Executive Summary – Defined
An executive summary is an important part of business plan. It summarizes the key points and gives an overview of the whole business idea. The main theme of executive summary is to summarize main points of the document for the reader.
What should I know about drafting a business plan executive summary?
Include the main points of the business plan in a voice consistent with that of the language in the body of the plan. The executive summary is a summation of your entire business plan. Many instructional guides will recommend taking the first and last sentences of each paragraph to develop the body of the summary. While this may be an effective techniques for including the components of the business plan, it misses a fundamental purpose of the executive summary – creating a voice for the business.
The business plan has to capture the essence of the business and project the same level of exuberance, confidence, and ambition as the entrepreneur. Below is a overview of what you should include and aim to achieve within your business plan.
Overview Executive Summary
The executive summary should tell all of the main points of the business plan in a concise format. However, there is more to writing the executive summary than simply being able to synthesize large amounts of material into a couple of short paragraphs.
You are attempting to translate the larger body of the business plan into a concise summary that adequately demonstrates the venture’s value proposals. An effective executive summary maintains the same voice as the body of the business plan. For example, if you use an exuberant and excited tone in describing your product, your executive summary should mirror this voice. Try to create anticipation for the body of the business plan that will follow.
Your objective should be to explain the product, service, or idea, the core business model, and the value creation process to the reader. Hopefully, after reading the executive summary, the reader will approach each section of the business plan with a basic understanding of what the section includes and will explain in further detail.
Contents of the Executive Summary
It depends on your business whether you are going to launch a new business or you already have an established business.
- Startup Business – Describe what your business is and how it can be an opportunity for investors as well as customers.
- Taking advantage of the opportunity – Explain how your business will serve the market and fulfill their needs.
- The target market – Describe and clarify who will be your target customers?
- Business Model – Describe your sales forecast, revenue, expenses and target market to convince and make it more appealing.
- Marketing Strategy – Give an outline how the product will be marketed and promoted in the market.
- Competition – Define all characteristics of your business that make it more appealing and give you competitive edge to capture market share.
- Financial analysis – Summarize your forecasted financial budget, revenues, expenses etc.
- Implementation plan – Describe all details of how you are going to implement your business idea and strategy in the real world.
For established firms an executive summary usually includes the following details.
- Mission statement – It describes what does your business do and what it serves.
- Company Information – This section gives an overview of the company. It includes formation date, location, number of employees, statistics etc.
- Business Highlights – It consists of details how your sales, revenues and market share grew over the time.
- Financial Summary – It includes financial summary of the company such as revenue, expenses, assets, liabilities etc. if a company want to expand its business then it may include the financing needed for expansion.
Tips on Drafting the Executive Summary
Wait until the rest of your business plan is substantially complete before beginning work on the executive summary. You can’t adequately summarize the parts of the plan until you’ve thought through and have begun to develop the different sections. Like the body of your plan, the executive summary will necessarily change and evolve as the business plan evolves.
As you know you may use the business plan as either a planning tool or as a manner to obtain a loan or equity financing. You will likely modify the executive summary slightly depending on its intended purpose.
Length of the Executive Summary
Opinions vary as to the appropriate length of the executive summary. In truth there is no magic length for the summary; rather, you should edit the summary to fit the intended use and expectations of the reader. An executive summary for a bank will generally be a bit longer than the executive summary being presented to a venture capitalist. The reason is more a matter of time and attention to detail.
A venture capitalist will want to a see a summary that concisely explains the concept – similar to the elevator pitch (business pitch). A bank lender, on the other hand, will review the plan more thoroughly as part of the business loan application. A well crafted and thorough business plan can lay out a more complete understanding upfront that maximizes comprehension of the body of the business plan. In either case, you will continue to mold and scope the business plan to present the most accurate and effective presentation of your business’ value proposition and how you intend to carry it out.
Final Points on the Executive Summary
In my humble opinion, the executive summary is the most valuable portion for planning purposes. This section causes you to think about the business holistically. You are tasked with summarizing everything you do or plan to do into a few concise paragraphs that will appeal to intended recipient. This is where you will be able to compare the strength and fit between the portions of the business plan.