Placed right at the beginning of a business plan, the executive summary is the hook that lures investors into wanting to learn more about your business.
Investors, executives, lenders and CEO’s are always busy. That means that the executive summary is an essential gateway for your business plan to get read.
How to write an executive summary
“The most important reason to include an executive summary is that in many cases, it is the only thing the reader will read,” says Pablo Bonjour, founder and CEO of Katy, Texas-based SMG Business Plans. According to Bonjour, investors will read the executive summary to decide if they will even bother reading the rest of the business plan. It is rare for an investor to read an entire business plan, at least in the initial stages of analysis and consideration for funding, so having a strong executive summary is a crucial point.
According to Bonjour, investors will read the executive summary to decide if they will even bother reading the rest of the business plan. It is rare for an investor to read an entire business plan, at least in the initial stages of analysis and consideration for funding, so having a strong executive summary is a crucial point.
Your goal is to get invited in for a meeting with the investor and the goal of the executive summary is to sell your big idea.
As Guy Kawasaki says in one of his articles The Art of the Executive Summary, “The job of the executive summary is to sell, not to describe.” It is important to transmit the essence, and the energy of it. You will most probably have about less than a minute to grab an investor’s interest, so you better make it clear, concise and convincing.
The executive summary is important for you, as an entrepreneur as well, to determine which aspects of your company have the clearest selling points. Akira Hirai, founder and CEO of Phoenix-based Cayenne Consulting, says “The process of distilling the essence of your business down to a page forces you to think hard, decide what’s important, and discard things that aren’t essential to the story line. By doing this, you develop a better vision of what your business is all about, and you become better at telling your story.”
Even though the executive summary is at the beginning of a finished business plan, many experienced entrepreneurs choose to write the executive summary after they have written everything else. Ideally, the executive summary is short (1-3 pages long) and highlights the points of your business plan, so if you save it for the end, it will be quick and easy.
Guidelines to write an executive summary
There is no set structure for an executive summary, although there are a few guidelines to follow to ensure your business plan gets the attention it deserves. Before you start writing, here are a few points to consider:
- Who is your Intended Audience
Who do you want to read your executive summary and why?
- What Does Your Intended Audience really Need to Know?
You need to identify what are the key messages that you want your audience to have in their heads after they have finished reading it.
- The summary should only include the highlights of your report.
Save the analysis, the numbers and the charts for the report itself.
- Check whether you need to work within a specific structure.
Some organisations have clear structures that are used for documents.
- Use formatting and graphics to highlight the message.
Clarity of the summary can be improved through usage of bullet points and subtitles in the organisational structure. This will also make it easier for the reader to skim read.
- Do your research to find out more about your audience.
Use adequate language for your target audience and set the right tone. Personalize your executive summary when presenting it to different investors. “You need to match your story to your audience, your business, and your desired outcomes,” says Akira Hirai. Use personal pronouns like “our” and “we” instead of general nouns like for an example “the company”). Your reader will feel a stronger personal connection with you, your brand, and your idea if you can relate to the reader in the first person. And don’t forget to be confident, either.
- Remember, every executive summary should be unique.
Depending on the size of the business plan or investment proposal you are sending, the executive summary’s length will probably vary. However, the general consensus is that an executive summary should consist of one to three pages.
- Check accuracy of grammar, spelling, sentence and paragraph structures.
The key section of the executive summary
The executive summary needs to summarize the main points of the underlying paper and to draw out the key points.
It usually consists out of 3 key sections: An introduction, a main body, and a conclusion.
“The most important part of an executive summary is the first paragraph that clearly explains what the company does,” says Dave Lavinsky, president of Growthink. The introduction sets the scene, and needs to be attention-grabbing in order to compel the reader’s interest to read the rest of the summary.
2. The main body of the text
It should outline the key findings from the report.
After you’ve explained what your company does, it’s time to sell why you believe you’re uniquely qualified to succeed. The main section needs to focus on the most interesting and most relevant points of the report. After the first paragraph, Bonjour says one effective structure is to summarize each section in the same order in which the items are presented within the full business plan. To make the structure as relevant as possible for the reader, typically an investor or a lender, he suggests considering the following categories:
- A Company Description Summary
- The Problem
- Your Solution
- Why Now
Outline the take-home messages and the wanted action from the person reading the report.
What to avoid
“The goal of the executive summary is to get the investor to read the business plan and/or to meet with you. Keeping this in mind, clear your vocabulary of any superlatives, clichés, or claims that can’t be backed up”; “Avoid using jargon or terms like “the best,” “groundbreaking,” “cutting-edge,” and “world-class”. Investors see those words day in and day out, and eventually, they lose meaning”, says Lavinsky.
- Have you kept in mind the audience at all times?
- Did you address it to them?
- Have you met any word count or structural requirements?
- Have you clearly outlined the key messages and any action needed as a result?
- Does the executive summary make sense by itself, without the report attached?
Here are a few examples of good and poor executive summaries:
And how do you write an executive summary? What makes you prepare them? Let us know