The executive summary is the most important part of the business plan. Many people will only read this. If it does not capture the attention swiftly, your plan will be discarded.
The Executive Summary – Win or Lose !
The executive summary in itself will not secure an investor, however, it can lose them.
The executive summary is also used as a stand-alone document when introducing the project to others so it must be able to capture interest by itself – and entice the reader to take the next step and seek more information, and hopefully secure a meeting.
Executive Summary – Structure & Content
The executive summary should ideally be one page. If longer you run the risk of only the first page being read. If it is longer it must not be all text ! It must:
• introduce the project in terms of what area it is concerned with, what it is trying to do, and list the key individuals and advisors involved
• explain, very clearly and simply, the proposition – exactly what are you going to produce, what need does it satisfy that is not being satisfied at present (will it do something better, faster, cheaper, more conveniently, is it easier to operate, smaller in size, longer lasting, lower maintenance …). Be specific and do not assume the reader will immediately see an advantage that you consider obvious
• state specifically the competitive advantages of products and/or processes in relation to other alternatives in the market, and then explain and substantiate how these are important to customers – this includes in particular confirmation that consumers are actually willing to pay for such ‘advantages’
• describe the stage the project reached particularly in terms of the “readiness for market” of its products, or product concepts, and any intellectual property such as patents, that may support the products
• outline the main characteristics of your market, including size and growth, and specify the market opportunity that you are addressing. Be specific about the main target groups of consumers
• highlight any “evidence of success” – this may be trade reviews, analyst comments, sales or partnership agreements, working prototypes, etc. which help to make the project more tangible and raise confidence
• summarize the objectives of the company in the short and long term and outline the key strategies you will use to achieve them
• state your finance requirements and what stake in the company is available for this (see Financial Structure). What is the planned exit route for the investor (How will they get their money, and profit, back !)
Test for Clarity and Effectiveness of Communication
It is always difficult for entrepreneurs to objectively evaluate what they have written. We are all often too close to the project.
Any executive summary must be tested on a ley person – any ley person. A person unfamiliar with what you are doing. Use a friend, even your children if they are old enough.
You need to ensure that following their read through they can have an intelligent conversation about the project, and that they appear impressed with it. You want them to be motivated to ask you questions about detail, not basic questions about what you are doing!
Ask them for specific and no-pulled-punches feedback. What do they like about it, what don’t they? Is the proposition clear – i.e. can they explain it to you? Do they find the proposition compelling? Ask them how you can improve the document? Were there any areas that gave them reason for doubt or scepticism? …etc.
You cannot underestimate the importance of the executive summary, so work hard to get it right.
