Whether you’ve been in business for years or you’re just starting out on your entrepreneurship journey, you’ve probably heard all about the importance of a strong business plan. This widely used business document gives you the chance to dig into the details of your business, ensuring you catch mistakes or weak points before it’s too late and allowing you to think through important information for your business.
Business plans aren’t just useful for you as an entrepreneur, although they’re definitely handy to create and refer back to regularly. They’re also helpful if you plan to secure funding for your business. A bank or other lenders will want to see that you’ve carefully created a strategic plan and shown that your enterprise can be profitable before they provide you with funds. You may even find a business plan competition to enter, giving you an opportunity to win funds.
The executive summary is the opening section of a traditional business plan, but it’s relative brevity compared to some of the longer and more daunting sections mean that it’s often overlooked. Don’t be fooled by their short length: executive summaries can make or break a business plan, so read on to find out how to make your executive summary as strong as possible.
What is an Executive Summary
The executive summary is the first section of a business plan and is meant to provide an overview of the plan, drawing attention to the most critical areas. It isn’t just a simple rewriting of the plan in short form. Instead, it is a strategic component of the plan that conveys all of the essential information to busy readers in a short, engaging, and easily understandable way.
Is an executive summary really necessary?
An executive summary is an essential component of a strong business plan. It should be written with a target audience of busy investors in mind. These individuals may have hundreds of plans come across their desks, and the chances of them reading your complete business plan from start to finish when they’re just evaluating your business idea is very slim.
When sending your plan to investors, imagine that they’ll only read your executive summary. It’s your chance to capture your audience’s attention and ensure that your business gets consideration for funding.
How long should an executive summary be?
Your executive summary should be one or two pages in length and shouldn’t exceed 10 per cent of your finished business plan. That means that if your plan is 10 pages long, you should keep the summary to one page in length.
What to Include in Your Executive Summary
Your executive summary should include a high-level overview of what the rest of the plan contains, with an emphasis on the aspects that are of interest to those you might be pitching for business loans and other types of funding. Key sections of your summary include:
The business opportunity
This section tells the reader that you’ve identified a need or opportunity in the market and describes your business is uniquely suited to meeting that need.
A description of your target market
Here, you’ll describe who you plan to sell your product or service to and why they’re a good target market for your offering. You can back this up with some relevant data to capture the reader’s attention, such as how many dollars your target market spends annually on your type of product or service.
Your business model
Summarize what it is exactly that your business will be doing. How will you create and deliver your product or service to your target market, and how will you generate revenue?
Your marketing plan
Marketing and sales are key components in any business strategy, and without them even a fantastic product may not generate much traction. Summarize how you plan to market your product and capture sales.
Showing familiarity with your competition demonstrates that you’ve done your research and know what you’re up against. Include an overview of your primary competitors, including your competitive advantage and how you plan to capture market share for your business.
A financial overview
This portion of the summary shows that you’ve thought through all of the costs associated with starting and running your business in the first few years, as well as realistic and informed sales projections for the first three years. Financial planning is particularly important if your goal is to access funds, as lenders will want to see that the business can be successful and that they’ll get a return on their investment.
If you’ve already been in business for some time, this section should include a summary of your financial history and any major wins or successes.
You may have a business structure involving lots of decision-makers and employees, or you may be a business of one. In either case, you should include information about all of the key people involved in your business, including their areas of expertise and previous experience if relevant.
Your implementation plan
This section explains how you will take your business from idea to launch.
Your funding needs
This critically important section explains how much funding you are looking for and how exactly it will be spent. It outlines how the spending