The executive summary is a very important part of your business plan as it is the hook that will get investors to examine the rest of the document. You want to keep potential investors reading through the material, which is a tall order since they get tons of these plans all the time.
An executive summary will have anywhere from one to four pages. There are experts in the field that suggest one page is more than enough, while others say a bit longer is fine.
According to Growthink, a business-consulting firm, your executive summary should contain all the information your investor will need to decide if they are interested in the very first page. The succeeding pages should simply further convince them that the first impression was correct and the rest of the business plan deserves closer scrutiny.
Look at your executive summary like an upside down pyramid, same with print journalism. Very important information, foundation, is placed first. Throughout the document, this is then expanded and the facts summarized. At the end of the process, the entire picture comes to the main point and the entire picture sharpens.
On the first page of your executive summary, include:
- A precise picture of your company
- Market size and the demand for your product or service
- How and why your company is the best choice to fill the market demand
Once an investor gets through the initial page, they can either finish the summary or begin jumping to important sections.
Executive summary subsequent pages:
- Consumer analysis- who are your customers and what is their demographic
- Competition- who will you compete with and where does your edge lie
- Marketing- how are you going to enter and then deeply penetrate said market
- Finances- summary of financial projections
- Management- tell who is in key leadership roles and why
Be concise, this is the first rule of the first page in your executive summary. Do not try to be overly wordy or dramatic with your phrasing. For instance do not say, a firm involved in the worldwide procurement and distribution of written material when you could say online book retailer. The first may sound great but you are wasting a lot of space and your investor’s time to read it. Besides what do you think they will call the business when they discuss it among themselves?
Never give in to the temptation to exaggerate your market size and the need for your company, be specific but accurate. As an example take the health care industry, it may be a trillion dollar annual market, but you are sure to be in a smaller niche of the whole, which means you cannot claim the entire mammoth industry. When you overstate this fact, you will find your hard worked plan in the trash.
Finally, you should explain how you and/or your business are in a unique position to provide for the market. Preferably, you can demonstrate how you have an overwhelming competitive advantage. Do you have a proven operations system? Maybe your company has a crack management team, long term contracts already in place or key partnerships, show all of this but again be accurate.