A business plan executive summary is an overview of your entire business plan. It should be brief but still provide the reader with the essential facts about your business and its strategy for profitable growth.
If you are seeking funding from elsewhere, this business plan executive summary will help you decide whether or not to delve deeper into the details of your business plan. A good executive summary needs to be concise and straightforward to grab the reader’s attention. If it is not, no one will bother to read on.
The business plan executive summary is written at the end of a business plan, summarizing everything described earlier in the document. It offers an introduction and overview of your company’s mission statement, what product(s) or service(s) you offer, and highlights any pertinent industry background information.
Why is an executive summary necessary?
A business plan is a lengthy document that takes time to read. If you capture the reader’s attention with an exciting overview of your project, they will save time and know which parts of the business plan they should read in detail.
This increases the likelihood of understanding your idea, making the reader more willing to read on. It motivates the reader and gives them an incentive to read your entire business plan.
How long should an executive summary be?
In general, it’s best to keep your executive summary short. Try to keep it to 2 pages or less; the length can vary if necessary. Audiences often have limited time and attention, so they want a concise report on your business plan as quickly as possible.
Ideally, the number of pages of the executive summary will be determined by the total number of pages of the original business plan. One must also avoid writing it for 3 to 5 pages as it is a summary and has to be short.
A good executive summary is 5 to 10 percent the length of the entire business plan. Look at the business plan executive summary example given at the end of the article for a quick reference.
Essential elements that should be included in an executive summary
Every executive summary should consist of specific vital details to make it convincing. Below are the critical elements to include in your business plan summary:
The Problem Statement or Business Opportunity
Generally, there is a gap in the market or a problem that your company wants to solve by providing products and services. In other words, this describes why you have developed this particular product or service in response to a specific need identified by potential investors who want to know more about what exactly your company does.
Your Business Idea
Next, readers want to know how you plan to solve the problem and how you plan to do so if they are interested in investing in what could be their next project. This includes briefly (1-3 sentences) explaining how you can help alleviate existing problems while offering solutions within their methods, whether through research or design trends.
Here you describe the industry you are in, its size, and whether trends affect it positively or negatively. Industry analysis is a tool to help understand your position relative to other companies that produce similar products or services.
Understanding the forces at work across the industry is an essential component of effective strategic planning that enables small business owners to identify threats and opportunities to their business and focus on developing unique capabilities for competitive advantage.
Target Market or Customer
Every company has a target customer base and a target market. This is where you describe the types of customers your company targets and their demographic and psychographic profiles.
The market for your company is essentially the space in which it operates. Your goal should be to show that you have researched this topic and include relevant information about what makes your product or service unique compared to others in the field.
Some questions you can answer: What are the other companies’ prices? Are there any competitors? How will I stand out from these companies? This is why it is essential to understand the market and the customer.
When you venture into a market, there are always other market participants you are competing with. Knowing who these competitors are and where their strengths lie will give the reader insight into the competition in your field.
You want a potential investor to read one sentence of an executive summary to assess whether they think our company has potential and later learn enough details to know how we plan to compete with already established market players who may not value innovation.
For companies seeking funds from investors or banks, include a brief financial summary showing how and where you will use these funds. This also applies to your existing business applying for funding – in addition to data on past performance.
You should also provide projections for the future so that potential investors can assess whether they will receive a reasonable return on their investment in your business. At the same time, lenders can determine whether or not loans may be able to be repaid on time, given this financial situation.
The success of your business depends mainly on the people involved. Therefore, it is important to introduce the key employees and explain their responsibilities as part of a team.
The executive summary lets readers know how well equipped the group is for the endeavor.
Tips for writing an executive summary
Before we dive into the business plan executive summary example, it is better to know your executive summary and how it fits into the rest of your business plan. Several executive summaries are either initial sections of detailed plans or stand-alone documents handed out without the entire plan. The following tips will help you write a better executive summary:
Mention your previous experience
Mention any previous start-up experience or industry knowledge you have. Just mention that more information will follow later, as long as you can back up the claims with evidence later.
