Entrepreneurs sometimes approach the executive summary section of the business plan like it's an unnecessary distraction, a redundancy that has little or no value when stacked up against the depth of information contained elsewhere in the plan.
That's a big mistake because the quality of the executive summary often determines whether or not the business plan gains traction with its readers.
An executive summary is supposed to be a synopsis of the entire business plan. It's an overview – but it's not an outline. If your executive summary simply describes the various sections of your business plan (like a table of contents), then you've missed the boat. Rather than listing the elements of the business plan, an effective executive summary tells the company's story by narrating the information, analysis, and predictions contained within the plan.
The executive summary should be the first thing the reader sees. An exceptional summary grabs the reader's attention from the very first word and doesn't let go until it ends – in two pages or less. The topics that should be addressed in the executive summary include your mission statement, business activities, strategic advantages, market position, product demand, the company's financial outlook, organizational structure, and critical challenges. In other words, the executive summary should hit all of the topics that are addressed in the business plan.
As a business owner, you should be conscious of the fact that executive summaries serve a number of important functions for your business plan and for your business:
- Securing investment dollars. Investors see literally hundreds of business plans every year. They rely on executive summaries to help them decide whether or not the rest of the plan is worth reading. If your executive summary doesn't pop, investors probably won't drill down to more detailed parts of the business plan.
- Pitching business concepts. A carefully crafted executive summary can also be a tool for pitching your business concepts to strategic partners, collaborators, lenders, and other key stakeholders. Since some of these individuals may never explore the full business plan, the executive summary will be their only exposure to your company's strategy.
- Seeing the big picture. Apart from its external value, your executive summary has internal importance because it helps you see the big picture. While other parts of the plan bog you down with details, the executive summary forces you to consider how the pieces fit together.