Last Updated: 3/30/2021
Composing a traditional business plan can be an overwhelming undertaking and many find it challenging to craft it. However, it doesn’t need to be that way. A simple method to begin it is by writing an executive summary.
In this guide, you will get insights into the meaning of an executive summary, components of an executive summary, benefits of an executive summary, and tips for writing an executive summary for investors
What is an Executive Summary?
An executive summary is a short introduction and synopsis of your strategy. It ought to describe your business, the issue that it solves, your target market, and budgetary features.
A strong executive summary catches your audience’s eye and tells them what you do and why they should peruse the remainder of your business plan. Investors make initial decisions dependent on perusing an executive summary, so it’s essential to craft a good synopsis.
When is an Executive Summary Necessary?
If you are writing a business plan for investors or bankers, then you need an executive summary. Numerous individuals will peruse just the executive summary, regardless.
Others will peruse the outline first to choose whether or not they read the remainder of the plan. An executive summary is fundamental in plans that are being composed for outsiders.
In case you’re composing a plan exclusively for inward use, you should not work out an executive summary. Nonetheless, some inward plans, such as a yearly tasks plan or a strategic plan can utilize an executive summary to feature important data and showcase the overall version of the plan.
How Long Should an Executive Summary be?
The overall guideline is that an executive summary ought to be as short as could reasonably be expected. Your audience has restricted time and consideration, and they need to get the details of your business plan as fast as possible.
Always keep your executive summary under 2 pages if conceivable, although it can be longer if necessary.
Components of an Executive Summary
Here are the components of an executive summary:
A description of your product and the issue your business intend to solve
Incorporate a short depiction of the item or service you offer and why it’s fundamental. Your business doesn’t have to serve a more significant social issue, but it needs customers.
A description of your target market
Your target market is who you figure your clients will be. It is a short depiction of the objective market — your essential crowd or the individuals you think will spend cash on your solution.
Supposing your business has a rivalry, then describe how your business will distinguish itself. Are you competing on price, quality, or something different? Quickly depict what makes your business diverse here.
In case you’re an existing organization, ensure you feature recent yearly sales and growth over the recent year. For a startup, it may be a short description of expected earnings, such as sales forecast for the next three years. To make your executive summary more appealing, you should incorporate figures, such as simple highlight charts and a bar chart with sales and gross margin for the next three years.
This is particularly significant for startups. Inspectors need to know who is behind the business idea and why you and your group are the correct individuals to grow the business. It likewise might be significant to feature any gaps in your team and how you plan to fill them. If you have a potential partner, briefly mention them and highlight their qualifications within your business plan.
If you are utilizing your business plan to fund-raise money for a startup, your executive summary should feature how much cash you are searching for. Investors will need to know this forthright and not need to dig through a business plan to discover this detail.
If you are a young startup and you’re composing a business plan to fund-raise, you will need to incorporate proof of traction in your executive summary. This can include outcomes from consumer surveys, pre-order numbers for your item/service, or even early deals numbers if you did a delicate open or limited time release. It doesn’t need to be a lot; however, any first achievement shows that your plan of action and statistical surveying is all around established.
You may likewise need to examine future achievements that your business plans to accomplish. This is especially significant for organizations within a highly saturated or complex industry, such as clinical gadget producers and medication organizations. They have to clarify where they are currently getting regulatory approval and what steps remain.
In case you’re looking for bank credit, lenders will be searching for proof of your budgetary soundness, including your total assets, resources, and financial history.
Have questions about business planning or the capital raising process? Contact our experts at Pro Business Plans by scheduling a free consultation.
Benefits of an Executive Summary
There are many valid justifications why having a business plan is significant for your business’ prosperity. Here are the benefits of an executive summary:
Investors don’t have heaps of time to peruse and one page can get the idea of your business across rapidly and briefly.
Having a one-page plan makes it simpler to share, regardless of whether you’re not presenting it in front of investors. You can rapidly send it as an email connection, toss it into a slide deck and even have it printed off as a simple read for interested individuals.
It’s really a generally excellent exercise to manage it down to the absolute minimum, and doing so constrains you to manage unnecessary words and convey your business idea plainly, with a negligible mess.
Tips for Composing an Executive Summary
Before you build up your executive summary for seeking investment, see how it fits into your strategy. The executive summary can be the first section of your business plan, or you may be building up an independent executive summary that you plan on giving out without the remainder of the plan.
Here are the tips for composing an executive summary for investors:
Investors utilize executive summary to screen opportunities
A solid and steady executive summary is helpful for angel investment platforms like Gust, AngelList, and others to measure enthusiasm in candidates.
Investors need the full business plan to finish due diligence when reviewing applicants
You should never put resources into a business that doesn’t have a strategy, and your executive is the way to having your strategy explored. The full perusing of the entire business plan comes just later in the process.
Highlight past startup experience
Tell the investors about any past startup experience or specializations from the beginning since this has a tremendous effect. Keep it brief, only a reference to more data to come later; however, ensure you’re ready to back up your cases later on.
Show how much cash you expect to raise and how it will be spent
It’s a synopsis, so details will come later; however, financial specialists need to know rapidly whether your startup is in their typical scope of interest and the utilization of funds has any kind of effect, as well. Spending to build inventory for existing orders, for instance, is way safer than spending to build up an item that is in plan and prototyping.
Valuation is your company’s worth, and it determines how much ownership you want to part with for investment. A few financial specialists need outlines to determine how much cash at what valuation; others need to allocate the valuation themselves and don’t care for new businesses pushing their number too soon.
Mention your exit strategy
Investors want to know that you comprehend they won’t bring in cash except if you accomplish an exit in a couple of years so they can offer to get their return. Many founders think that investors need them to be effective, when in fact it means very little without a possible exit.
Be persuasive, but focus on the facts
You need to make your potential investor continue perusing; persuade them to put resources into your startup. Yet, do comprehend that the influence is in the realities, not in the wording. What keeps them intrigued is the substance of the synopsis, not the tone.
An executive summary is a brief introduction and synopsis of your business strategy. A winning executive summary should incorporate a description of your business, the problems it wants to solve, target market, and financial plans.