While writing a business plan for outsiders, you must write an executive summary and keep it to the beginning of your detailed business plan. This section capture the attention and excitement of both investors and potential business partners.
Business plan is the most important document that you provide to bankers, lenders, financial institutions, large creditors or potential investors to raise capital. For a start-up business, the most important thing is to convince investors, lenders or venture capitalists to invest in your business.
In our last article, we have discussed why to write a business plan.
In this article, we will discuss the most important part of it known as “executive summary”.
Executive summary is the overview section of a business plan which summarize the key points for readers to save time. Therefore, executive summary section is usually the first thing your readers read but typically written last after writing all other sections.
You should provide a short, concise and optimistic overview of your business under this section.
Good summary is the key to having it reviewed by investors or bankers. Bankers and investors wants to read the executive summary first before getting into the detailed business plan to understand the fund requirements and how it will be used in business.
What to include in Executive summary section of a business plan
Executive summary section should be written after writing everything else. We advise you to keep the executive summary section short and simple. A page or two will be enough to summarize the whole thing.
Please note, not all business plans require a summaries section in it.
Executive summary is required when you write to convince banks, venture capitalists, angel investors and for any outsiders to invest in your business by providing capital.
Executive summary should have following things. The objective should be to highlight at least one important key statement from each of the other sections of your business plan.
- Trade name, location, legal structure and contact details
- Describe the business opportunity of your product and/or services you offer.
- Explain why you think there is a opportunity in it and what problem your business will solve. How does it fit into the marketplace.
- What separates you from the competitions.
- Which market you are targeting and what is your marketing and sales strategy.
- Describe your competition and what is your strategy to get market share.
- Describe your ideal customers.
- How much the total project cost?
- How you want fund to be invested. Do you want equity investments or bank loan.
- Educational background of promoters, award and recognition received, if any.
- Net worth of the owners.
- Summarize the financial plan for at least 5 years.
- Percentage of ownership you are offering in exchange for the fund you are requesting and how the ownership will be divided?
Your executive summary section must be short, simple, clear and concise. It should capture readers attention to read the whole business plan. Under this section you should convey the most important parts of your business plan.
The best way to write the executive summary section is to first identify the critical points in each section of your business plan that you know are important to the reader and include only those points in the summary.
A bank may not offer you loan if your business does not have sufficient assets to cover it.
In that case, you can look for venture capitalists and Angel investors for funding.
Venture capitalists and angel investors are high risk takers. If your business plan sounds good to them, then they can fund your startup. To persuade, venture capitalists and angel investors, you should write executive summary section preferably with analysis of the market and how you are going to generate money out of it.
What paragraphs you can include
While writing executive summary section, you can write it in short paragraph with proper heading to it. Here are few paragraph that can be included under this section. You can summarize each heading in two to three paragraphs depending on the information you want to provide.
- Company overview
- Market opportunity
- Organization Structure and Management Team
- Products and Services
- Competitive advantages
- Marketing and sales plan
- Funding request and use
- Financial projections
- Future Goals
You need to make sure that the summary is brief. You can write it in one-two page with 6-8 paragraphs covering the important points of each section of business plan. Don’t cut and paste lines from other sections, better to rewrite those sentences under summary section.
Your main motto should be to quickly convince the reader by keeping the best aspects of every part of your plan. You can summarize above sections in executive summary to explain the whole business plan:
Mistakes to avoid in Executive Summary Section
If you don’t grab attention of readers in the executive section, then they will not take interest in the whole business plan. Therefore, you should avoid mistakes in this section.
Make sure you avoid following mistakes;
- Making executive summary section more than two pages. Keeping it one-page, if possible, is better.
- Writing the executive summary part first. It should be written last to summarize all the sections of your business plan.
- Not including mission statement.
- Not mentioning the expected total costs of starting up.
- Not including funds expected details. Its required if you are expecting external funding.
- Not Including franchise rights, patent, copyright and trademark details, if any.
- Not writing strong and positive words.
- Not taking mentor’s or expert help to find mistakes in it.
Remember, executive summary section is the first thing your investors or lenders read to understand the whole requirements and opporunities. If its poorly written with weak language, they may set the rest of your business plan aside unread.