The executive summary is the first thing someone will read when they start making their way through your business plan, and that makes it vitally important. Just like a great movie trailer excites you about seeing a film, or a book jacket blurb entices you to pick up a novel, the executive summary needs to engage your readers and spark their interest, making them want to continue reading more about your business.
The executive summary introduces you, describes the current state of your company, where you’d like to take it, and why you believe you’ll be successful in getting there. Interestingly, many experts suggest that even though this section comes first in the finished document, you don’t write it until last-after you’ve put the rest of your business plan together, so you can highlight your strengths and the important points you’ve made.
We’ve talked about pitching your company before. At its essence, that’s what the executive summary is: your first pitch, whether it be to a lender, an investor, or a potential employee. If you don’t write a decent executive summary, there’s a chance the rest of your plan won’t even get read. If you hit it out of the park, then you’ve gone a long way toward achieving your desired result.
What Goes Into the Executive Summary of a Business Plan?
As we mentioned in our Introduction to Business Plans, plans can serve several different purposes and be intended for different audiences. What you include in the summary will depend on where in the business cycle your company is and what the plan is for.
In every case, keep in mind that this is a summary! Make it impactful but keep it concise. The Small Business Administration recommends fitting everything on one page, and two should certainly be your limit.
The company information to include is the name of your business, when it was formed, the names and roles of the founders, how many employees you have, and where you’re located.
The Problem Your Business Solves
Remember that if your product or service doesn’t answer a need or isn’t solving a problem, you don’t have a viable business. The problem may be as simple as: “There are no day spas within a 50 mile radius of Anytown,” but you need to identify and state the problem you’re solving.
If you have a mission statement for the company, it might fit in here, or you can include it in the company description section instead. A mission statement isn’t a required element of a business plan, but creating one could be a help in giving you direction and defining the character and culture of your company.
The Solution Your Business Provides
How will you address the existing situation you described and solve the problem? Keep in mind that this is a summary, so you don’t need to go into detail; the rest of your plan will cover that. Describe the way your business is the solution in a few sentences or bullet points.
Explain who you’re marketing to and how your concept fits what they’re looking for. Going back to our fictitious day spa, describe the environment you’ll create; for example, whether you’re targeting a clientele that will appreciate a peaceful environment, an upscale luxury market, or something more mass appeal, and how your concept fits that. Writing the summary last, you’re able to pull info from the market research and strategy sections and point to the research that backs up your idea.
How You Compare to Your Competition
Even if there are no day spas in your area, there may be gyms that offer massages, beauty salons that do facials, etc. Discuss how your business will solve the problem better and more successfully. Why would a potential customer choose you?
You’ll introduce them extensively later on, but part of exciting readers is letting them know who’s on your team, and why you’re uniquely qualified to be successful. If you don’t have everyone on board yet, that’s okay. Talk about the positions you intend to fill and how you plan to do that.
Your Current Situation
Describe where you are now with the business and what you’ve already accomplished. It’s okay to be just starting out, but talk about the progress you’ve already made. If you’ve found the perfect spot for that day spa we’ve been talking about, mention it here. Perhaps you have an interior design already. You should include the drawing later in the plan, but mention it here.
Where would you like to see your business headed? What are you trying to achieve? If you’re writing a business plan to help you secure a loan or investor, how will that infusion of money help you get there?
If you’re writing your business plan because you’re seeking funding, there are certain pieces of information you need to include, such as information about your current bank and investors, if any. If you’re running an established business, you’ll need to outline your current revenue and expenses, although save the nitty-gritty details for the financial section of the business plan.
The executive summary section of a business plan for a new business can offer information about its business model and how you plan to earn revenue. You should also share financial projections and your anticipated expenses.
If your business plan is for your own use as an operational tool, you can be a little less formal with what you include in the executive summary. Concentrate on the problem-solving and conceptual details of the business. It’s okay to skip the company information, your team’s biographies, and other operational and logistical details.
How to Format the Executive Summary
Start with a paragraph that grabs the reader’s attention. If you have a compelling anecdote about the company, an interesting fact, or relevant statistic, that could be one way to go. Some summaries open with a statement about the purpose of the company or its mission statement.
After the opening paragraph, you can follow the order of the following sections of the plan. Each topic belongs in its own paragraph. And because this is a summary, cover them in just two or three sentences each.
In your final paragraph, tell the reader the purpose of the plan. If you want a loan, how much and for how long? If it’s an investment, are you looking for a percentage or specific amount? And what are you offering in exchange?
You want to create excitement and interest in your business, so use positive and compelling language. While to you, it may be entirely obvious that the universe has been waiting for just your product or service, but that’s probably not the case for the people reading your business plan. Balance your enthusiasm with sincerity, don’t exaggerate, and persuade with facts. Be simple and clear so that even someone who is totally unfamiliar with your industry will understand what you’re saying.