WRITING AN EFFECTIVE BUSINESS PLAN
- PART 2
THE ULTRA-IMPORTANT EXECUTIVE SUMMARY
by: Cary Christian
I told you last week about the
three keys to writing an effective business plan. I decided it would be
worthwhile to spend a little more time on the subject this week in order to
cover the all-important Executive Summary.
Business plans are always long documents, particularly if they are well
conceived and well written. Some users of a business plan, such as venture
capitalists, receive hundreds or maybe even thousands of business plans per
week. There is simply no way they are going to read every one of them.
Assuming you are submitting your business plan because you actually WANT
someone to read it, the Executive Summary is your key to getting it read.
This is where you build enough interest to get the reader to want to read
the rest of it. For this reason, it is BY FAR the most important section of
your business plan. Write a poor Executive Summary and the rest of the plan
is immaterial. It could be blank, for that matter, because it will NOT
WHAT DO YOU PUT INTO AN EXECUTIVE SUMMARY?
Don't try to simply summarize every section included in the body of the
business plan. It will come off as stilted and awkward. Summarize the most
important points contained in the document, i.e., those sections that carry
the most importance. Here's what you should include.
Describe your business. The reader needs to first understand what it is you
do in order for the remainder of the information to make any sense. Give
them a brief, well written two or three paragraph summary of your business.
Show the reader that you understand the market you operate in. Describe it
for them. Tell them about your competition. Tell them what makes your
business unique or about the strategic strengths you have within your
market. Tell them where you stand in your market. Are you the market leader?
Second but trying harder? A new entry into the market?
If you are a new entry into the market, this section becomes even more
important. If the reader doesn't believe after reading this section that you
have a good grasp of the market, he or she will not bother reading further.
Try to keep this section to three or four paragraphs, but if you must use
more because of complexities in your market or your position within it, take
the extra space needed here and save it elsewhere.
You can split this section into several subsections if it aids the flow of
the summary. For example, you might present a section discussing your
competition in the market and dedicate another to your unique position or
WHY YOU NEED THE MONEY!
After describing your business and the market you operate in, it's time to
tell the reader what you're going to do with their money. You need to
convince them, in a very small amount of space, that their money is going to
boost you over the top and make it possible for you to meet or exceed the
projected financial information you will be presenting next.
YOUR FINANCIAL FORECASTS
Summarize your projected income statement, statement of cash flow and
balance sheet. Present each statement summarized to the level of major
categories. For example, instead of listing all the individual expenses that
make up Operating Expenses, simply list all of the expenses as one line item
called "Operating Expenses." It should be easy enough to condense each
statement to ten lines or less.
Your goal is to give the reader an overview of the projected financial
results. They'll get into the details later.
If necessary, present summaries of other supporting schedules. If you
believe such supplemental information is important to an adequate
understanding of the summarized statements, provide it.
Give the reader a summary of what you're looking for. If you want to raise
$1 million in operating capital, say so. Tell them the terms you are
prepared to offer, whether it be interest, an equity stake in the business,
or a combination of both.
Provide the reader with full contact information for each individual that
should be contacted if the reader has questions. Make it easy for them.
Provide every address, phone number, fax number, cell phone number, or email
address that might be useful to them for the individuals identified as
Try to keep the entire Executive Summary to five pages. Most readers would
prefer three, but it will be very difficult, if not impossible, to provide
the information required in less than five because of the inclusion of the
financial statement tables. If you write this section well you won't have
any trouble keeping their attention through five pages.
And above all, you MUST WRITE IT WELL! Write, rewrite, and rewrite
some more. Make the Executive Summary as perfect as it can get. It needs to
read fast, flow nicely, provide maximum information with few words (be
concise!) and, of course, your punctuation, grammar and spelling should be
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