Executive Summary - The most crucial part of your business plan
The executive summary the most important part of your business plan, and perhaps the only one that will get read so make it perfect!
The executive summary has only one objective : get the investor to read the rest of your business plan.
Ok but how?
Get in the reader's shoes
Their inbox is probably full of business plans and they need to get to the bottom of it.
They are therefore very likely to scan through each business plan in less than 2 minutes and to select only the most promising projects.
How to make your executive summary stand out?
First on the formatting. Make the text easy to read by using short paragraphs rather than long blocks of text. And keep it short: 1 (ideal) or 2 (maximum) pages.
Then on the content itself: go straight to the point. Introduce in a couple of paragraphs: the idea, the team, the market, the potential in terms of profitability, and the funding requirements.
Don't try to cover everything in too many details: keep it high level and the investor will read the rest of the plan to get the details if they are interested.
The introduction of the executive summary
The investor (or the banker) will start by checking that the project matches its investment criteria:
- The idea and the funding requirements match their investment stage: seed, series A, growth, or LBO
- The sector is not over-allocated in their portfolio: investors have diversification criteria imposed by their own investors, banks by their credit committee
- The market is big enough: especially important for equity investors
- The team has the right skill-set
The introduction of your executive summary must touch briefly on all of the points above before covering them in more details in the body of the executive summary.
For example:
Created in 2011, ABC Ltd offers through its website www.abc.com an A/B testing solution and generated a turnover of £1m in 2012. The objective of this business plan is to seek a financing of £20 to grow the company's market share in the A/B testing market valued at around £2.3bn en 2012. The company is led by 3 seasoned entrepreneurs and employs 2 other people.
The body of your executive summary
The rest of executive summary must follow a progression. Start with the business description and the team, then the market and your financial highlights, and finally the funding requirements.
Business description
Try to introduce your company in a couple of sentences (legal structure, location, shareholders and management team), its activity, and the main milestones to date.
The aim is to build interest from the reader of your plan by showing that you have the right team to carry this project and some traction around the product.
If you have some skill gaps within the team you also need to address this concern by showing how you are going to fill the gap (recruitment, external advisor).
Your reader now knows:
- In what they will be investing
- Along which shareholders
- And who will lead the project
Market
The next step is to give a brief overview of the market:
- Customers: who are they? How many are they? What is the estimated value of the market?
- Need: why will customers buy your products or services?
- Competition: who are your competitors? What sets you apart?
- Strategy: what is your market positioning? How are you going to access the market?
If you are writing your business plan for a bank, try to reassure by showing that there is a real need for your product and that you are going to generate revenues quickly.
If your business plan is for an equity investor, you also need to emphasize the market size and demonstrate that there is the potential to establish a large business.
Financial highlights
Here you need to present your key historical and forecasted financials, along with the main assumptions underlying your forecast.
Which figure should I mention? This really depends on both your sector and stage. As a minimum, try to show:
- That you are profitable: your EBITDA is positive
- That you generate cash: your operating cash flow is positive
- That you are growing: your revenues, EBITDA, and operating cash flow are growing regularly
Depending on your sector you might also want to include a few Key Performance Indicators (KPIs). For example the number of active users for a software company.
Need
Finish your executive summary by stating the funding requirements and the use of proceeds. If needed, detail the offer (% of equity on offer, the ideal length of the loan, etc.).
If you are trying to raise equity and already received binding offers from a few investors, mention it here as this will reinforce the attractiveness of your project.
Examples of executive summary
If you're after a bit of inspiration, you can have a look at the presentation pages of our business plan templates.
Each of our template includes a complete business plan sample and you can read their executive summary on the presentation pages.
What tool should I use to write my executive summary?
If you just need to write your executive summary, any good word processor should do.
If you need to create a complete business plan including a financial forecast, it is more efficient to use our online business plan software:
There are several advantages to using specialized software to write a business plan:
- You are guided through the writing process by detailed instructions and examples for each part of the plan (including the executive summary).
- You can be inspired by already written business plan templates
- You can easily make your financial forecast by letting the software take care of the financial calculations for you.
- You get a professional document, formatted and ready to be sent to your bank or investors.
- You can easily compare your actual financial performance against your forecast, and keep it updated and relevant as time goes by.
If you're interested in using this type of solution, you can try our software for free by signing up here.
That's it, now you know how to write a great executive summary! Don't hesitate to contact us if you have any questions.
Also on The Business Plan Shop
- How to write a business plan?
- How investors analyse business plans
- Free business plan template
- Tips to write a business plan for investors
- Where to write the conclusion of a business plan
- How to write the structure and ownership section of your business plan
- How to write the location section of your business plan
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