Definition: A nontechnical summary statement at the beginning of a business
plan that's designed to encapsulate your reason for writing the
plan
Anyone looking at your business plan will first want to know
what kind of business you're starting or already have. So the
executive summary, or statement of purpose, should succinctly
encapsulate your reason for writing the business plan. It needs to
tell the reader what you want and why, right up front. Because it's the first thing the reader of your business plan
sees, it must make an immediate impact by clearly stating the
nature of the business and, if you're seeking capital, the type of
financing you want. Are you looking for a $10,000 loan to remodel
and refurbish your factory? A loan of $25,000 to expand your
product line or buy new equipment? Would you like to find a partner
to whom you'd sell 25 percent of the business? What's in it for him
or her? The questions that pertain to your situation should be
addressed here clearly and succinctly. Your executive summary should be short and
businesslike--generally between half a page and one page, depending
on how complicated the business or use of funds is. It should touch
on the following key elements: - Your business, its product, the market it serves and its
competitive advantage
- Your business's legal form of operation (sole proprietorship,
partnership, corporation or limited liability company), when it was
founded, the principal owners and key personnel
- Major achievements, which would be anything noteworthy, such as
patents, prototypes, important contracts regarding product
development, or results from test marketing that have been
conducted
- If you're looking for funding, include the amount and purpose
of the loan requested, the repayment schedule, the borrower's
equity share, and the debt-to-equity ratio after the loan, security
or collateral is offered.
- The company's current market value, estimated value or price
quotes for any equipment you plan to purchase with the loan
proceeds.
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Although it's the first part of the plan to be read, the
executive summary is most effective if it's the last part you
write. By waiting until you've finished the rest of your business
plan, you ensure you have all the relevant information in front of
you. This allows you to create an executive summary that hits all
the crucial points of your plan.
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