Written by: Christopher Chitty
The Executive summary is your sales pitch and in most cases, it is the only shot you're going to get at convincing an investor, lender or any other big player to be interested in what you have to offer and hopefully, invite you in for a meeting.
It is arguably the most integral part of your entire business plan. As most executives, CEOs and investors are perpetually busy, they will not find the time to read a 100 page document.
The executive summary is the hook that will reel them in.
The number of pages an executive summary has is dependent on the type of business you're pitching and just how large your plan actually is. Some executive summaries are on a single page while there are others than run four to five pages sometimes more.
The important thing to note here is that no two executive summaries are alike and should be tailored to the person you're writing it for.
It is best to write the summary only after you are completely done with your business plan. List out the main and most significant points and craft your executive summary to grab the attention of your target audience.
Without further ado, here are guidelines for writing your summary;
1. The attention grabber: Your first line needs to set the tone immediately. It has to be something factual and specific and not full of lofty ideals and concepts. The first line must grab the attention of the reader and make him want to read on. Typically, this line will explain what your great idea is and what you've done to get it going. If you've worked with professional and well-known advisors or companies, make sure you include this. If these peripheral factors can encourage the reader to consider your business plan, naming them now will help you. In most cases, if the first line or first paragraph does not grab attention, that's as far as your summary will be read. So lead with your most impressive statement and hook your target from the start.
2. Problem in the industry: Entrepreneurs have a thirst for coming up with ideas to fix problems and most businesses emerge from this simple need. You need to identify that there is a big problem, whether existing or incoming and you have a good solution to solve or exploit it. Here is where you list the ways you are going to take advantage of this opportunity to increase revenue, reduce costs, increase effectiveness or enhance lives. Convince the reader that there is a problem and you have the answer to it. Remember to keep your sentences short.
3. The fix: What is your solution and who is it for? Be as clear as possible and use simple words to describe what your fix to the problem is. Steer clear of using any project names or trademarks as this may mean nothing to the reader. Keep it simple. Also include who you are currently working with (partnerships) if possible and where you fit in the overall picture. If you already have a small pool of clients, make this known and explain how your product or service has benefited them. If you do not have any customers explain when you intend to start marketing. If possible, factor the timeline of when your product will be ready for use in the market to help gauge this.
4. Target: In this case, your target would be your demographics or a niche group of well paying customers whom your product is designed for. In a few sentences, provide information on basic market segmentation, its size, growth, how fast you think the growth is and what motivates the segment. Even if your business is meant to cater to a wide group, it is far better to focus on a niche and growing crowd in the beginning. Investors want to see real growth and not sweeping concepts of world domination that threaten to collapse on the weight of its own lofty expectations.
5. Competition: Your closest competitor and all other competitors must be mentioned as well as how you believe you are able to compete and potentially beat them in the market. Ensure that these competitors are relevant to your product line. Even if they are emerging competitors, list this down. You need to detail your unique benefits and advantages without belittling your competition. Investors are interested in what you can do and not how badly you think of your competition.
6. Revenue: This comprises of a few sentences on how you intend to generate revenue and from whom. How long do you think you will take to be cash positive or where you see yourself in four years. Your information must be validated and backed up by statistics.
7. Employees: If you started hiring a team to help push your product, you need to give a brief but detailed description of who they are and why they fit your company. You need to highlight how and why you believe that they are uniquely positioned to help improve and expand your business. If they once served as CEO of a big and respected company, list it down along with those examples. But do not just name drop. If they were CEO of an unknown company, you should not use the name of the company.
8. Money: Investors and venture capitalists only care about one thing; how much money you're going to make them. You need to have a financial projection of a few years, preferably five complete with revenues, expenses, headcount, potential losses and profits. You would have already mentioned how you intend to grow and make money in the earlier paragraphs so this last one would be to quantify and validate your claims. Your numbers must be solid so get an accountant to help you if you can't do it yourself.
While writing, there are a few more things to consider;
• Do not use sweeping statements. Investors prefer to invest in companies that have a solution to a market problem than companies intending to bring even more enhancement into a market. Do not lay big claims that cannot be justified. Investors have heard to death statements like, "Number 1 in the market," "Unique product designed with consumers in mind". These are sweeping statements which have no real meaning. Make your first sentence count!
• Avoid using fluff language such as ‘dynamic', ‘innovative', ‘easy to use', ‘intelligent', ‘next generation' and other similar types of words people commonly use to describe their product as enthusiastically as possible. Take a step back after you write it and justify each action word you use to determine if it can be validated or if they're just there for fluff's sake.
• Do not lie. Do not say you have a big company signing a contract next week when that's not even on the cards. Many entrepreneurs write in lies in a bid to improve their chances. In no way will this help you. Avoid saying things like, ‘All we need is 1% of the market' or ‘no one else is doing what we do'. These are almost always a blatant lie. There is usually always someone doing exactly what you are attempting to do and seizing 1% of the market is short sightedness.
• Spell out your company name in full. Avoid acronyms. You want your reader to register you with your company name and not something designed to make reading easier. Connecting them with a full name rather than an acronym will make you more memorable than ABC INC.
• Spellcheck. Don't rely only on the automated spellcheck. Look through with your eyes and get your partners to help you. Spellcheck, fact check and sentence check thoroughly before you even think of sending it out.
There are many rules and guides for writing something that may never come up to a full page but that is just how important an executive summary is. Many more guides on this subject have been written but most are variable and reliant on the type of business you are starting. Many can be adapted and changed of course but it would be up to you to determine just where these changes are to be made.
Writing the summary takes time and finesse and it requires you to be forthcoming with your information while ensuring that all details are covered as succinctly as possible.
With that in mind, write your executive summary with the intention to sell, not describe, even if it is a miniaturized version of your entire business plan.