About Executive Summary & Steps to Write It Excellently

What is an executive summation?

An executive summary is an introduction and a summary of the business strategy. It should outline your company and the issue it solves, your targeted market, and the financial highlights.

An effective executive summary catches the attention of your readers and will let them know what is that you do and why they should be reading the other parts of your proposal. It’s not uncommon to have investors make a decision by the executive summary, which is why it’s crucial to write it right. Learn how to create an executive summary that will set your business strategy apart from others.

Does an executive summary need to be included?

Are you making a business plan to present to your bankers or investors? If so, you’ll need an executive summary. Most people will only read the summary, regardless of the content. Some will look at the summary first to determine if they go on to read the remainder of the plan. Executive summaries are a must for plans created for people who are not inside the plan.

If you’re writing a business proposal only for internal use, you might not have to draft your executive summaries. But there are certain internal plans –like an annual plan for operations or a strategic plan — that can include a summary in order to highlight important information and present an easily digestible version of the plan in its entirety.

It’s a lot of work to write a professional summary. If you don’t have any business purpose for your summary, don’t write it.

How much should the executive summary be?

The most common rule can be that the executive overviews must be as short as they can be. Your audience is short on time and attention span, and they’ll want to learn the essentials about your plan for business as fast as they can.

Make sure to keep your executive summary to a minimum of two pages, if it is possible however, it is possible to make it more if absolutely needed.

It is possible to make it one page using the Lean Plan format. Learn more about the one-page business plan template and download an example here.

1. An explanation of the product or service, and the problem that your company solves

Provide a concise description of the service or product you offer and explain why it’s important. Your company does not have to solve a social issue but it must be able to meet a demand for customers or an opportunity on the market.

2. A description of your intended market

Your market of choice is who you imagine your clients will be. Sometimes, the product’s name is the key to determining the market, for example, “Peoria’s Best Thai food,” or “Mini Cooper Dashboard Accessory.” If not, you can provide a brief description of the principal audience you are targeting or those who you believe will purchase your product will suffice.

3. Competition

If you assume that your business is competing (every company does! ) In a brief manner, describe the ways your company will distinguish itself. Do you compete with respect to price, quality or other factors? Please describe in detail what differentiates your business here.

4. Financial Overview

If you’re a company that’s already in existence you could do this straightforwardly by simply pointing out the most recent sales for the year and the expansion during this last year. For startups, this could be an overview of your goals for the future, like an annual sales forecast for the coming year as well as three years from today. I typically suggest a simple highlights chart or a bar chart showing gross margin and sales in the next 3 years.

5. Your Team

This is particularly important for startups. Investors need to know who’s driving the business concept and the reasons why you, your staff and you’re the best people to run the company. It is also helpful to point out any gaps within your team and explain how you will fill these gaps. If you’ve got prospective partners or candidates in your mind you should mention them briefly and elaborate on their skills in your business plan.

6. Funding Needs

If you’re planning to raise funds for your company then your executive summary must be clear about the amount of money you’re seeking. Investors want to know this in advance and do not need to dig through your business plan to locate the information.

Other areas your executive summary might require to be covering

• Early evidence of success

If you’re a fresh company and are creating a business plan to raise capital and raise funds, you should add evidence to show “traction” in your executive summary. It could be a result of consumer surveys, pre-order figures for your product or service, or earlier sales numbers when you released an open house or a time-bound time release. It doesn’t need to be huge however, any initial achievement is proof that your business’s strategy, as well as your product or service and market research, is well-founded.

• Future Milestones

It is also possible to discuss the future milestones your business is hoping to reach. This is crucial for companies operating in a complex or dense sector, like pharmaceutical manufacturers and medical device businesses, for example. They must explain where they are at in receiving regulatory approvals and the next steps to take.

• Evidence of Financial Stability

If you’re looking for an advance from a bank, they will be looking for proof of your financial stability which includes your assets, net worth, and your financial past. Find out how to go about making an executive statement for each one of those situations.

Strategies for writing an executive overview for investors

Before you write the executive summary you will use to seek funding, consider the way it will fit within the business strategy. The executive summary could be the initial part in your plan for business or it could be an executive summary as a separate document that you intend to hand out separately from the other sections of your plan.

