Executive Summary: The Definitive Guide

The executive summary is one of the essential sections of a business plan. It’s also surprisingly helpful to help you stand out from your competition.

This article will look at what makes a practical executive summary and how writing one can help you raise investment for your awesome startup idea.

What is an Executive Summary?

An executive summary is the first and most-read part of a business plan. As the name suggests, it is a business summary written for its intended readers. It would be best if you detailed every essential element of your business in the executive summary.

Although it is the first section of a business plan, you must write it at the last when you prepare the whole business plan.

The executive summary should serve a specified purpose. Consider the intended use for the summary. Ask yourself, who is the intended user?

If the intended user is an investor, the equity ratio will be one of the critical points for the investor. Do not resist telling the investor what equity portion you are willing to share against his investment in your business in the executive summary.

Likewise, if the purpose of your business plan is to raise a loan from the bank, the bank would be very interested in knowing your business’s financial position, making the discussion about your company’s assets viable in the executive summary.

Make the executive summary so good that it makes the reader read the whole of the business plan. No one wants to read a piece of junk. Put every effort. Consider it a make-or-break point for your business.

Since the executive summary of a business plan is the last written element, it now becomes vital for you to know about the different aspects of a business plan.

What is the content of the Executive Summary?

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To write a perfect executive summary, let’s examine the business plan’s elements. The business plan is a combination of three sections.

• The Business: Discussion about the pertinent aspects of your business.
• The Marketing: Going in deep about the market for the product or service offered by the company.
• The Financials: Discuss the financial statements and use of funds to be raised.

Here is a point-wise summary of the content you can consider writing in the business plan:

The Business:

1. Legal Structure and Business Model
2. Business Opportunity
3. Products/Services
4. Management and Key Personnel
5. Operating Procedures
6. Strengths and Weaknesses
7. Core competencies and Challenges
8. Business Accomplishments
9. Location
10. Insurance (If any)

The Marketing:

1. Target Markets (TAM, SAM, SOM)
2. Go To Market Strategy
3. Customers
4. Major Competitors
5. Distribution Channels
6. Key Relationships and Partnerships
7. Advertising Methods
8. Industry and Market Trends

The Financials:

1. Uses of Funds
2. Income Statement
3. Balance Sheet
4. Cashflow Statement
5. Profit and Loss Forecast
6. Capital Spending Plan
7. Assumptions
8. Analysis Like Break-even, NPV, IRR, etc.
9. Financial Projections

Now, it is not necessary to write about every single element above. It depends on the stage of your business. Write what’s relevant for your business.

For instance, if you are in the initial stages of your business and do not have any historical data to support your financial section of the business plan. You may resort to financial projections based on your target market assumptions.

Write your executive summary once you have completed writing the business plan. AT this stage, you have a holistic view of your business.

Let’s look at what investors are eager to see in your executive summary.

What do investors look for in an executive summary?

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You know what? A typical venture capitalist goes through 750 pitches in a year. He invests only in 3. So only 0.4% of the startups raise the investment.

To list yourself in the few businesses that raise investment, you must write the content that investors or lenders want to see.

What an investor looks for in an executive summary is a good summary of the main points that make up your business.

The overview should be clear, concise, and easy to understand. It should include what your company does, why it’s important, whom you’re trying to target with your sales pitch, how much money you plan on making, and why you think it will happen.

It should also include information about your competition so that investors know what they are getting into when investing in your company.

The first thing investors look for when reading an executive summary is how well the company has been organized and set up. They want to be sure there isn’t any confusion as they read the proposed investment documents.

Another thing that investors look for is how much money they plan on making from this investment opportunity. This is usually stated as revenues or profits, but either way, the amount needs to be noted on reasonable assumptions so that people aren’t left wondering if it’s realistic!

Points that you cannot miss out in your executive summary

The Problem:

The investors are curious to know the world problem you are determined to solve. After all, solving the pain makes you massive gains as society rewards the one who can solve the problem at scale.

Try to outline the problem that your business solves in just 2 to 3 sentences. Investors will engage with your words if you clearly state the problem. Framing the problem prepares the stage for the introduction of the solution.

The Solution:

You have primed the investor’s mind with the problem at this stage. He’s ready to look for a solution now.

State a concise description of your product or service, a demo of how it works, and a list of associated benefits.

Ask yourself, what’s your unique selling point? What’s the one thing that is impossible for your competitors to copy?

Are you having any strategic partnerships or critical relationships that give you an edge over your rivals?

Take your time and write a compelling solution that fits your business.

The Team

The team is the core of any business. Investors typically look for a professional team who can implement the solution.

Mention the core team coming up with the solution in your executive summary. The team is one of the critical deciding factors for an investor looking for while investing in a startup.

The Market and Competition

Every entity has its competition. The real deal is how you are going to overcome that competition. What marketing and pricing strategy will you adopt that the customers will accept.

Write about what portion of the market you have already captured and the total available market for your product worldwide.

Conclusion

So, this was an overview of the executive summary. Hopefully, this short guide will help you write an executive summary for your business.

Just remember. Write the executive summary at last once you write the business plan.