How to Write a Business Plan Executive Summary That Sells Your Idea Here's an easy-to-follow outline to create an impactful business plan executive summary.
By Eric Butow
Key Takeaways
- The purpose of an executive summary
- Common mistakes to avoid
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This is part 4 / 9 of Write Your Business Plan: Section 3: Selling Your Product and Team series.
The first part of your plan that anybody will see, after the title page and table of contents, is the executive summary. This could be considered an expanded table of contents (in prose form) because it's more than an introduction to the rest of the plan. It's supposed to be a brief look at the key elements of the whole plan—and it's critical.
Executive Summaries Sell Ideas
The actual executive summary should be only a page or two. In it you may include your mission and vision statements, a brief sketch of your plans and goals, a quick look at your company and its organization, an outline of your strategy, and highlights of your financial status and needs. If you've ever read a CliffsNotes version of a classic novel, you get the idea. Your executive summary is the CliffsNotes of your business plan.
Related: Executive Summary
Labor over your summary. Polish it. Refine it. Ask friends and colleagues to take a look at it, and then take their suggestions to heart. If your plan isn't getting the response that you want when you put it to work, suspect a flaw in the summary. If you get a chance to look at another plan that was used to raise a pile of cash, give special scrutiny to the executive summary.
The summary is the most important part of your whole plan. Even if a plan is relatively short, it's difficult for most people to keep that much information in their minds at once. It's much easier to get your arms around the amount of information—just one or two pages—in an executive summary. Your plan is going to be judged on what you include in the summary and on how well you present it.
A good rule of thumb for writing an effective and efficient business plan is to avoid repeating information. Brief is better and clearer, and needless repetition may annoy some readers and confuse others. Take extra care when writing your summary. You'll be glad you did.
Related: How to Craft a Business Plan That Will Turn Investors' Heads
Ultimately, you want the executive summary to be as strong as possible because it is also the first thing people read in your plan, and we all know the power of a strong first impression. This is where you want to wow people and make them think. This is like the coming attractions, or trailers, at the movie theater. You want that trailer to be enticing and bring the audience members back to see the film. Likewise, you want your readers to want to read your plan.
Your Business Plan's Elevator Pitch
As Tim Berry writes in his article How to Write an Executive Summary: "The executive summary is like an elevator pitch. You're selling someone on reading your full plan while quickly summarizing the key points. Readers will expect it to cover certain areas of your business—such as the product, market, and financial highlights, at the very least. While you need to include what's necessary, you should also highlight areas that you believe will spark the reader's interest. Remember, you're telling the brief but convincing story of your business with this summary. Just be sure that you're able to back it up with the right details with the rest of your business plan."
Related: How to Write a Business Plan
When Should You Write Your Executive Summary?
Because the executive summary comes first in your plan, you may think you should write it first as well. Actually, you should write it last, after you've spent considerable time mulling over every other part of your plan. Only then will you truly be able to produce a summary of all that is there. Returning to the CliffsNotes analogy, it's impossible to summarize a book until the book is written.
Purposes of the Executive Summary
The executive summary has to perform a host of jobs. First and foremost, it should grab the reader's attention. It has to briefly hit the high points of your plan. It should point readers to questions requiring detailed responses to the full-length sections of your plan where they can get answers. It should ease the task of anybody whose job it is to read it, and it should make that task enjoyable by presenting an interesting and compelling account of your company.
The first question any investor has is, "How much?" followed closely by, "When will I recoup my investment?" Perceived risk and exit strategies are supportive information, and these in turn are supported by the quality of the management team and the proposed strategies.
Related: Why You Shouldn't Send Your Business Plan to Investors
It doesn't much matter whether you are presenting the plan to a family member, friend, banker, or sophisticated investors such as investment bankers or venture capitalists. They all need the same information. Concealing the amount and terms will only lessen your chances of successful financing.
How Long Should an Executive Summary Be?
Five minutes. This is how long an average reader will spend with your plan. If you can't convey the basics of your business in that time, your plan is in trouble. So make sure your summary, at least, can be read in that time and that it's as comprehensive as possible within that constraint. If you are using a deck, limit yourself to one slide and one minute of comments.
Related: How to Create a Business Plan Investors Will Love
Points to Include in an Executive Summary
A suggested format for an executive summary:
The business idea and why it is necessary. What problem does it solve?
- How much will it cost, and how much financing are you seeking?
- What will the return be to the investor? Over what length of time?
- What is the perceived risk level?
- Where does your idea fit into the marketplace?
- What is the management team?
- What are the product and competitive strategies?
- What is your marketing plan?
