At some point most businesses will need a business plan. A business plan is generally required to secure internal or external investment or apply for funding such as a bank loan or enterprise agency support in order to exploit an identified business opportunity.
As someone who writes business plans and provides training to entrepreneurs on how to write their business plan, I strongly recommend using a business plan template. I also suggest taking due care and attention in crafting the Executive Summary of the plan. This post will outline how I approach writing a compelling Executive Summary for a business plan.
In a previous Tweak Your Biz article which focused on key learnings extracted from the brilliant book ‘Running Lean’ by Ash Maurya, I outline my agreement with his view that an early stage startup does NOT need to prepare a business plan. I strongly endorse using Ash’s Lean Canvas tool because business planning is critical. But at a point in time, a Business Plan will be required.
Overall objective of your Executive Summary
The Executive Summary should be no more than 2 pages [I don’t agree that it should be one page which generally is achieved simply by reducing the font size]. The overall objective of an Executive Summary is to convince the reader to read the entire plan and create a strong first impression by:
- Providing an overview of the business – to include products and services offered; benefits for customers; and the size of the addressable market.
- Sharing the vision of the business thereby presenting why you and your team have such enthusiasm and passion for this plan.
- Outlining the Business Model and the Financial returns.
In essence, your Business Plan Executive Summary must detail using easy to understand language the business’s Unique Value Proposition – the unique value provided to customers such that you stand out from competitors in the market.
Format for your Executive Summary
A business plan must tell a story. It must follow a recognisable structure. Equally, the Executive Summary must have a natural flow. I attended a Global Incubation Conference in Seattle a few years ago and met Wendy Kennedy the author of a Commercialisation Workbook called ‘So What, Who Cares, Why You’. I love the title and have incorporated her thinking in what I consider to be the 5 elements of a succinct but comprehensive Executive Summary for your business plan.
#1. So What
[1 -2 paragraphs] So what refers to the products and services offered. But really it refers to the ‘burning problem’ experienced by customers. The starting point in any ‘business story’ is to answer: What will inspire sufficient customers to take money from their wallet and give it to you? The natural follow-on is to, in one or two sentences, summarise the product or service solution(s) offered.
#2. Who Cares?
[1 -2 paragraphs]The second section (you don’t necessarily need headings) will provide a clear description of the customer and an overview of the target market. The easiest way to explain to the reader who exactly is the ‘ideal target customer’ and to demonstrate market traction is to specifically mention names of your strategic reference customers and route to market partners.
#3. Why You?
It is generally acknowledged that people invest in the people behind the business. The Executive Summary must carefully summarise the skills and track record of the management team such that the reader has confidence in the future of the business. [One short paragraph per team member and then one paragraph to outline Advisors]
#4. Summary of the financials
I love colour in business plans. It makes them easier to read. I particularly like tables and charts. Figures aid understanding. A 3 year financial chart with Sales, Expenditure and Net Profit can work very well in an Executive Summary followed by bullet points to detail issues to include as appropriate: setup costs; amount of investment sought; revenue models to include pricing; how funding will be allocated; and the exit strategy.
The fifth element is not necessarily the conclusion to the two pages but can be woven in at an appropriate juncture of your Executive Summary. I try to work with promoters to identify one other detail of particular significance to the business. This is generally some factor that is critical to framing the story presented by the business plan. It will probably relate directly to your Unique Value Proposition or source of Sustainable Competitive Advantage. This also gives you license to write a little bit more on one of the four elements already discussed if that is where your ‘Secret Sauce’ resides.
When to write your Executive Summary
The traditional view on when to write your Executive Summary would probably be when you have the entire plan finished. I would suggest an alternative approach – to write it first before you get bogged down in the detail (a business plan can take weeks to write).
- Get out a blank sheet of paper (or use a whiteboard, powerpoint slide or mindmap) and write down the five things you would want someone to really know and remember about your business if they were to read your business plan.
- Without referring to copious notes or copying and pasting from other documents, type out a paragraph or two on each of these points.
- Keep the language simple. A good tip in this regard is to write short sentences.
- For the financial section you can estimate the numbers and finalise them when the projections are compiled.
You now have a first draft Executive Summary. I bet that when you review it when you do indeed finish the final plan that you will not change too much of it. You might even decide after completing the Executive Summary to complete your financial projections and not bother writing the rest of the plan!
I look forward to the comments of the Tweak Your Biz community on my suggested format for the Executive Summary of your Business Plan.
Images: ”Business Plan and pen close up / Shutterstock.com“
Connect with Tweak Your Biz:
Would you like to write for Tweak Your Biz?
An outstanding title can increase tweets, Facebook Likes, and visitor traffic by 50% or more. Generate great titles for your articles and blog posts with the Tweak Your Biz Title Generator.
Get Featured On Tweak Your Biz – #TYBspotlight