Business Plan Executive Summary

The same is true for scenario no. 2—“Strategic Planning for Business”—which only differs from the simple business plan in that there is more than one founder.

When you begin soliciting money from family and friends you begin to enter a different world, and the business plan executive summary starts to take on meaning. Although, in the case of scenario no. 3—the “Business Plan for Small Business”—I would suggest you incorporate your executive summary as the major part of your "friends and family" business plan rather than as just an introduction.

Your business plan in this scenario is already somewhat condensed and because of its small size does not require a separate executive summary

Of course, when you become involved in raising substantial outside capital for your new business, your business plan executive summary becomes the most important document you will prepare for your business. You will use it as a stand-alone document written for the precise purpose of selling your business idea to an outside investor.

Your executive summary must convince investors to ask you for a complete “pitch,” or a copy of your formal complete business plan. That is why this document is so important, and why it must be carefully crafted. It is the key for entering the world of the outside professional investor.

Getting Started

So, how do you go about writing a business plan executive summary? The general consensus is that you need to write your formal complete business plan first, and then use that information to prepare your executive summary. I, of course, have a different opinion…

Before any investor will consider putting money in your new business, you will have to “pitch” your business idea to them some how. This could be as simple as sitting down with your prospective investor and going over your business plan…as you probably would with family and friends.

Or, you may have to put on a multimedia presentation in front of a large group of investors at some “event.”

Therefore, it is my suggestion that you visualize your in-person presentation, or “pitch;” write out a script, and use that as the outline for your business plan executive summary. Then you can write your business plan to support your executive summary and pitch.

However you decide to approach writing your business plan executive summary, there are several key components that must be included:

• The Hook. Like any good sales copy, you need to get the attention of your reader immediately—you have precious little time to convince the reader to continue reading. Anything of a dramatic (and appropriate) nature should be presented as early as possible…an invention…a medical breakthrough…a high-profile person on your management team…anything that is special or noteworthy about your new business concept. Always lead with your “best” material.


• Your Product. This is where you describe a major problem in your industry that you have a solution for. Be specific. Keep it simple. No acronyms. You also need to describe where your company will fit into the current scheme of things, and how your involvement will affect the industry by solving this major problem. How your product(s) can benefit your industry.


• The Market. You will need to describe the potential market your business is addressing. How big it is…how mature it is…how well defined it is…how fast it is growing…how easy (or difficult) it is to enter…and the portion of the market you intend to capture (be careful here—no pie-in-the-sky numbers). If you are already receiving sales, or have done test marketing, say so here.


• Your Business. This is where you tell your reader why and how you are going to beat out the competition (and you do have competition even if it is only the status quo). Be clear here in describing your competition and exactly what your advantages are over them.

  You will need to convince an investor that your potential market will actually “pay” for what you have to offer. You should also be able to offer a five-year projection of how much, or how many, of what you are offering you anticipate selling.



• Your Team. To many investors this is the most important part of your business plan executive summary. An investor is keenly interested in who will be accomplishing all your claims of success. If you have special talents on your team, say so, but don’t blow anyone’s accomplishments out of proportion.


• Projections. Investors expect to receive a lot of money in return for investing in your business, and this is where you show that. Provide five years projected revenues and expenses, and be sure your numbers pass the reasonableness test. Investors know what margins can be attained in every category of business and if you are not within the norm, you may be dismissed as not being experienced enough to run a company.
  

• The Request. Investors will expect you to be very specific about asking for their money, as well as what you are willing to give up to get it. You also need to tell them if you will need additional rounds of funding—and when. Don’t scrimp here, because your investors will not be happy if you run out of money before you said you would.

If you can “hook” your reader in the first paragraph, they will appreciate having enough information to determine whether they want a “pitch” or not. If you lose your reader in the first paragraph…it won’t matter how long or short your document is—you’ll never get them back.

Using Your Executive Summary

What do you do with your business plan executive summary once it is completed? First of all, it is the first section of your formal business plan—which you want to complete before you start circulating your executive summary. You never want to tell a prospective investor you can’t show them your business plan because it is not completed.

Most importantly, this is your “sales” document…your brochure if you will, and you want to make sure that every contact you make has a copy. You should meet with your attorney and make sure they have a few copies to pass to their investor clients as well.

You do the same with your banker, and your accounting firm. Every member of your advisory board should have copies, and they should be arranging introductions with people who you would also leave a copy with.

When networking, both formally and informally, you should leave copies with anyone you believe could introduce you to a prospective investor. Never leave home without a couple of copies of your business plan executive summary in your pocket.

You can be judicious about who you give copies to, but if you’re paranoid about someone stealing your idea, or knowing “too much” about the details of your business…you stand a good chance of never getting your business funded.

For more information on using your business plan executive summary to help finance you business, read the other reports in the Small Business Financing module.

If you are working on expansion for your business, you can get information here on Business Expansion Planning