The executive summary is the most important section of a business plan and you should really know how to write the executive summary if you want people to read your business plan. After reading the executive summary of your business plan, the reader should be able to clearly understand the business that you’re in, how it is operated, the competition and the differentiators and its current financial situation.
The executive summary is usually the last section to be written in a business plan because one can only summarize the information that is already laid out clearly in other sections of the plan. While it is last to be written, the importance of the executive summary should not be undermined as it is the first section to be read by the people. Based on the quality of the executive summary the person may decide to read the business plan further or throw it in the bin. Another important point to consider while writing an executive summary is the length of the summary. It should be written like a summary i.e. brief and crisp yet explanatory.
Writing Executive Summary – The Traditional Approach
Traditionally, an executive summary is meant to describe your business to the reader. It should consist of the mission statement, the description of business, key business details such as the number of employees and financial highlights. Let’s look into the contents of the executive summary in detail.
1. Mission Statement
The mission statement should briefly explain the reason why your business exists. A mission statement helps business owners and employees make critical decisions in accordance to the overall direction of business and also helps outsiders such as customers, vendors and media relate with your business.
A mission statement does not have a specific format and it could be anything like few words, a couple of sentences a paragraph or even an image. The key is to keep it focused, making it memorable and clear enough for anyone to understand the purpose of your business.
2. Business Description
In this section you will describe what your business does or will do. You should start this section with a one-sentence description of your business, also called the elevator pitch. It is said that if you can’t explain your business in one sentence to anyone then there is something wrong with your overall business concept.
After the elevator pitch, you can include details such as the description of products or services that your business offers. The idea is to briefly introduce the problems that the target market faces and how your product or service helps solve that problem. You should also briefly mention the competitive landscape and how your product or service is different from that of the competitor.
3. Financial or Business Highlights
If your business has got some achievements that you would really like to share you should put them in this section of the executive summary. As a new business you may not have significant financials to share. In that case, you can try and include highlights such as user growth or some unique achievement such as a testimonial from a big customer.
Apart from the above three sections some other details that can be included in the summary are business details such as the location of the business, legal structure i.e. whether the business is an incorporation, sole proprietorship or partnership, name of the founders and key employees.
If you are writing the business plan for raising capital then also include the purpose of the document when you write the executive summary.
How to Write Executive Summary – The Modern Approach
Businesses today need to sell themselves to everyone, the customer, employees, shareholder, and the investors. Most often the business plans are written to attract investments from venture capitalists and other investors. In this case, your business plan’s executive summary need to sell your business concept to the investor rather than simply describing it. The executive summary should be compelling enough, without being overhyped, to make the right first impression. If you choose to write your executive summary in the new way, you should include:
1. The Grand Opening Statement
These one or two sentences need to be the most impressive and should really convince people that you are not just another startup. Use this statement to describe the uniqueness of your solution that addresses the big problem. This statement will also be your elevator pitch that you will use to describe your business to anyone.
2. The Problem
Describe the problem that the customer currently faces and intensity of the problem. The purpose is to establish the fact that there is a big problem out there that you intend to solve.
3. Your Solution
Share your offering in this section and how it solves the problem. Clearly define the offering – whether it is a product, service or a combination of both.
4. Opportunity
Use this section to define the opportunity that you have in hand. Explain the target market, current market size, growth rate, the growth drivers etc. While defining the market size don’t overestimate and be specific about your niche; for example, if you are making a to-do list application that works on iPhone, don’t claim that your opportunity is the entire mobile market.
5. Competition and Differentiation
While you may feel that you are the first mover in a particular space, chances are that you will have competitors. Direct or indirect, existing or expected, there will be competition and it is in your own benefit to recognize and define the competition and your competitive advantage. You may not have an absolutely new business idea but you can always differentiate yourself in terms of service, operating method, price, quality etc. Be very specific about the competitive advantage of your product or service.
6. Business Model
Share your revenue generation methods in this section and who will pay for your product or service. Will you charge your customers a one-time fee, monthly subscription fee or annual license renewal fee? What is your pricing strategy? Are you going to compete on margin or volume?
7. Financials
If you are an existing business then use this section to describe your financial achievements so far and future projections. New businesses with no financial history should simply provide projections for the three years in terms of revenue and profits.
8. The Team
An idea is nothing without execution and it is the business team that executes the idea. Most investors are interested in knowing the people behind the business and their capabilities. Describe the key team members, their experience and work history, role in the current business etc. in this section.
9. The Need
This is where you mention what you are looking from the investor i.e. the amount of funding.
Whatever approach you choose to write, it is essential to know how to write the executive summary in the most effective manner to be able to convince the reader about your business concept.
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