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June 3, 2010

Business Plan Executive Summary Tips

Your business plan executive summary is the “hook” to get investors to spend time and attention reading the rest of the plan. The key at this early stage is to keep investors reading, as investors receive business plans all the time and cannot read every single one of them.

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Every business plan executive summary contains one to four pages. Some business experts say the executive summary should contain only one page. Others say it can be a little longer than that.

Growthink, the business consulting firm, holds that the first page of the executive summary should contain everything an investor needs to know in order to find out if your company is of any interest to them. Subsequent pages in the summary serve to further convince the prospective investor to read the rest of the plan.

It helps to think of the executive summary as an inverted pyramid, just as in print journalism. The most important information is placed at the beginning. The story is then expanded and the facts recapitulated, getting further and further into the details as the whole picture sharpens.

The first page of your business plan executive summary must contain:

  • A concise description of the business
  • A description of the market size and market need for the business
  • The reasons why the company is uniquely qualified to fulfill the needs of the market

After reading the first page, investors can finish reading the executive summary, or jump straight into the other sections.

Subsequent pages of the executive summary must contain:

  • Customer Analysis: What specific customer segments the company is targeting and their demographic profiles
  • Competition: Who the company’s direct competitors are and the company’s key competitive advantages
  • Marketing Plan: How the company will effectively penetrate its target market
  • Financial Plan: Summarizing the financial projections of the company
  • Management Team: Biographies of key management team and Board members

As concision is crucial in the first page of the executive summary, it is usually necessary to “dumb down” the wording. For example, an “online book seller” could also be presented as “a firm involved in the procurement and distribution of written materials across a wide geographic spectrum.” The former description must be used in this case, as not only does it allow more room on the first page, but it is an easier phrase to remember when investors talk amongst themselves about your company.

When proving market size and need for your business, be specific – and never exaggerate. For example, the healthcare industry may total a trillion dollars, but your company’s niche must necessarily be smaller than this figure. Overstatement of your company’s potential will get your business plan thrown into the dreaded “circular file” (a.k.a. the wastepaper basket.)

When explaining why your company is “uniquely qualified” to fill the needs of its niche, you must demonstrate an “unfair competitive advantage” in the market, such as a world-class management team, proprietary technology, proven operational systems, key partnerships, long-term contracts with major customers, and other successes.

Growthink business plans have raised $1 Billion in funding since 1999. And for a limited time, you can download Growthink’s proven business plan template for just $1.

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