The executive summary of a business plan is a brief description of the entire business plan. Usually, it only has one page and should be the last written component of a business plan.
But why is it mandatory to invest time in carefully crafting it? Well, the answer is right before your eyes. This is the first thing the people that will evaluate your plan, whether it’s an investor or the committee that approves loan banks, will read. Moreover, this is the part that will determine the way in which potential investors will think of your business plan.
Therefore, the main objective of the executive summary is to hold the interest of the reader so that he or she will want to continue reading the rest of the plan as well. This is the best chance of selling/pitching your business idea. Thus, pay extra attention and don’t take it for granted.
The most important aspect is to consider the possibility that the person reading the summary will hear for the first time about such a business idea. That is why you must make sure he or she understands what you aim to achieve without requiring additional details or follow up with questions. Thus, the summary shouldn’t include additional references to other chapters of the business plan or to the annexes. The summary should be considered a unique and independent part of the business plan.
It is desirable that the executive summary has one or two pages tops and it contains information related to the following aspects:
- The business concept: describing the business idea and summarizing the most important elements.
- The opportunity: why should someone choose your idea and not another one? Why is it such a good opportunity to invest? What evidence is there to back it up? What is the market dimension? What is the market need? What are the current trends and how will you adapt your business idea to them?
- The product/service: offer a description of your product or service. Why is it different from those that already exist on the market? When will it be created and delivered?
- Competition: who are your main competitors? Which are their strengths and weaknesses?
- The competitive advantage: what is the element that will differentiate your product or service from the ones that are already out there on the market?
- The marketing strategy: what are the key-elements of your marketing strategy?
- The management: who is a part of your management team and how will it contribute to the success of your business?
- The financial aspects: what are your financial forecasts for your business? How much revenue will you receive in the next 3-4 years? When will the breakeven point be reached?
- Funding: how much money is necessary to launch/develop your business? What other alternative funding sources are out there? What is your exit strategy?
A well-known saying says that you only have one chance to make a good impression. And in this case, it applies perfectly. Therefore, invest time and determination in writing the executive summary to make sure that you cover all the aspects that are relevant to your business.