JULIA: ORDER OF EXISTING SECTIONS IS WRONG. THIS ONE SHOULD BE THE THIRD SECTION, AFTER "DO YOU NEED ONE" AND BEFORE "DESCRIBING YOUR BUSINESS."
The executive summary will be the first document in your business plan. This one- to two-page write-up provides a brief overview of the most important components of your business plan. The executive summary might sound like one of the simplest components of the plan – and in some ways, it is. But it’s only simple if you have already completed every other section of the plan, because these sections supply the key information that goes into the executive summary.
Though the executive summary is the first part of your plan that investors or lenders will read, it should be the last part that you write. It needs to be concise and engaging, compelling readers to continue through the rest of your plan.
What to Include
Although you will need to tailor your summary for each recipient – each investor or lender will have specific types of businesses it likes to fund or is allowed to fund – anyone you are pitching your business plan to will want to see the following information in your executive summary:
- Your business's name and location
- A one-sentence summary of your business’s value proposition: what separates you from the competition?
- An overview of the problem that your business will solve
- A brief explanation of how your product or service solves that problem
- An honest acknowledgment of existing competitors and a short description of your business's competitive advantages
- A description of your ideal customer
- Proof that there is a market for your product or service
- A summary of the management team you've assembled and how their experience will drive your company’s success
- A brief description of the development stage your business is currently in
- Summary financial data on sales, gross margin and profits for the next three years that are realistic, accurate and compelling
- How much money you’re requesting and, for investors, what percentage of ownership you’re offering in exchange for their backing
- What major goals your business has achieved so far and seeks to achieve in the near future
How to Write It
The executive summary should be written in simple, clear language that will allow lenders and investors to understand your product or service even if they have no background or experience in your industry. You’ll need to quickly convince the reader that the market wants your product or service and that your management team is in the best position to supply it. Project enthusiasm for your business, but avoid hyperbole and exaggeration. You are more likely to be taken seriously if you are sincere and realistic and persuade with facts.
Make sure to be extremely clear about where your business is currently headed, which shows that you’re confident and have thought through your plan; don’t present several possibilities for what you might do, which projects ambivalence and uncertainty, two qualities that will not inspire anyone to give you money. Also, be sure your executive summary answers the reader's implied question – what's in it for them? What makes your business a good use of their loan funds or investment dollars? (To increase your odds of securing funding, see How Venture Capitalists Make Investment Choices.)
It doesn't matter how compelling your business idea is – if you don't include an executive summary in your plan, or if the one you do include is poorly written or missing fundamental information, investors and lenders will reject your idea and they won’t bother to read the rest of your plan.
Next, we’ll discuss the company overview section, where you’ll get into a bit more detail about what your company does.
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