Six Executive Summary Essentials
Contents
What is an Executive Summary?
The executive summary is the first section of your business plan. As the name implies, its purpose is to give the reader a brief overview of your business plan. But more importantly, it should make the reader want to learn more about your opportunity – to read the rest of the business plan. Investors love modern one- or two-page executive summaries, formatted like a glossy marketing piece, with text well laid out in columns and sidebars, and a couple of relevant graphics. It had better grab their attention, or they won’t look further.
You may have already found several articles, web pages, or books about writing the perfect executive summary for your business plan. They all offer a list of requirements that might take 50 pages to address, but of course, they ask you to write concisely.
Six Must-Have Elements of a Business Plan Executive Summary
Before you start, remember that the goal of the executive summary is to provide a printed version of your best elevator pitch, to provide a positive first impression to the reader. Think of it as a selling effort, not an attempt to fully describe your startup. Here are the key components:
- The problem and your solution. These are your hooks, and they better be covered in the first paragraph. State your value proposition, and what specifically you are offering to whom. Skip the acronyms, history of the company, and the disruptive technology behind your solution.
- Market size and growth opportunity. Investors are looking for a large and growing market. Spend a few sentences providing the basic market segmentation, size, growth, and dynamics – how many people or companies, how many dollars, how fast the growth, and what is driving the segment. Skip the comment that you are conservatively estimating your penetration at 1%.
- Your competitive advantage. Identify your sustainable competitive advantage, like unique benefits, cost savings, or industry ties. Don’t kill your credibility by saying you have no competition. At a minimum, you compete with the way things get done currently. Most likely, the investor has already seen multiple plans with similar solutions.
- Business model. Who is your customer, what is the price, and how much does it cost you to build one? Do you now have real customers, are just starting development. Outline your sales and marketing strategy (direct marketing, sales channel, viral marketing, and lead generation). Identify key quantities, such as customers, licenses, units, and margin.
- Executive team. Remember that investors fund people, more than ideas. Why is your team uniquely qualified to win, and what have they done before? Explain why the background of each team member fits, by naming their roles and responsibilities at relevant companies. Include outside advisors if they have relevant experience.
- Financial projections and funding. You need to show your summary revenue and expense projections for three to five years. Investors need to know the amount of funding you are asking for now, and what they get. The request should generally be the minimum amount of cash you need to reach the next major milestone in your plan.
The above outline need not be applied rigidly in this particular order. There is no magic formula that fits all startups, but make sure you touch upon each key issue. You need to think through what points are most important in your particular case and capitalize on your strengths. Key points skipped are red flags, and investor first impressions will go negative. Additionally, failing to present important points clearly and concisely will also have a bad impact. So, avoid unnecessary wording and focus on delivering a to-the-point narrative. A summary generator can be an invaluable tool in this process. It will help you condense the most essential details of the executive summary into brief and impactful statements with maximum ease.
A final important element is not even in the executive summary, it is the paragraph you use in the email that introduces your company and has the executive summary attached. Less is more here, so include the grabber, show your passion and commitment, and be sure and ask for something (like a follow-on meeting or specific feedback). That’s your metric to see if you have their attention.
You’ll find some additional tips in this Inc.com article, How to Write an Executive Summary, that incorporates thoughts from Akira Hirai, Cayenne’s CEO.