While a great business plan has many components, it could be argued that your executive summary is THE most important element.

Think of it like selling a house. No matter how great the bones of the house are, or how desirable the area is, a savvy seller is going to clean, organize and stage the house.

Why?

Because a smart seller knows that for everyone to see the house’s true potential, they need to put their best foot forward.

Staging your house for sale is the same idea as a business plan. You may have an incredible idea and the required data to show why your business plan will work, but if you can’t provide an executive summary that’s clean, simple and clutter-free, then some investors may not be able to see the bigger picture.

The Goal of Your Executive Summary

There’s prevailing wisdom in much of the industry that an executive summary should be written last after all the other components are done.

However, I personally reject this approach. Instead, I actually encourage my clients to work on their executive summary first.

I completely understand that this may feel overwhelming because there is a lot of information to sort through. But this part of writing your business plan should be a challenge.  It should be uncomfortable. You’re trying to drill down to the heart of your business idea, so having to be objective isn’t easy.

Knowing that potential investors will be reading the entire plan means the goal of the executive summary is to intrigue them. It’s the equivalent of an elevator pitch — you have two minutes or less to capture their attention and get them feeling connected to your vision.

For the investors, like business bankers and underwriters, they’re looking for the facts. They want to understand the fundamentals of your business before diving into all the details, and if they can’t find them in the executive summary, they may feel frustrated. Your goal is to make all the key highlights easy to see so they don’t have to go hunting for details.

Some questions to ask yourself when building your executive summary:

  • Can you clearly describe what space you are in, what customer niche you serve, and what value you are providing to the market?
  • Are you able to add your revenue targets, any fundraising needs, and what you plan to do in the next phase of your business?

Key Components of the Executive Summary

The first thing to focus on is the 3 x 3 rule. This means you should only target three areas from a standard business plan table of contents and write three sentences in each area.

The purpose of only choosing three areas is to keep your plan focused. When we’re excited about a business plan it’s all too easy to get carried away and provide too many details. By narrowing your focus, you can ensure you’re only including what’s necessary and related to your business plan.

To narrow down to three areas, you can choose three of the following:

  • Industry
  • Operations
  • Team
  • Customers
  • Market Need
  • Plan and Capital

For example, one of your paragraphs can be titled “Team.” This is a great section to use as your first paragraph. I like to frame the first sentence this way: “Pajama Business LLC is operated by Mike Smith and Mary Jones.” You don’t need to share an entire organizational chart, just show who the “bosses” are.

Once you’ve nailed down your 3 x 3, then you can begin building out your sidebar details. These don’t need lengthy explanations and can be written in bullet point form.

Your additional information should include:

  • Asking Amount
  • Equity
  • Year Established
  • Operating Status
  • Industry and Niche
  • Ideal Customer Persona

The most important thing to remember when working on your executive summary is to be clear and direct. Readers should know exactly what to expect as they move forward with reviewing the rest of the plan.

Common Mistakes to Avoid

One of the most common mistakes people make with their executive summary is making it too long. Two pages should be your cap, but if you can keep it to one then that’s even better.

Your executive summary is the teaser that makes investors want to read more, so you want to avoid overloading them with information. You want them to be excited about the potential of your business idea and want to keep reading.

You also want to avoid certain language in your summary. You don’t want to make any promises you may not be able to keep, like saying an investment of XX dollars will result in XX in profits. Any claims you make need to be attached to a clear, data-driven marketing strategy to get to illustrate how the goal can be achieved. These sorts of bold claims without backup may make investors question whether you have a solid acquisition strategy or marketing plan.

Being overly general can also be a red flag for investors. Investors may see this as you being unfocused and not having a clear strategy.

Final Thoughts

The purpose of your executive summary is to educate, not sell. You want to approach the opportunity of presenting it to investors as a way to share information and introduce the possibility of a deal. By keeping your executive summary high level and using clear, concise language, you’re inviting investors to learn more, and saving the real story for when they read the overall business plan.

Are you working on a business plan and need some guidance from an expert who’s been there, done that?

Check out my new book
How to Write an Exceptional Business Plan HERE.

Ashley Cheeks

Author Ashley Cheeks

Ashley Cheeks is a Business Plan Consultant. Her core business plan writer expertise is in designing business plans for bank and investor funding. She founded Written Success after years of being a professional business plan writer as a freelance consultant, and working for companies including GE and Fluor. She lives in Houston with her husband, daughter and son.

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