Generally, an executive summary is a concise overview of a business plan. It summarizes the overall business plan in a captivating manner for the target audience. It appears at the onset of a large business proposal or report and is written so that the audience can quickly digest the purpose of the overall report without having to go through it all. Experts suggest that the executive summary should be kept under 2 pages. However, if it is necessary, it can be longer but no more than 5 pages. It’s as effective as an elevator pitch, short, precise, and grabs the target audience’s attention span. A good summary can lead the reader to read the rest of the report. Many investors make an initial decision based on the impression an executive summary creates.
Why an executive summary?
If you are writing a business plan for funding purposes, it is essential to write a well-crafted executive summary to grab the interest of the investors. It prepares the reader for the following content of the report, saving them time. It precisely highlights the main section of a business plan. It’s meant to be an abbreviated version of your business plan with no exaggeration. It has two key purposes:
- The executive summary will provide the investor with an initial lead
- It is used to organize the main components of a business plan
Contents of an Executive Summary:
What content to use in an executive summary depends on the business type. If it is a startup in need of investment, the executive summary should be a solid representation of your business idea. For a startup company, a typical executive summary will cover the following points, The business opportunity or identifying the problem area: In this section, you can discuss the need of the business by elaborating a bit about the problem area.
A description of how your business solves the problem: You can include a brief description of the product and services your business offers to solve the problem. It’s not always necessary to serve a social purpose, but it should have the component of addressing a customer’s needs or an opportunity in the existing market.
- Description About the target market: Your target market is the customer group you are focusing on serving. Based on their demographics, put a brief description of the target market. At times your product or service name is self-explanatory to describe the target customer. However, it is always wise to include a clear description of them.
- Discussion about the competitive advantage: Every business at one point or another has a substitute. To stand out among others, you need to have a competitive edge. It can be due to the product features, the problem it addresses, pricing composition, location benefit, etc.
- Financial overview: For a startup, this section should highlight sales forecasts and goals for at least the next three years. Including a highlight chart, a bar chart with sales growth and gross margin for the next three years.
- Your Team: This is important to highlight for a start-up. Potential investors will look into your team composition to get an idea of who is behind the business idea if you and your team are the right candidates to build the business. It will be valuable to highlight any drawbacks your team has and how you plan to mitigate those. If you have a candidate in mind, then include them and expand on their qualification within your business proposal.
- Implementation phase: Briefly summarize the implementation strategy from the planning stage to entering the market.
- Funding needs: The investor will want to know upfront about your funding needs. It should be briefly detailed in the executive summary how much fund you are aiming to raise. If your business is an already established one, the executive summary typically includes information about achievements, growth plans, etc. For an established business, an executive summary typically covers the following sections:
- Mission statement: This section is an opportunity to articulate in few sentences your business philosophy, its core value, and purpose.
- The company and management: Give a brief background on your company, how it formed, owners and key employees, product and service description, business location, and other relevant statistics.
- Product and service description: Utilize this section to highlight your key product and services.
- The market: Describe how your business is gaining a large market share and expanding according to market demands. A brief description of the market research and customer demographic can be included in this section.
- Competitive advantages: Utilize this section to point out how you are unique in meeting customer demand among other similar businesses.
- Business highlights: Describe in an engaging tone how your business expanded in terms of growth, profitability, year to year revenue increment, market share, number of customers, etc.
- Future Milestone: Brief the reader about your future aspirations for the business. If funding you are seeking, explain how it will be employed to expand the business or increase profitability.
- Financial summary: In this section, describe your achievements regarding financial growth, sales growth, salary information, plan for team expansion—a short yet complete picture of financial projection. If you have financing requirements, then include in this section how much you need from external sources. You need to provide evidence of your financial stability, including your net worth, asset, liability, and other financial histories.
Tips for writing an effective executive summary:
- Write it last: Even though the executive summary should appear at the beginning of your report, don’t write it before your actual business plan. It is more challenging that way and wastes a lot of time. Writing it last gives more clarity and grounds to come up with a well-articulated summary. After laying out, the summary structure, take essential information from each section of the document and set the tone for the entire summary by presenting it attractively.
- Assume yourself in the place of your reader: When you put yourself in the mindset of an investor, it will be clear to you what needs to be included and what to omit. Ask yourself the relevant question to validate the reliability of the summary. If it does not answer key questions of the investor, the summary will be a failure, and eventually, the business idea will be tossed aside. It is important to get it right.
- Keep it short: A summary is effective when it is short and captivating to the reader. They will want to dig deep into the report if the summary can make an initial impression. Many investors make the initial decision just by reading a summary. An ideal summary should not cross more than 2 pages. It is advisable to keep it between 2-5 pages. More than that is not a summary. Make the reader dive deeper to get more information. It should appear as a tip of a large iceberg. Only include information in the summary that you can back up in the following discussion. Less is always more in the case of an executive summary.
- Focus on the goal of an executive summary: The goal of the summary is not to secure an instant deal. It is to grab the attention of a venture capitalist, bankers, or initial stage meeting to elaborate on the business proposal. It is also a great way to map your business strategy if it is not to get funding.
- Think of it as an elevator pitch: Explain in few sentences why your idea is revolutionary in solving a great problem. Describe in a compelling way what you have developed and what the scopes are in the long and short terms. Make it short, precise, and easy to understand.
- Structure and arrange each section based on importance and strengths: Lead the summary with urgency and want the reader to pay the most attention, following up with content in order of importance. Organize your summary in a flowing yet strong order. Use the order to show emphasis, and don’t tone down your language. Use strong and positive words to structure it. Omit maybe, if, so, but. Instead of writing “Dreamcatcher might be a useful platform for an international student to find their dream internship opportunities,” write “Dreamcatcher is a practical solution for an international student to secure their dream opportunities.”
- Polish your summary and take feedback: Have someone read it for you who knows nothing about your business plan. Ask the person key question like, does it flow or it sounds shabby? Does it communicate with the reader? Is it clear and concise? Take their honest feedback and suggestions for improvement.
Conclusion:
An executive summary is not only useful to get investment, but it can also be used as a layout for the development of your business. The effort you put into crafting an enticing executive summary will serve you in the long run, as the executive summary includes the most important aspect of your business and your long-term aspiration. You can look back to create a more detailed backup for the plan in general. Writing a good summary is not an overnight process. It will take time and sincere work. The quality of your summary determines whether it is the first or the last thing your readers read.
Also read How Long Should An Executive Summary Be?
