In making a business plan, the part that requires more care is the Executive Summary here of the essential elements and the advice of two famous manager for proper document preparation
Executive Summary: Definition and Meaning
What is the executive summary? As the word itself suggests, is a summary prepared especially for managers who need to get an idea of a long document, without losing too much time, or without having to scroll completely.
Write up an executive summary for a business plan winner is no easy task. The executive summary is the most important part of the business plan, the section that is written only after the drafting of the whole plan and presents the business project subject of the business plan trying to summarize it in a few words and concepts.
The executive summary concentrates and summarizes the business plan preserving the sequence and structure. A kind of summary of the focal points to enable the reader to get an immediate idea of the content and proceed with ease to a dynamic and cross-reading.
And ‘the last thing you write, but it will be the first thing to be read and its function is never merely summary, but its primary goal is to be persuasive.
How to write an executive summary: Content and form
Usually in an executive summary of each business plan that respects there are some essential elements.
The summary fact should generally include a few simple but key topics: a description of the company (including products and / or services sold), the mission, the management, the target market and potential customers, marketing and sales, competitors, operating steps, financial plans and estimates. The summary should include all the information and details that you will not want to miss the reader. In conclusion, as already mentioned, the executive summary concentrates and summarizes the business plan preserving the sequence and structure. Therefore, it is necessary that at least each of the business plan section is quoted, summarized and accompanied by brief comments:
- The company’s description
- The description and explanation of products or services
- The industry analysis
- The market analysis
- The marketing strategy
- The structure of management
- The implementation plan or the operational plan
- Financial analysis: necessary capital and financial information
Several precautions have to be taken with respect to the content and form of the executive summary in the event that the business plan has the user-specific purposes:
- Business plan to find funding, then directed to potential investors;
- Internal business or strategic plan, then directed to the internal management or consultants.
Executive summary for investors
If the business plan that you are writing the specific purpose of attracting investments or loans will be central to specify the amount of funding requested and, in the case of an investment, the percentage of equity ownership offered in exchange (the deeper details and technical They may be delegated in specific chapters).
Being persuasive is our mission! The show must stimulate the potential investor to continue to read and study the individual points in the inner chapters; and finally get him to invest and marry the business goddess.
Executive summary for a domestic level
In drawing up a business plan for internal use, operational or strategic the executive summary can be written in a more dry and direct. The purpose here is not to convince but to summarize in a clear and precise:
- The purpose of the plan,
- Key resources,
- Planned investments,
- The details of the subject in the products or services and their characteristics,
- The market and its characteristics,
- The objectives and benchmarks.
Obviously, you will need rather not repeat the basic information about the business, the products, the work team or other unnecessary details for internal use.
How to write an executive summary: The length
How long should be the executive summary of my business plan? This is one of the most discussed issues.
Opinions are divided: some say that everything should be summarized in a page, others believe that the ideal length is between 3 and 5 pages, and other schools of thought speak of a 5-10% of the entire length of document.
The common thread seems to be the synthesis.
In this writer’s opinion, the executive summary length must still be:
- Proportional to the complexity of the information that summarizes and highlights;
- Suited to the target for which the business plan is designed.
In any case, the two guru Guy Kawasaki and Tim Berry listed in their respective blogs, some very interesting tips to consider.
How to write an executive summary: The guru tips
The executive summary according to Tim Berry
Tim Berry, founder of Palo Alto Software and co-founder of Borland International, one of the voices more weight when it comes to business plans, summarizes in 3 points its guidelines for a successful executive summary:
- Never waste words: Berry is essential not to waste space and time of reading. Investors and managers expect a focused synthesis even in the most complex and voluminous business plan, and do not want to waste time reading information that is not essential.
- The best length is one page: It is important to highlight the main points of the plan and make them as concise as possible. The aim is to draw the reader in chapters and not to explain every detail of your business.
- The executive summary is not an abstract and is not a business model canvas. The summary is the introduction to the business plan, is not a technical summary nor a separate document.
The executive summary according to Guy Kawasaki
Guy Kawasaki is one of the most acclaimed gurus worldwide in the environment of the innovative and technological startups. It is a former employee of Apple Computer responsible for marketing the Macintosh computer in 1984, creator of the concept of an evangelist in the world of consumer electronics and current CEO of garage.com, a company that finances high technology initiatives in Silicon Valley.
Kawasaki summarizes 9 components to the contents of an executive summary efficient. As is clear also Guy Kawasaki refers to a business plan for raising finance:
- The catch phrase: The phrase (or two) that opens the summary sets the tone and the rest of the document should explain in a few syllables because their business is considered a great idea.
- The problem: It is essential to explain what the problem is that your business will solve, the very reason of the business life.
- The solution: That is what provides the company (the product and / or service) and who offers it. The language must be common and avoid acronyms or other words that may be unfamiliar to the reader. This is the point where it is explained how the company creates value.
- The opportunity: To indicate the segmentation of the market, the size, the expected growth and dynamics (how many will become customers, the amount of sales, the speed of growth, etc.).
- Competitive advantage: The competition in the market always exists. Without competitors, there is no market. The advice is to understand its competitive advantage and clearly state this fact. Be merely an early mover is not enough.
- Model: Clarify how you will generate income and from what source and explain why your model will be scalable and effective, in addition to efficient capital management perspective. Expressly the metrics by which you will evaluate and the results will be achieved within a time frame that will go from 3 to 5 years.
- The team: Indicate why your team has the right qualities to succeed in what he is called to do. Nothing CV is more appropriate to bring the background of experiences that bring power to the project. If necessary, you can also name the brand for which the team members have worked if they are known and meaningful for their business.
- The promise: The time decelerator pitch is one in which substantially becomes a promise to investors: to make him earn much money. This will be possible only if the company will be able to achieve a high return on investment. A summary of the financial estimates to be included in this point, it should show clearly these objectives. It is advisable to be strictly analytical and specify costs, revenue, profit / loss, cash flows and number of staff units, in relation to a period of five years, as well as key drivers such as customer numbers and units sold.
- The demand: This is the point at which make explicit the amount of capital required the investor. A figure that indicates the minimum amount of money required to reach the first major company milestone. It is better to ask for a little more, but never less than what is needed for the business. In addition, it is useful to indicate any future request for additional capital.