Writing a Business Plan - The Executive Summary

The executive summary is the introduction to a formal business plan. It summarizes the business proposition, key financial projections, where the business stands at present and elements that are critical for success. While you may be tempted to rush through this part before attacking the bulk of your business plan, remember this is the first thing a potential investor will read. If your executive summary doesn't grab his or her attention, then he or she probably won't bother reading the rest of your package.

Brevity is key. A good executive summary ranges from half a page to two pages; anything longer and you risk losing your reader's attention or appearing unfocused. A safe bet is to keep it under one page.

Although it leads off the business plan, the executive summary should be written last. That way, you can cull information from the rest of the report, and make certain there are no inconsistencies.

The executive summary is also the best place to describe your mission statement. Develop a concise description, no more than a few sentences, that explains:

• Why your business exists
• What its goals are
• How you will achieve those goals

Next, develop the business description or concept. This is where you offer more detail about the type of business you want to open, who the customers will be and what the competitive advantage is. A competitive advantage explains why customers will chose your business over marketplace rivals. Your reasons may include:

• Filling a void in the marketplace
• Offering a better product than what currently exists
• Offering a comparable product, but at a better price than your rivals

From there, you'll move onto a brief description of your financial outlook. This part of the executive summary should mention the expected costs of starting up, as well as your bottom-line financial projections for the short and long term.

The next issue to address is the status of your business. It may still be only in the idea stage. Perhaps you've already raised a little money. Or, it may be that you are fully operational and looking to expand. Investors will interpret your current business position as a signal as to how much capital is needed to advance your company, and whether or not this matches the type of opportunity they are looking for.

The final part of the executive summary will focus on critical factors that will determine your chance for success. These items will be specific to your business, but may include:

• Low staff turnover
• A technology patent
• A strategic partnership
• Externalities, such as the continuation of a marketplace or economic trend

Overall, the executive summary should offer a glimpse into what the business plan holds. Hit on all the important points; if you hold off on composing it until after you've written the rest of your business plan, it should practically write itself.