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 will result in growth for the business.
Tips for writing an executive summary that gets noticed
While all executive summaries contain more or less the same type of information, they aren’t all created equal. There are a few tips you can implement to make sure yours helps your business plan stand out
- Think of your executive summary as a pitch
Rather than simply summarizing a lengthy document to prepare the reader, imagine that you only have the one or two pages of your executive summary to convince a lender to fund your business. Imagine it’s your entire business pitch, and inject it with the enthusiasm that any good pitch deserves.
Just because it’s the first part of your business plan doesn’t mean it should be the first section you write. Instead, write the entire business plan before getting to the summary. This gives you the chance to really work through all of your thoughts as you write the formal plan so that by the time you get the summary you’ve already processed the information contained in the document and it’ll be easier to pick out the key parts you should include.
- Keep your executive summary short
You may have crafted a lengthy and detailed business plan, but the executive summary really shouldn’t exceed two pages. Spend plenty of time working on those two pages to make sure they are clear, informative, and engaging.
- Prioritize sections based on importance and strengths
While you should touch on all of the sections of a business plan that we went over in this article, each business is unique. Summaries for plans will vary in their structure depending on the business. Your primary audience may be most interested in your unique logistical capabilities, your technical expertise, or some other aspect particular to your business.
- Avoid using cliched language
The business world, and particularly the world of venture capital, can be riddled with trendy phrases that don’t necessarily communicate much. For example, it’s become very common for startup companies to describe themselves as “disruptive,” rendering that word meaningless. Proofread your executive summary checking for cliches or buzzwords, and try to replace them.
- Pay attention to your tone
While you may want to edit your executive summary a little bit depending on who the audience is, you should typically maintain a clear and professional tone. It should be easy to understand while avoiding being too casual.
You’ll have surely done your research while coming up with the content for your business plan, so your executive summary is a chance to let your knowledge shine. Here, you can show that you really know your stuff when it comes to your industry, your market, your target demographic, and your business.
It’s also wise to do your research regarding the audience for your executive summary. This is a critical document that can make a difference in terms of your chances of getting funding, so knowing who will be reading it and tailoring it to them can be helpful.
If you’re not sure where to start, search for sample business plans online. You can use a fill-in-the-blank business plan template to work through the different sections of your plan, and once that is complete, you can use those sections to guide your writing of your executive summary.
Finally, try to tap into the excitement you have for your business! Your aim is to get the reader of your executive summary excited about your business too, so tap into the things that made you want to start your business in the first place. With this mindset, you’ll be able to write an executive summary that’s sure to get you noticed.