How to write an Executive Summary for your Business Plan?


Abs
By Abs | December 5, 2019 4:53 pm  | 4-min read
How to write an executive summary for your business plan

An executive summary of a business plan is an overview of it. Its purpose is to summarize the key points of the document for its readers, saving them time. When you are developing a business plan, potential investors or other stakeholders will often want to see an executive summary at the beginning to get an overview of the plan.

An Executive summary is often called the most important part of the business plan. If it does not capture the reader’s attention, the plan will be set aside unread – a disaster if you’ve written your business plan as part to start your new business.

As the executive summary presents the essence of the report, it should focus on the most important information without delving into minor details. Most importantly, it should be interesting enough to compel the reader to go through the complete document. This blog post has been created to explain how to write an executive summary. Even though it may vary depending upon the nature and objective of the report, and the audience it is intended towards, an executive summary should broadly touch upon:

  • Unique selling proposition
  • Market or target customers
  • Company description and its legal form
  • Pain points and your solution or funding requirement

How to write an executive summary

Tips on How to write an Executive Summary

  • Focus on providing a summary

  • Keep your language strong and positive

  • Keep it short – no more than two pages long

  • Polish your executive summary

  • Tailor it to your audience

  • Put yourself in your readers’ place

Key Elements of how to write an Executive Summary for a business plan

  1. Overview

  2. Problem

  3. Solution

  4. Opportunity

  5. Business Model

  6. Financials

  7. Funding

#1. Overview

This section describes the product you intend to develop, the target market of the product, the competitors for the product, and how the product is different from competitive solutions in the market. An overview paragraph might look like this:

<Product name> is a <type of product/category description> that delivers <statement of benefit>. Unlike <specific competitor or competitive category>, <product name> provides <statement of differentiation>.

Example –

PayPal is a web-based payment service that allows buyers and sellers to transfer funds promptly while protecting against any fraud or theft. PayPal allows any merchant to accept funds and allows customers to pay without disclosing sensitive banking or personal information.

#2. Problem

This section identifies problems that your product is designed to solve. Remember to use declarative sentences with very simple words to communicate each and every point.

Example –

Small web-based merchants are now unable to sell their goods online due to the inability to process credit cards. Processing a credit card requires a merchant to obtain a merchant account from their bank, something that is currently expensive for small online merchants. At the same time, customers are currently hesitant to disclose their credit card number to merchants online, due to the risk of fraud. As a result, many merchants are unable to capitalize on the World Wide Web to reach and sell to new customers.

#3. Solution

This section describes the product and how it addresses the issue outlined in the problem section. It is best to describe the product in terms of the benefits to the customer, and not focus on the features of the technology.

Example –

PayPal provides a web-based payment service that can be used by any merchant to accept payments online. Users create a PayPal account linked to their bank account and use it to pay for goods without revealing their credit card or banking information. PayPal transfers money between customers and merchants and also protects both parties from any fraudulent transaction. Merchants get access to paying customers they are currently unable to access without a merchant account, and customers gain the ability to make risk-free online purchases.

#4. Opportunity

This section describes the market prospect that the product is designed to capture. It is extremely important to cover the estimated size of the market, the estimated growth of the market, and the characteristics of the target customer.

Example –

Online retail sales in 1999 reached USD X dollars, a growth of X percent over the previous year. By XXXX, XYZ estimates that online commerce will comprise USD X dollars annually or X percent of all retail sales. Currently, only X percent of the X small merchants making less than USD X annually are currently exploiting the Internet to reach customers online. A web-based payment processing system would remove this barrier, and permit an estimated USD X in additional online transactions to occur annually.

#5. Business Model

This section describes how the product will make money. How does the customer purchase the product? Is the product sold to the customer directly or provided on subscription-basis? Is there some other way that business makes money? How much money does the company make on each sale?

Example –

PayPal derives revenue from each transaction it processes. Customers pay nothing to transfer funds to a merchant using the service, but merchants pay between 1.9 percent and 2.9 percent, depending on the dollar value of the transaction, to receive funds from a customer. Each transaction is subject to a minimum transaction fee of USD 0.30.

#6. Financials

This section describes the economics of the business. Aspects to be highlighted include the fixed and variable costs needed to run the business, the projected customer growth, projected number of months to breakeven, the projected number of months to cash flow, and the overall profit potential.

#7. Funding

This section gives in detail the amount of funding the organization requires, how those funds will be used, and the milestones the organization hopes to achieve using the funds.

Example –

PayPal is currently seeking USD 5M in Series B funding. These funds will be used to finance the development and acquisition of payment processing infrastructure in 2000Q1, the creation of marketing and training collateral to drive merchant and customer adoption in 2000Q2. At the conclusion of these activities, the company expects to in a position to begin processing transactions by 2000Q3.

The 5 Paragraph Formula for an Effective Executive Summary

The 5 Paragraph Formula for an Effective Executive Summary

Paragraph 1: Provide an overview of your business

You can get your readers thinking along the track you would like them to by including a quote or statistic in the first paragraph of your executive summary.

Paragraph 2: Discuss the target market and marketing strategy

Your second paragraph should comprise of a clear and concise definition of your target market, and the need or problem that your business will aim to solve.

Paragraph 3: Provide an overview of operational highlights

The third paragraph should provide effective highlights like where your company offices will be located etc.

Paragraph 4: Show forecasting

In the fourth paragraph, you should make sales forecast projections for one and two years since your business plan has been implemented. Calculate the break-even point, and inform the audience of what you plan next.

Paragraph 5: Detail your investment needs

If your business requires any financing, this is where you should go into details about the investment needs of your business. The number you include here should be clear and should align with your projections from the previous paragraph.

Conclusion

You now have the complete knowledge to draft an effective executive summary. Hopefully, this article has alleviated some of the overwhelming feelings that come while the executive summary.

Remember, the executive summary is the first thing your readers read. If poorly written, it could also be the last thing they read, as they set the rest of your business plan aside unread.

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Abs
About The Author
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Founder and CEO, Appy Pie, Abs has a cumulative experience of over 10 years in the world of technological development and entrepreneurship. His in-depth knowledge of the mobile app development technology and his sharp observations offer valuable contributions to the blog. His areas of expertise are SEO, trends in the mobile app world, and the latest innovations in Artificial Intelligence & Machine Learning. He has a passion for fitness and likes to get his daily dose of endorphins from a run and a strenuous session in the gym.

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