- What is your exit strategy?
If you can address each of these in two or three sentences, you will have a twenty to twenty-seven-sentence executive summary.
Company Description
If your company is complex, you'll need a separate section inside the plan with a heading like "Company Description" to describe its many product lines, locations, services, or whatever else it is that makes it a little too complicated to deal with quickly. In any event, you provide a brief description, no longer than a few sentences, of your company in the executive summary. And for many firms, this is an adequate basic description of their company. Here are some one- or two-sentence (mock) company descriptions:
John's Handball Hut is the Hamish Valley's leading purveyor of handball equipment and clothing.
Boxes Boxes Boxes Inc. will provide the people of the metropolitan area with a comprehensive source for packing materials, containers, and other supplies for the do-it-yourself move.
Salem Segway Witch Tours offers tourists the only Segway tours of the infamous home of the seventeenth-century witch trials.
Related: Turn Your Business Plan Into Money!
Optional Information
The following items are not a necessity in your business plan: mission statement and corporate vision. If you have honed either down to a clear and concise sentence, by all means, use it in your plan.
Mission Statement
A mission statement is a sentence or two describing the company's function, market, competitive advantages, and business goals and philosophies.
Many mission statements communicate what your business is about and should include a description of what makes you different from everybody else in your field. Mission statements have a place in a plan: They help investors and other interested parties get a grip on what makes your company special. A mission statement should be clearly written. Here are some (again, mock) examples:
River City Roadsters buys, restores, and resells classic American cars from the 1950s and 1960s to antique-auto buffs throughout central Missouri.
Captain Curio is the Jersey Shore's leading antique store, catering to high-quality interior decorators and collectors across the tri-state area.
August Appleton, Esq., provides low-cost legal services to personal- injury, workers' compensation, and age-discrimination plaintiffs in Houston's Fifth Ward.
Related: How to Use Your Business Plan Most Effectively
Corporate Vision
A mission statement describes the goals and objectives you could "reasonably" expect to accomplish. A small software company whose mission statement included the goal of "putting Microsoft out of business" would be looked upon as foolishly naive.
In a vision statement, however, just those sorts of grandiose, galactic-scale images are perfectly appropriate. When you "vision"—to borrow the management consultant's trick of turning nouns into verbs—you imagine the loftiest heights you could scale, not the next step or several steps on the ladder.
Does a vision statement even have a place in a business plan? You could argue that it doesn't, especially because many include personal components such as "to love every minute of my work and always feel I'm doing my best." But many investors deeply respect visionary entrepreneurs. So, if you feel you have a compelling vision, there's no reason not to share it in your plan.
Related: 6 Tips for Making a Winning Business Presentation
Extract the Essence
The key to the executive summary is to pick out the best aspects of every part of your plan. In other words, you want to extract the essence. Instead of describing everyone in your company, talk only about your key managers. Instead of talking about all your products, mention only the major ones or discuss only product lines instead of individual products. It's a highlight reel, so to speak.
Article Tools and Summarizing the Summary
Within the overall outline of the business plan, the executive summary will follow the title page. The summary should tell the reader what you are planning to do. All too often, the business owner's desires are buried and lost when the reader scrolls through. Clearly state what you are planning to do (your ideas) and what you are seeking in the summary.
The statement should be kept short and businesslike, ideally no more than half a page. It could be longer, depending on how complicated the use of funds may be, but the summary of a business plan, like the summary of a loan application, is generally no more than one page. Within that space you'll need to provide a synopsis of the entire business plan. Key elements that should be included are:
Financial requirements. Clearly states the capital needed to start or expand the business. Detail how the capital will be used and the equity, if any, that will be provided for funding. If the loan for initial capital will be based on security instead of equity within the company, you should also specify the source of collateral.
Related: The One-Paragraph Start-Up Plan
Business concept. Describes the business, its product(s), and the market it will serve. It should point out just exactly what will be sold, to whom, and why the business will hold a competitive advantage.
Financial features. Highlights the important financial points of the business including sales, profits, cash flows, and return on investment. Current business position. Furnishes relevant information about the company, its legal form of operation, when it was formed, the principal owners, and key personnel.
Major achievements. Details any developments within the company that are essential to the success of the business. Major achievements include items like patents, prototypes, location of a facility, any crucial contracts that need to be in place for product development, or results from any test marketing that has been conducted.
When writing your statement of purpose, don't waste words. If the executive summary is eight pages, nobody's going to read it because it will be very clear that the business, no matter what its merits, won't be a good investment because the principals are indecisive and don't really know what they want. Make it easy for the reader to realize at first glance both your needs and capabilities.
