How to write an effective executive summary
Most of them offer a wealth of well-intended suggestions about all the stuff you need to include in the executive summary. They provide a helpful list of the forty-two critical items you should cover, and then they tell you to be concise. Most guides to writing an executive summary miss the key point: The job of the executive summary is to sell, not to describe. The executive summary is often your initial face to a potential investor, so it is critically important that you create the right first impression.
Contrary to the advice in articles on the topic, you do not need to explain the entire business plan in words. You need to convey its essence, and its energy. You want to be clear and compelling. Forget what everyone else has been telling you. Here are the key components that should be part of your executive summary: The Grab You should lead with the most compelling statement of why you have a really big idea. Usually, this is a concise statement of the unique solution you have developed to a big problem. It should be direct and specific, not abstract and conceptual.
If you can drop some impressive names in the first paragraph you should—world-class advisors, companies you are already working with, a brand name founding investor. He or she may never get that far.
The Problem You need to make it clear that there is a big, important problem current or emerging that you are going to solve, or opportunity you are going to exploit. In this context you are establishing your Value Proposition—there is enormous pain and opportunity out there, and you are going to increase revenues, reduce costs, increase speed, expand reach, eliminate inefficiency, increase effectiveness, whatever.
The Solution What specifically are you offering to whom? Software, hardware, service, combination? You might need to clarify where you fit in the value chain or distribution channels—who do you work with in the ecosystem of your sector, and why will they be eager to work with you.
If you have customers and revenues, make it clear. If not, tell the investor when you will. The Opportunity Spend a few more sentences providing the basic market segmentation, size, growth and dynamics—how many people or companies, how many dollars, how fast the growth, and what is driving the segment. You will be better off targeting how to write an effective executive summary meaningful percentage of a smaller, well-defined, growing market than claiming a microscopic percentage of a huge, heterogeneous, mature market.
- After describing the elements above, the executive summary should also have a brief financial summary.
- Now it's time to request either an investment or loan, depending on the purpose of the executive summary.
- All of us will read summaries for plans that pique group interest, and half of us will look at the rest of the plan only if we are still interested after reading the summary.
Your Competitive Advantage No matter what you might think, you have competition. At a minimum, you compete with the current way of doing business. Most likely, there is a near competitor, or a direct competitor that is about to emerge are you sufficiently paranoid yet?? So, understand what your real, sustainable competitive advantage is, and state it clearly. Believe it or not, in most cases, you should be able to make this point in one or two sentences. The Model How specifically are you going to generate revenues, and from whom?
Why is your model leverageable and scaleable? Why will it be capital efficient?
Don't disclose how much equity you are willing to give up or what interest rate you are willing to pay. If they effectivve understanding or make the summary more skimmable, it's okay to use: Executive Summaries Learn about executive summaries and how to write them. Checklist for writing an executive summary Have you kept in mind the audience at all times? Undergraduate and standard graduate program tuition for students who meet the criteria for Maryland residency will be the applicable in-state rate. Be transparent about your financial history and bankable assets. Mention any defining details that would matter to the person that will ultimately read the summary—like that the founders are all MBA students at the local university, or that your business has been awarded a prestigious development grant. Do not lead with broad, sweeping statements about the market opportunity. Bullet points are a useful form to highlight the key points, and this is where your three to executtive messages come in.
What are the critical metrics on which you will be evaluated—customers, licenses, units, revenues, margin? Whatever it is, what impressive levels will you reach within three to five years? The Team Why is your team uniquely qualified to win?
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If you can, state the names of brand name companies your team has worked for. The Promise When you are pitching to investors, your fundamental promise is that you are going to make them a boatload of money. The only way you can do that is if you can achieve a level of success that far exceeds the capital required to do that.
Your Summary Financial Projections should clearly show that. But if they are not believable, then all of your work is for naught. You should also show a key driver or two, such as number of customers and units shipped each year. The Ask This is the amount of funding you are asking for now. This should generally be the minimum amount of equity you need to reach the next major milestone. You can always take more if investors are willing to make more available, but it is hard to take less.
If you expect to be raising another round of financing later, make that clear, and state the expected amount. You should be able to do all this in six to eight paragraphs, possibly a few more if there is a particular point that needs emphasis.
If in doubt, check out our page: Likewise, the report should not contain major points that did not appear in the summary. Honest appraisals and truthful promises are what sell, not overused, recycled ideas and hollow claims. What is the purpose of the company sponsoring the document, or of the original document itself? In two or three sentences you should tell the reader why your business is special. State your value proposition and competitive advantage in positive terms, not negative terms. Don't disclose how much equity you are willing to give up or what interest rate you are willing to pay.
You should be able to make each point in just two or three simple, clear, specific sentences. You might be able to get this on to one page, but most likely this means your executive summary will be about two pages; worst case, maybe three. Some people say it has to be one page. The only reason investors ask for one-page summaries is that they are usually so bad the investors just want the suffering to be over sooner. Most investors find that there is not enough information in one page to understand and evaluate a company they are actually interested in. Please remember that the outline above should not be applied rigidly or religiously.
There is no template that fits all companies, but make sure you touch on each key issue. You need to think through what points above are most important in your particular case, what points are less relevant, what points need emphasis, and what points require no elaboration. Some other general points: Do not lead with broad, sweeping statements about the market opportunity.
What matters is not market size, but rather compelling pain. Investors would rather invest in a company solving a desperate problem for a small growing market, than a company providing an incremental improvement for a large established market. State your value proposition and competitive advantage in positive terms, not negative terms. It is what you can do that is important, not what others cannot do.
The summary how to write effective an executive Choose For
With the one or two most obvious competitors, however, you may need continue reading be very explicit: Use analogies, as long as you are clarifying rather than hyping. You would think this goes without saying, but too many entrepreneurs cross over the line between passionate enthusiasm and fraudulent misrepresentation.
He or she may never get that far. Try to sum this up in two or three sentences. Others will read the summary first to decide whether or not they read the rest of the plan. What matters is not market size, but rather compelling pain. For a startup, it might be a brief description of aspirations, such as a sales goal for the next year or three years from now. Providing too much background in the summary. You might be able to get this on to one page, but most likely this means your executive summary will be about two pages; worst case, maybe three. You should also show a key driver or two, such as number of customers and units shipped each year.
On a lighter note, check out The Top Ten Lies of Entrepreneurs presentation. Is each sentence clear, concise and compelling?
If you are looking for help developing your slide presentation for investors, please read Perfecting Your Pitch. Finally, one of the most important sentences you write may not even be in the executive summary—it is the sentence that introduces your company in the email that you or a friend uses to send the executive summary. Your summary might not even get read if this sentence is not well-crafted.
Again, it should be specific and compelling. It should sell your company, not just describe it. For more on this topic, please read Getting to Wow. Venture investors are predisposed to like entrepreneurs. Many of us were entrepreneurs in our prior lives, and all of us enjoy the challenge and excitement of starting up companies. We are on your side.
So please help us get to know you better by telling your story clearly and concisely. If you have any questions about this article, or about Garage Technology Ventures, you can contact Bill Reichert, Managing Director of Garage Technology Ventures email: Video Resources Get the newest insights from Garage.