Even the most well-written business plans fail because of poorly-written executive summaries. The Executive Summary is the first thing that investors read.
The style is important as well. The executive summary format must be the standard layout that investors expect to see.
Read below to get to know the most important section of a business plan – the Executive Summary!
The Most Important Section of a Business Plan
Many companies think they have a plan for their business laid out, but unless this is printed on paper and organized effectively, there is no plan…just a jumble of ideas.
It is essential to put in writing the company’s mission-vision statement and goals. Even if the business plan gets revised along the way, it will serve as a steering wheel that will take the company to its desired destination.
With a business plan in place, the company knows where it is heading.
Best Part of a Business Plan
A business plan has several parts like the mission statement, company background, product description, operations, marketing plan, financial planning, competitor analysis, etc. But the most important component is the Executive Summary.
You can hook prospective investors by delivering the information contained in the executive summary in an interesting manner.
The executive summary, although found at the beginning, is an overview of the business plan’s content which is why it is advisable to write it last. The executive summary is at the beginning to provide the reader an overview of the business without having to go through the entire business plan.
Being so, it would be wise to highlight the strengths and competitive advantage of your business within the executive summary. Convince the reader why your idea will be successful. Tell them where your company is now, where it’s going and how you plan on getting it there. Deliver it in such a way that you are narrating a story but with factual information.
Why Write an Executive Summary
Financiers, bankers, investors, lenders, CEOs and managers are very busy people; your Executive Summary tells them if the rest of your business plan is worth their time. Give them a reason to keep on reading. Keep them interested with a well-written and well-thought executive summary.
In most cases, the executive summary is probably the only thing they will ever read in your document. Only after going through the summary will they decide if the entire business plan is worth the read.
The executive summary gets your foot in the door – but can you keep people interested so they don’t slam that door in your face anyway – foot and all?
Telling a Good Story Through the Executive Summary
A story has three parts: the beginning, the middle and the end. Begin your executive summary by sharing about a need in the market which your product or service could fill. The market may not know about the need, but it is there and they will willingly patronize your product or service.
The middle of the summary should include the elements found in the other parts of the business plan beginning with the mission statement. Tell something about your company and what it’s all about. Provide a brief company profile, its growth highlights, and market potential.
Introduce your product. Talk about what the market can gain from using it. Present a financial summary through infographic to make it easier for the investor to understand. End the executive summary by presenting your future plans. Explain what you plan to do with the money you intend to raise.
Set the Appropriate Tone
In verbal conversations, we change the pitch and intonation of our voice to convey a clearer message to our listeners. We also use facial expressions, body language and hand gestures to do this as well. In written communication, however, this gets a little bit tricky because of the lack of the voice aspect. So instead of our voice, we use “Tone”.
In writing, the tone is your “voice”. It affects your readers the way your voice, facial expressions, and hand gestures would when you talk.
It is essential that you know how to set the appropriate tone, especially when writing in the business setting. Injecting humor might be appropriate for a stand-up comic to do as he pitches an idea about a stand-up act to a producer but it might not work the same way if you are trying to get investor funding for your startup.
To help you set the tone of your executive summary, think about the what, why and who. Ask yourself what you want your reader to know, who your reader will be and why you are writing it. Keep it formal, professional and easy to understand.
Things to Remember
Here are some things to consider when writing an executive summary:
- Should be a short review of the Business Plan
This means that the content should not be as detailed as the information outlined in the other parts of the document. Save the charts, numbers, and analysis for the report itself.
- Apply structural guidelines in the Executive Summary
Make the paragraphs short and concise. It should also make sense even without reading the entire report.
- Use graphics, bullet points, and headings
Graphics, bullet points, and headings are useful tools to summarize documents. Graphics can provide substantial information at a glance compared to reading it in words. Lengthy information can be itemized into digestible bullets. Organize the information using headings to avoid mix-up.
- Define the problem
The reason why you are presenting your business plan to investors is for them to help you solve it. Make sure to define the problem in a clear and understandable manner.
- Offer a solution
The only way you will be able to convince investors to back you up is to assure that you have the solution to the problem. Explain briefly the research you made in the market and how your product or service will be of use to your prospective customers. Back this up with data on potential earnings.
- End the summary with a paragraph bearing the heading “Why Now?”
In this part, explain why your product or service is an idea whose time has come and why the best time to act on it is now. By putting a sense of urgency, you will prevent your investors from dilly-dallying on their decision and secure their commitment ASAP.
Knowing if Your Executive Summary is Good Enough
By now you should know that an executive summary is a concise and relevant explanation of what your company does. Only when you grasp its real meaning will you be able to produce the ideal executive summary. There are a few processes to go through to make a summary including reading and rereading several times.
But here’s one way of determining that you did it right. Get a non-investor to go over your output then ask that person to explain what he/she just read. If he/she is able to verbalize your executive summary, then you’re good to go. If not, it means your work needs rewriting.
Coming up with a well-presented business plan is not the end of it. There are times when the investors will say they don’t have time to read your plan so you’d have to verbally summarize its contents to them. And the best part to present is the executive summary.
The executive summary may seem long at a glance, but it should only take two to three minutes to read aloud. Do not read your executive summary to your investors. They’d expect you to know what’s in your business plan and be able to tell them in your own words without having to read from it.
Reading requires looking at the document and makes you lose valuable eye contact with your listener. Use a PowerPoint presentation as a guide instead.
Business gurus call this stage the Elevator Pitch in reference to an elevator ride which could last up to two minutes. Due to the short attention span of an average person, that is the time you need to convince your prospective investors on the novelty of your idea.
Do Your Homework
Your verbal presentation must be brief and concise while highlighting the important points. You have to hook your listeners into every word you say. Cite statistics without having to look into your folder. A few seconds gap in your presentation because you had to refer to your notes could potentially lose the interest of your prospective financiers.
Be passionate when delivering your report and speak with authority. Excitement is contagious. Be excited. Your listeners will want to know what you’re excited about and pay more attention. Welcome their questions. Most often than not, questions equal interest. Be prepared to answer questions – it’s your business – own it.
I hope you find this article helpful and if you want to learn more about starting your own business, StartupJungle.com has a 21 point checklist for starting your new business. Make sure you download this if you’re serious about getting started.