The Executive Summary is the most critical element of the business plan. If it does not grab the investor’s attention, the investor will not bother with the rest of the business plan. Find out what the two types of executive summaries are, and how to use them.
Companies seeking capital often ask how long the Executive Summary of their business plan should be. The answer depends upon the use of the summary, mainly determining if 1) it precedes the full business plan, or 2) it will be used as a stand-alone document.
When the Executive Summary precedes the business plan, its length should be short, typically only one to two pages and certainly no longer than three pages. This is because the Executive Summary is not meant to tell the whole story of the business opportunity. Rather, the summary must simply stimulate and motivate the investor to learn more about the company in the body of the plan.
The second type of Executive Summary is a stand-alone document. That is, it is given, by itself, to investors for their initial review. If interested, the investor will then request the full business plan. A stand-alone Executive Summary is often used to limit the flow of information. That is, if an investor is not interested in the general opportunity that your summary presents, you don’t want to reveal to them intimate details of your plan.
Regardless of which type of Executive Summary you are developing, the summary must included the following critical elements:
- A concise explanation of the business
- A description of the market size and market need for the business
- A discussion of how the company is uniquely qualified to fulfill this need
In addition, a stand-alone Executive Summary should include summaries of each essential elements of the business plan.
This includes paragraphs addressing each of the following:
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Customer Analysis: What specific customer segments the company is targeting and their demographic profiles
- Competition: Who the company’s direct competitors are and the company’s key competitive advantages
- Marketing Plan: How the company will effectively penetrate its target market
- Financial Plan: A summary of the financial projections of the company
- Management Team: Biographies of key management team and Board members
The Executive Summary is the most critical element of the business plan. If it does not grab the investor’s attention, the investor will neither read nor request the full business plan. As such, spend time developing the best possible summary, create two versions (e.g., stand-alone and full plan predecessor) as appropriate, and work to get it in the hands of the right investors.
Growthink develops strategic business plans, conducts market research, and builds financial models for growing ventures. To date, Growthink has developed over 200 business plans for clients who have raised over $750 million in venture capital.
