Writing the Executive Summary
The executive summary is probably the most important document you will ever write for your business. Why? Because it is likely to be the only document most people will read about your business. It is also the document that will do more to move your business to the next stage than any other document. Almost everything rides on the Executive Summary. It is the key to attracting investors, customers, suppliers, partners, and employees. Nothing will dash your dream quicker than a poorly written Executive Summary. My purpose here is threefold:
1. Get you into the proper mindset to do a killer job of writing your Executive Summary.
2. Step you through each paragraph, explaining what to focus on and what to leave out.
3. Show you a good example of an Executive Summary.
Let’s start with the basics.
What is an Executive Summary?
The ES distills your idea into a clear business opportunity that excites the reader and entices them to help you act on it.
What is the objective of the Executive Summary?
If the reader asks you for the full plan, or if he shares it with others, the ES has done its job. Not every reader can help you directly, but they probably know people who can. It gets you the meeting with the right people. It advances the discussion. It gets people to take the next step.
Should the recipients sign a non-disclosure agreement?
It depends upon the stage of your business and who you are sharing the ES with. In most cases, the answer is “no.” In fact, most investors won’t sign non-disclosures. There should be nothing in the ES that you don’t feel comfortable disclosing to the public. There’s a chance your ES will find its way to your competitors. The rule of thumb is to tell them in the ES what you are doing, but not how you plan to do it. The full business plan can detail the “how” and may require a non-disclosure agreement.
How long is the Executive Summary?
There is no magic length. Take whatever space is required to communicate the full scope of the opportunity, save the details for the full plan. Shorter is better, typically 1-3 pages.
Who should write the Executive Summary?
The Founder/CEO or business visionary should write the ES. This is not a document to outsource. The full business plan can be written partly by professionals, but the ES should come from the visionary. If the visionary is not a good writer, she can outline the essential paragraphs and have a professional writer flesh it out.
What are the elements of an Executive Summary?
There is no set format. It’s best to avoid cookie-cutter formats. Some writers like to start with an overview of the market. I recommend starting with the core idea and the long-term vision for the business. Paint a picture of what the business could look like if it is successful.
The following pages provide an outline of the paragraphs to include. You can give these paragraphs whatever headers make sense for your business.
The Business Idea/Opportunity
The Product or Services
The Proprietary Features/Competitive Advantages
The Market Size and Conditions
The Revenue Sources and Projections
The Risks and Barriers
The Next Steps/Milestones
The entire summary should be clear and to the point. Use short, choppy phrases. The language should be simple and demonstrate clarity of management objectives. Above all, the summary should show opportunity.
The following a suggested sequence of presentation:
The opening statement should grab attention. State something about being the first to introduce this product or the customer demands being generated from your initial market research. Describe the nature of the business; i.e., type, location, business form, length, and state of operation. Describe current milestones reached and their financial results; i.e., reaching X amount in sales, evaluation and testing completed, prototype built. State what industry your product addresses.
Describe your product. Discuss specialization, significant or unique features. Discuss where you are, or would like to be located. State why this location will be advantageous. If the product is to be sold or distributed through other outlets, discuss how this will be done and their locations. Describe and precommitted sales or contractual relationships you have with manufacturers and/or distributors for your product.
Describe the market for your product, your current or projected share, and overall potential. Discuss the competition and what advantages you have over them. Discuss your plans for introducing your product and your strategy for gaining market acceptance and loyalty. Mention any letters of intent you have with prospective customers.
Discuss the process involved in producing your product and getting it into the marketplace. Highlight areas of specialization and technology that you may have pioneered in the production of the product. If you plan to subcontract or license Manufacturing/Operations, describe the arrangement and why it is advantageous.
Discuss the people involved in the venture, their management expertise and experience. Highlight their distinctive competence. Discuss support personnel that will be needed as the company grows. Show that the people involved are qualified and committed.
Funding Request and Terms of Investment
State how much money has been invested to date in the venture. State the additional funds needed and their use. Discuss what you are offering in return for the money. Include the payback period and potential return on investment. State what the earning projections are for the next 3-5 years. State any tax benefits that will result from investment.
Milestones and Timeframes
State what must be done and expected completion date to move venture along. Describe the phases and timeframes with which the business will be concerned. Summarize the unique advantages and strengths that will contribute to the success of the venture.
Common Mistakes to Avoid
Too wordy; not to the point
Too long; trying to be all inclusive
Does not identify a special or unique opportunity
Does not clearly demonstrate what the venture is all about
Does not identify what management hopes to accomplish and how they plan to do about it.
Terms of the deal are not clear
Failure to insure all the proper legal steps have been taken (see Fact Sheet)
The Fact Sheet stands alone and appears at the back of the Executive Summary Module as a separate page. It enables the reader to scan the vital information that makes up the company. Fill in the following fact sheet and have it typed on a separate page.
Name of Company:
Location: (address, city, county, state, zip, phone)
Zoning Classification: (obtain form city ordinance)
Type of Business and Industry: (example – manufacturing, agriculture)
Business Form: (proprietorship, partnership [type], corporation [type])
Product or Service Line: (example – electronics, household)
Patent, Trademark or Service mark: (type, number, date issued)
Length of time in business: (or in development)
Number of Founders/partners/employees:
Current and/or projected share of market: (example – 10% of GF market 1985, 20% 1986)
Invested to Date: (estimate equipment, supplies, time)
Additional Financing Needed: (estimate total dollar amount)
Minimum Investment: (dollar amount for stock, partnership unit, etc.)
Terms and Payback Period: (example – equity position, limited partnership shares, 3-year buyback, 40% ROI)
Total Valuation: (after placement)
Description of any related party transactions, contracts or relationships which the company may be involved.