Business Plan Tips

Effective Executive Summaries

The executive summary of your business plan is the first thing investors read, and they may not get much further into your business plan. Here's how to make the most of your executive summary.

The executive summary of your business plan may be the only section that ever gets read.

Effective Executive Summaries

If you blow it, you won't get a second chance so you'd better know how to get it right the first time - every time.

Business plans are designed to contain a large amount of detailed information about a company's performance and future prospects. They are crafted to attract the attention of investors, many of whom don't have time to peruse the small print of every business plan that crosses their path. Instead, they rely on the executive summary to decide whether or not they are interested enough to keep reading.

With so much riding on the outcome, your executive summary needs to make the reader as excited about your company as you are. Shorter is usually better, but the rule of thumb is that the executive summary should be no more than 10% the length of the entire business plan. Here's what else you need to know to make the most of your executive summary.

First Impressions

Your executive summary should begin with a sentence that grabs the reader's attention and says why your idea is the best thing since sliced bread. Vague generalizations won't get the job done. You need to be practical, specific, and concise if you hope to solicit the kind of reaction you are hoping for. Also, resist the temptation to use the size of the market as bait. Investors are far more impressed with hearing how your company and its product meet an urgent need.

Establish Need & Define Your Solution

Once you have their attention, you need to convince them that there is a genuine need in the marketplace for what you do, even if it is for a more efficient delivery of an existing product or service. After that has been established, you can discuss how your company fits into the system that meets that need. Be sure to include some specifics about your company's connections in the industry, your existing customer base, and demographics of your actual market segment.

Why You?

Like it or not, you aren't the only business trying to make a profit doing what you do. Even if you are pioneering a new market, there is a good chance that others are either already providing a similar product or will be in the near future. Although you want to clearly define your company's competitive advantages, don't overstate your case. Investors see business plans all the time and adept at spotting inflated claims when they see them.

The Plan

Now it's time to get more specific about how you will go about delivering your product (or service) and generating profit. This is also the place to discuss the strategic benchmarks you hope to achieve in the near term (three to five years) as well as the return on investment you expect.

The Close

You have not because you ask not, right? The executive summary should close with specifics about the amount of investment capital that is needed to achieve your goals. If the reader decides to investment in your business you will be expected to deliver results, so don't lowball the figures to make the pitch more appealing.

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