Give a detailed explanation of the funds.
Funding summarizes how much money you plan to raise and how the funds will be used. For investors, in particular, we need to provide sufficient information about our startup’s plans, so they know whether or not it is of interest to them.
This includes learning what the money will be used for – building inventory for existing orders seems less risky than developing products in design and prototyping, to name just one example.
Valuation is a controversial topic when it comes to funding. Some prefer startups to do their valuation, while others want specific summaries that indicate amounts at certain valuations before investing in those startups.
Mention your exit strategy
Investors invest in your company to make money, and if you fail to do so within a few years, they will sell their shares to get their return. So, mention that you have an exit strategy to get some profit from investing in your company.
However, you should explain the details later. Too many founders think that focusing on being successful is enough because investors want most – but it will not pay off unless there are clear plans for exiting one day.
Use persuasion, but focus on facts.
You want the person reading your summary to keep reading and investing in you beyond that. At this point, you will use persuasion but always focus on the facts. If potential investors want more information, they will ask how those facts prove traction or market size to make informed decisions. They are not interested in mere claims of excellence – these are useless unless backed up by evidence.
Do not use cliches terms.
Do not use clichés like “the passion of our team” when describing a startup. Instead of touting your company with meaningless words, show them facts and let investors rave about them.
Business plan executive summary example
Below is a business plan executive summary example of an on-site pet care company.
Executive Summary for Pet Grandma Inc.
Pet Grandma Inc. provides on-site pet care with a personal touch for owners who want their pets in good hands while they are away. This team will ensure that your pets get the care they deserve and have everything they need to stay happy and healthy when you are out of town or away.
The Company and Management
Pet Grandma Inc. is headquartered in West Vancouver and is incorporated in the province of British Columbia. The company is owned by partners Pat Simpson and Terry Estelle, who have extensive experience in pet care and retail, respectively. Below is some additional management information:
The two co-owners, Pat Simpson and Terry Estelle, provide hands-on leadership at Pet Grandma Inc. They assemble an advisory board to guide them on their journey at Pet Grandma Inc.
Pet Grandma Inc. offers a variety of pet care services, all in the pet’s home environment, including:
- Dog walking
- Daily visits
- 24-hour care for days or weeks at a time
- Administration of medications by qualified staff as a substitute for owners who are away from their pets for work and cannot self-administer medications.
- Emergency treatment by a veterinarian is also arranged if needed.
- Watering plants
Over the past three years, the pet care industry has experienced tremendous growth. West Vancouver is an affluent area with a high density of pets. Their market research shows that nine out of 10 respondents in the area would prefer to have their pets cared for at home while they are away, and six out of 10 said they would consider having someone come to their home to keep them company if their dog was alone during work hours.
Competitive advantages for Pet Grandma Inc
In West Vancouver, eight businesses care for pets. But only three of them offer on-site care, and none offer a “pet visitation service” for working pet owners.
Pet Grandma’s marketing strategy emphasizes the quality of care they provide (a “grandma” for your pets.) and their availability several times a day.
All of their employees are certified pet sitters – all employees are insured and bonded to ensure safety and give peace of mind.
Based on the size of their market and their defined market area, the first-year revenue was projected to be $340,000. Over the next three years, it is estimated that they will achieve a growth rate of 10% per year. They will have six trained employees providing pet services at launch and can expect to add four more in the coming year once funding is secured.
Co-owner Pat Simpson is starting with appointments but plans to add a full-time receptionist soon. They already have more than 40 clients aggressively recruiting cat owners in West Vancouver through newspaper ads, the website, and social media. They know that Pet Grandma Inc. care means loving and professional on-site care.
Financial requirements to get started
Pet Grandma Inc is seeking a $150,000 operating loan to fund our first-year growth. The co-owners have collectively invested $62,000 to meet their working capital needs.
An effective business plan can set your business on the map and get you started with it. Therefore the business plan outline must be well written. This article gives you all you need to write a business plan and an example. The article also mentions the essential elements of a business plan. The tips provided in the article can help you fine-tune your plan accordingly.