How to Write an Effective Executive Summary

What is an executive summary?

An executive summary is a brief introduction and summary of your business plan. It
should describe your business, the problem that it solves, your target market, and
financial highlights.
A good executive summary grabs your reader’s attention and lets them know what it is
you do and why they should read the rest of your business plan or proposal. It’s not
unusual for investors to make an initial decision just based on reading an executive
summary, so it’s important to get it right. We’ll show you how to write an executive
summary that sets your business plan apart from the rest.

Is an executive summary necessary?

Are you writing a business plan to show to investors or bankers? Then you need a good
executive summary. Many people will read only the summary, no matter what. Others
will read the summary first to decide whether or not they read the rest of the plan. The
executive summary is essential in plans that are being written for outsiders. 
Now if you’re writing a business plan solely for internal use you may not need to write
out an executive summary. However, there are some internal plans ––such as an annual
operations plan or a strategic plan—that can use a summary to highlight necessary
information and showcase a digestible version of the overall plan.
It takes some effort to do a good summary, so if you don’t have a business use for the
summary, don’t do it. 

How long should an executive summary be?

The general rule of thumb is that executive summaries should be as short as possible.
Your audience has limited time and attention and they want to get the details of your
business plan as quickly as possible.
Try to keep your executive summary under 2 pages if possible, although it can be longer
if absolutely necessary. 
You might even be able to write it on one page using a Lean Plan format. You can learn
more about that one-page business plan format and download a template here.

1. A description of your product or service and the problem your business solves
Include a brief description of the product or service you offer and why it’s necessary.
Your business doesn’t need to serve a larger social problem, but it should address a
need for customers or an opportunity in the market.
2. A description of your target market
Your target market is who you think your customers will be. Sometimes the product
name itself defines the market, such as “Peoria’s Best Thai food,” or “Mini Cooper
Dashboard Accessory.” If not, then a brief description of the target market—your
primary audience, or the people you think will spend money on your solution will suffice.
3. Competition
Assuming your business has competition (every business does!), then briefly describe
how your business will differentiate itself. Are you competing on price, quality, or
something else? Briefly describe what makes your business different here.
4. Financial Overview
If you’re an existing company, this might be as simple as highlighting recent annual sales
and growth over the last year. For a startup, it might be a brief description of aspirations,
such as a sales forecast goal for the next year or three years from now. I often
recommend a simple highlights chart, a bar chart with sales and gross margin for the
next three years.
5. Your Team
This is especially important for startup companies. Investors want to know who is behind
the business idea and why you and your team are the right people to build the business.
It also may be valuable to highlight any gaps in your team and how you intend to fill
them. If you have potential partners or candidates in mind, briefly mention them and
expand on their qualifications within your full business plan.
6. Funding Needs
If you are using your business plan to raise money for your business, your executive
summary should highlight how much money you are looking for. Investors will want to
know this upfront and not have to dig through a business plan to find this detail.

Tuesday, September 13, 2022