AFRICA – So you have a business plan. What’s next? You need an Executive Summary.
As an entrepreneur there may come a time when you need to present your business plan to a financier or potential investor. These individuals do not always have enough time to read through a lengthy description of your entire business plan. For this reason, you need a document that encapsulates your business strategy and gets your message across as concisely and accurately as possible. This document is called an executive summary.
What is an Executive summary?
An executive summary is a one page document that gives a general outline of your business in brief detail. It is an important marketing tool because in just one page it can give someone a precise description of your business idea and management plan.
What should I consider when writing my Executive Summary?
The purpose of an executive summary is not just to summarize your business plan, it is supposed to sell your idea as well. An executive summary is therefore about making a strong impression – in a matter of five minutes. Ideally, an executive summary should grab a reader’s attention instantly and lead them to inquire more about your business as an opportunity.
How do I write an Executive summary?
There are different ways to go about writing your executive summary and there are different formats to choose from. In terms of content, you’d need to include information on the name of your company, the sector you operate in , as well as important information on your product or service. Other information would include some of the milestones you have achieved, who your customers are, your business strategy and your plan for the future. In general, avoid technical words, instead keep your sentences short and simple.
How will an Executive Summary help my business succeed?
An executive summary is a valuable document because you can give it to a financial institution or development organization, who you think might be interested in helping your business grow. Think of it as a type of business card that you would give to someone on your first meeting. Since it gives a brief plan of your business, where you are now, the goals you intend to achieve and how you are going to achieve these goals, it can be a useful summary when seeking advice from experts or other successful entrepreneurs. An executive summary also helps you to refine your understanding of you own business and ‘sum it up’ for yourself.
If I already have a business plan do I need an Executive Summary?
Yes. Athough you may already have a business plan, bear in mind that investors or financial institutions do not have time to sift through hundreds of pages of business plans. An executive summary is short, enabling someone to read it in a few minutes and assess its financial viability at a glance. An executive summary introduces your business plan – if someone likes your executive summary, chances are they’ll be interested to read your full business plan.
Check online for an example of an executive summary.
Adam Hoeksema
November 23, 2010
Excellent outline. I just wanted to expand on your first point a bit.
Famous venture capitalist Guy Kawasaki said in his book, The Art of the Start, “Of the effort you put into write a business plan, 80 percent should go into the executive summary. These are the most important paragraphs of your organization’s existence.”
That being said, I wanted to include a basic outline of how I would suggest you write your executive summary.
The Grab – This section is probably the most important part of your entire executive summary. In two or three sentences you should tell the reader why your business is special. Maybe you have Michael Jordan as a customer and he has promoted your product on Twitter for free. Maybe you just signed a partnership agreement with Google. Maybe you were just awarded a patent, or maybe you just made your first big sale. Sometimes just a simple quote or testimonial might be enough, the key is to grab the attention of your audience and draw them in to the rest of the document.
Big Problem – The first ingredient of a great idea is a Big Problem, so explain the Big Problem that your product addresses. For instance, there is too much traffic in Chicago, and everyone hates traffic. Everyone in the room should be saying “yeah I hate that.”
Unique Solution – The big problem is the easy part. Now you have to convince the reader that you have come up with a unique solution for the big problem. If you have these two ingredients you have the makings of a great idea. Maybe you developed a new traffic control system that will save one minute for every person in Chicago, each day, during their commute. One minute each day is valuable when you are talking about a couple million people.
Market Potential – Elaborate on the big problem by providing stats for your industry. Be careful not to pretend that you have a larger market than you do! The fact that the medical device industry is $100 billion annually means nothing because your new medical device will only serve a small segment of the industry. Break it down to a realistic market potential.
Unique Selling Proposition – This is where you elaborate on your unique solution. What specifically gives your product or service an advantage over the competition? Maybe your home health care service actually sends doctors to the home instead of just nurse practitioners, or maybe you guarantee same day visits so that you don’t have to schedule ahead of time. Just point out why you are special.
Business Model – Your business model needs to be clear and easy to follow. Essentially, you are answering the question, “How will you get people to take dollars out of their wallet and give them to you?” Keep the model simple – especially in the executive summary.
Management Team – Depending on what industry you are in, this can be one of the most important parts of your executive summary. Your investors or bankers are putting trust in the team, not the idea. Ideas are easy to come by, but executing on those ideas can only be accomplished through a strong team. Quickly show why your team has the experience and knowledge to execute your business plan.
Financial Projections – Based on your market, your business model, and your historical performance, you need to develop a bottom-up financial forecast. If your plan is for a group of investors, don’t spend too much time on this section because they know that you have no idea how much money you might make. Investors typically won’t make a go / no-go decision based on your financial projections. They will essentially make their own financial projections. The point of your projections is simply to demonstrate your competence, and your ability to build financial projections based on a sound set of assumptions.
Request – Now it is time to request either an investment or loan depending on the purpose of the executive summary. You should restate why your company provides value. Remind the reader of the big pain that you are solving and your market potential. Finally reemphasize your team and its ability to get the job done. Ask for the dollar amount that you need to reach the next major milestone for your business. Don’t disclose how much equity you are willing to give up or what interest rate you are willing to pay. This should be done later through face to face negotiation.
There you have it. The basic executive summary outline that I typically provide to clients from my blog – http://www.theexecutiveplan.com. Good luck!
Wilmer
April 19, 2012
This information is off the hziool!