My opinions on this matter come from my eight years of being an active participant in an angel investment organization as well as greater than 10 angel investments and being a member of the Angel Capital Association.

Executive summaries used by investors are used to identify potential opportunities

An executive summary that is well-written can be beneficial to angel investing platforms such as Gust, AngelList, and others to determine the level of interest for candidates. Introductions are often followed by emails asking for a summary of the email but not complete business plans Therefore, you should be prepared with an executive summary ready that makes investors want to read the entire item.

Investors must have a complete business plan to ensure due diligence while reviewing potential candidates

We’ve never made a purchase from any business without an established business plan. Your executive overview is the primary factor in reviewing your business plan. The complete reading of your full business plan is only after we’ve narrowed down the summaries to a few that are intriguing enough to be able to conduct due diligence.

Within the group I am with, for instance, the majority of us go through every executive summary that is sent to us. Everyone will review summaries of plans that spark group interest and half of us will review the rest details of the plans only if remain interested after having read the summary.

Provide previous startup experience or industry-specific expertise

Inform investors about previous startup experiences or specializations you’ve had from the beginning as this will make a significant difference. Investors typically advise investors to “bet on the jockey, not just the horse.” Make it short and a simple hint of additional information that will follow, but be sure that you can support your claims in the future.

In the following paragraphs, outline how much you are planning to raise as well as the way you intend to spend it.

This is a brief summary, and more details will be added after, but investors need to be able to determine quickly if your business is within their usual range of interest and the way you use money can make a difference as well. The case of building inventory for already placed orders, for instance, is more secure than investing in creating a product being developed and prototyped.

In this case, valuation is a controversial topic. It is the amount you claim the value of your company and a number that decides the amount of ownership you offer for investment. Certain investors require summaries to define how much they will receive to invest and what the valuation is. Others would prefer to calculate the valuation for themselves and do not like startups pushing their numbers too early.

Include your exit strategy

The details can be left for the future, but investors need to know that you are aware they won’t earn a profit unless you make an exit within a couple of years, so they can sell shares and earn a profit. Many founders believe that they’re just trying to succeed, but it’s actually nothing without the possibility of an exit.

Make yourself persuasive but keep your eyes on the facts

You must get your potential investor to read more and persuade them to take a stake in your venture. However, remember that convincing lies on the basis of factual information, not language. What will keep them engaged is the substance of the report and not the tone. Evidence of the market’s potential, traction, or even startup experience is more convincing than mere assertions of superiority.

Avoid obvious cliches

There are some obvious traps that you could be prone to when you’re not careful. For instance, you shouldn’t talk about the team’s commitment or passion–they all have it therefore it’s irrelevant. If you claim that your company’s disruptive and game-changing, even the next Facebook or something else then you’re in trouble. Instead, demonstrate that with the facts, and let investors speak for themselves and not you.

How to write an executive summation for the bank’s loan

Contrary to popular belief banks don’t make a decision to risk their business plans. To convince banks to be more attentive the executive summary needs to address the six primary factors mentioned at the beginning of this article. It should also include some other specific points which highlight stability as well as the assets in the balance sheet, as well as the financial history of the company, proving that the loan isn’t risky. However, there is one important exception: banking law prohibits banks from loaning money to companies that don’t have enough assets to pay for the full amount of the loan and the loan is then repaid in part. This is against bank regulations.

Professional bankers will ask for an outline of your business when they approve the loan application as they’re legitimately looking to learn about and understand your company however, they aren’t willing to make a decision based on risk. The purpose of this summary isn’t to persuade and sell but to provide reassurance and explain.

So, what is effective for the executive summaries for bankers can be quite different from what is needed in the summary for investors.

Draw a graph of your net worth

When investors are looking to view the management team’s experience in starting up Bankers are looking to know the wealth of the personal business owners. The more collateral, savings, or other investments you have the more likely you are to be able to get the loan.

