Business Plan Executive Summary: Business Plan Component Nr. 1
The business plan executive summary is a summary of a business plan and should be at the beginning of the plan. Its purpose is to convince bankers, investors and potential business partners of your business model and concept and encourage them to read further.
Your future partner, banker or investor finds (or at least should find) compact key data in the business plan summary. This data is crucial for his decision when weighing the pros and cons. Due to the importance of the executive summary, it is advisable to write it last to as to avoid inaccuracies.
The company to be founded will be presented in the executive summary (sometimes also called “business idea” or “concept”). The underlying business idea and the goal of the business plan are explained briefly and concisely. The business plan executive summary is of paramount importance, because it determines whether the plan will be read. The first impression wins your potential backer at this point.
Business Plan Executive Summary: Key Components Of A Business Plan
When preparing a business plan take note to present the most important points in a logical sequence clearly and concisely. Mistakes in this part of the presentation are rarely forgiven.
Typically the executive summary is just 1 or even 3/4 of a page long. In any case it shouldn’t exceed two A4 pages.
Remember what George Bernard Shaw said: „If I had more time, I would have written a shorter letter!“
Filler text, such as sentences with no essential meaning, does not belong in any part of the business plan. It is an absolute no-no in the executive summary.
Even if it seems strange to be specific right at the beginning of the business plan, it is advisable. Particularly important figures pertaining to financial volume, special price advantages or growth rates in core markets should be included here.
This is a useful checklist when preparing a business plan executive summary:
• What business idea are you pursuing?
• What market are you aiming for with your products or services?
• How do you assess the current and projected future market potential?
• What unique selling points does your business have? What advantages to the client make your product or service stand out?
• What are your goals in the short, medium and long term?
• How do you intend to achieve these objectives?
• What experience and knowledge can you can bring that are important for the realization of your projects?
• How much capital do you need to invest?
• What are the main factors making your business more successful than that of the competitors?
• What are the risks in the implementation?
• What is your sales and profit planning in the next three to five years?
• What is the return on investment (ROI)?
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Business Plan Executive Summary Vs. The Infamous Elevator Pitch
Unlike the executive summary, your elevator pitch must convince the potential partner or funder of your and your enterprise’s success in seconds.
The elevator pitch is a very short outline of your executive summary. You need a very short version of your business proposal in the event that you cross paths with an important person. You will have to convince potential funders not only of the company, but also of you yourself. If you manage to be convincing with hard facts, the potential investor will be much more likely to remember you even after talking to 10 more people. Stories, slogans and take-home messages really help. Good slogans can serve as an inspiration to find your own unique line.
Business Plan Executive Summary: The Business Concept
The business model is the core of every business plan and can be defined as follows: The business model illustrates the business idea and also the ways and means of how this idea can be successfully implemented.
In addition to a chronological representation of how the business idea and the company should develop over time, it is the objective of any newly established enterprise to create solutions to potential clients’ existing problems or meet anticipated needs and thus generate profit in the long term.
The potential investor or partner must get an overview of the main features of the business idea in the executive summary. If he keeps reading, this means he is genuinely interested in the business concept. Afterwards it is important to build on this interest and to bring your business plan to life. The overviews must now become specific and be presented in detail.
Business Plan Executive Summary: A Checklist Serves As A Frame Of Reference For The Most Important Questions And Answers Involving Your Business Model:
• What is innovative and beneficial about this business model (here follows the description of the field of business activity)?
• What are the goals of your business? What makes the vision and the company’s goal unique?
• What needs of the customers must you meet?
• What is your core competence?
• If this core competence protected? If yes, how?
• Can the desired success be achieved through this business model?
• Can this business model adapt quickly to changes in the economic environment?
• How do you plan to achieve your goals? Identify the strategy.
• How will the company position itself on the market? What makes it different from the others? What identifies the company? What is the core competence?
• How is the value (EBIT margin, returns) achieved? What can guarantee the success of the business?
• Why do you choose a particular type of company? Here you should take care to avoid providing unnecessary information. The business plan has to be presented in detail, but this does not mean that you should list each and every detail.
It is important to write as specifically and accurately as possible.
Business Plan Executive Summary: Common Mistakes
It is one thing to make mistakes while presenting the concept, but sometimes it comes to that you start asking yourself whether the business model is even feasible. Major mistakes at this point can put an end to your plans for your company. Many sources of mistakes can be identified and avoided, however, if you look carefully.
Investing your own resources in areas with low added value can melt capital down very quickly, which is even worse when capital is scarce anyway.
Prospects for the success of the business model exist only if you manage to create a unique customer value in a sufficiently large market and at corresponding profitability in the time that capital is available.
Excessive dependence on individual customers can make your own interests difficult to pursue. In addition, there is always the danger of the bulk buyer’s taking you down if the figures are bad.
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