finally, for all businesses, you need to provide future financial projections so investors can determine whether they might get an adequate return from investing in you and lenders can ascertain whether or not you will be able to repay your debts.
- Management Team – In this section, you will introduce the key members of your team. The success or failure of your company depends largely on the people involved. So, any reader surely wants to know how well equipped your team is. Mention key staff members and the experience and skills they bring, in the executive summary.
Executive Summary Length
When structuring your executive summary, the first thing to keep in mind is that it should be short and comprehensive. The length of your business plan executive summary should never exceed 3 pages; the ideal length is 1-2 pages.
The First Paragraph of Your Summary
The first paragraph of your summary is instrumental in deciding whether a reader will continue to read further. As such, it should be captivating and generate interest. Succinctly explaining the type of business in which you operate, the problem it solves, and the size of the opportunity is a great way to start your summary.
The Dos and Don’ts of Creating a Great Executive Summary
There are certain mistakes often made in writing an executive summary. If these little glitches can be avoided, writing a flawless executive summary for your business plan is not difficult. So here are a few important tips and tricks for you to remember.
- Write the summary last – You executive summary should follow nearly the same order as your detailed business plan. Which is why it is important that you write the summary only after you are done with all your research and have finished writing your detailed business plan. This ensures that you include only the most salient parts of your business plan and can write a clear and concise summary.
- Use a positive and confident tone – The language and tone that you use in writing any document makes a huge impact on how it is received by the reader. Since the executive summary must convince the reader your plan will work, your language should be strong and assertive. For instance, instead of using words like “might” or “could” use words like “will”. Don’t let the readers doubt your capability by using weak language or tone of writing.
- Don’t give away everything in the summary – Many a times we make this mistake of giving too much background or too many details in the summary. Details are meant for the full business plan. Your executive summary is meant to direct people towards the detailed plan, so avoid sharing everything in the summary itself.
- Cover the bases – The executive summary must cover the important questions asked and answered by your business plan. The three most important questions are “What is the definition of the business you are in?”, “What is the market size and need?” and “How is the company uniquely qualified to succeed in that market?”
- Simplify – define your business in a way that it can be understood within the short executive summary. To do this, you must be able to use plain language and only one or two sentences for this definition. If there are additional elements to the business which will go beyond its core or become future potential directions you will take, the executive summary is not the place to go into those. Make sure the business definition can be summed up so that anyone with only a very basic understanding of the industry can understand.
- Make sure the logic flows – This is true within the plan as a whole, and within the executive summary. The logic of why your specific team and resources are suited for the specific market opportunity you identified and why you’ve chosen the marketing methods you have should be apparent and raise no red flags. If there is a jump in the logic – for example, it is not clear how the management team has any expertise suited for the business in question – then readers will move on to another plan rather than read on to answer that question in the body of the plan. This logic should be clear, although in concise and simplified format, even within the executive summary.
- Ensure the content of your summary matches your business plan – The information that you share in your executive summary should match what you have in your full business plan. Make sure that there are no discrepancies between the two.
- Avoid repeating content in the executive summary – You already have very little space to include everything you should in your executive summary. Repeating content wastes precious space.
Summary of Writing a Great Executive Summary
Your executive summary is the first thing someone reads to form an opinion on your business. Whether they decide to read your detailed plan or push it aside depends on how good your executive summary is. So, go ahead and use this guide to craft an effective and impactful executive summary. That way, readers will be more likely to read your full plan, request an in-person meeting, and give you funding to pursue your plan.