Be open about your financial background and assets that you can bank

Investors want to know about the future growth potential Bankers are looking for the past financial history of your company and the assets that are bankable. Make sure to collect every bit of financial information regarding you, your current investors as well as any previous businesses in advance.

Show evidence of your possible long-term stability and durability.

When investors are looking at potential exits, bankers require their commercial lenders to provide stability for the future. It is not necessary to have exact figures, but creating financial projections that define the growth rate, cash flow, expenses, and sales for the next three years is a great way to provide evidence of stability.

Risk exception for bank loans

I have mentioned a notable deviation from the norm that bankers aren’t willing to take risks. For instance, in the U.S., the federal Small Business Administration (SBA) has programs that collaborate in conjunction with local businesses banks to provide certain riskier small business loans that make loans to start-ups and small-sized enterprises.

Similar to traditional bank loans, SBA loan applications require a traditional business plan that contains an executive summary that covers the five key points mentioned in the list of points above. It’s still beneficial having the financial stability aspects laid out the same way you would with banks, however, the limits might be less stringent and will allow more risky businesses to get financing.

Make a simple and quick business plan on just one page using the free business plan template for one page.

Six Tips to write an efficient executive summary

Whatever your reason for creating your executive summary There are some general guidelines that will make the process easier and ultimately more efficient. Here are some to consider as you start:

1. Think of an executive overview as a pitch

Consider an executive summary something like the elevator pitch only with limitations. An effective summary will help you sell the plan’s other elements but it’s not only a pushy sales pitch. It needs to effectively provide a concise summary of the plan. It should cover your company, product as well as market and financial highlights, at a minimum (see the next section for further information about this).

Naturally, you’ll emphasize what is most likely to pique the readers’ interest, in order to accomplish the immediate goal of this business plan. However, your readers will want to know to be able to identify the most important points you’ve covered. The summary isn’t simply an elevator pitch.

2. Note it down last

Do not begin writing your business plan until you’ve written your summary. Although the executive summary is located at the beginning of your completed company plan, many successful business owners (including me) prefer to write the executive summary after they’ve completed the rest of their business plan.

It’s best if the executive summary should be brief–usually only one or two pages or five on the outside. It emphasizes the key points you’ve already made within your plan of business therefore if you save it until the end of your plan the process will be swift and simple.

3. Make your Executive Summary Brief

Keep it short and simple. Experts recommend one page, only two or three pages, and no more than five pages, and occasionally, even longer. I believe that less is more. Try to keep it as short as you can, without omitting the essentials. I can’t resist, since I read hundreds of plan documents every year. One page is more effective than two pages, and two is better than five. And more than five or more pages (my view here) are too long.

4. Simple is best.

Function follows form, therefore don’t complicate or over-explain the details within your summaries. The majority of executive summaries are brief text, usually with bullet points and subheadings. Illustrations, such as pictures of an item or a bar chart that highlights financial information, are often a nice feature.

5. Prioritize sections according to the importance and strength

Do not bury the main point. Make sure to arrange your executive summary in a way that the most crucial information is first. There isn’t a set order for the various key elements comprised, but the reverse is true in actual fact, make use of the order to emphasize.

Start with the things you want to attract the most attention, then follow up with things in priority order. I like summary reports which begin with an explanation of the issue because it creates excitement and urgency, which can help set you to solve the problem in your organization.

6. Use it to summarize your memo

After it’s completed, you can repurpose it into an overview memo. It’s the very first chapter of a formal business plan, however, you could also make it a stand-alone “summary memo.” Investors frequently request startups to provide an overview memo in lieu of an entire business plan.

It could be a small document that is usually included in an email or just a short summary in an email. You may also use it for filling in profile pages for startups on investment platforms like Gust or AngelList or even to apply for an incubator or business plan contest.

Download a template to create your executive summary

If you’re interested in starting with a template, think about using the Lean Plan for your executive summary. It’s a no-cost download on Bplans which will cover everything you’d like to add to yours.

Explore hundreds of executive summaries examples

Make use of Bplans More than 500 sample excellent business plans, all of which are accessible online for free. You can use the search feature to find the one which best matches your company’s profile. Then, take the plan’s free executive summary as a reference to assist you in the process of creating your own.