Writing a Business Plan: How to Create a Good Executive Summary

First impressions matter and brevity is key with an executive summary.

Writing a Business Plan: How to Create a Good Executive Summary

Having a good executive summary at the introduction to your formal business plan is crucial for capturing the attention and excitement of both investors and potential partners alike.

A good executive summary effectively captures the core business proposition, key financial projections, where the business stands at present and elements that are critical for success of the company moving forward into the future.

Write a Good Executive Summary By Avoiding These Two Mistakes.

While you may be tempted to rush through the process of writing an executive summary, just so you get get to attacking the bulk of your business plan, remember that this is simple (yet very impactful) statement is the first thing a potential investor will read.

If your executive summary doesn't grab their attention right off the bat, then they probably won't bother reading the rest of your business plan or continue on to make an investment in your business.

1. Brevity is Key with an Executive Summary.

A good executive summary ranges from half a page to two pages maximum; anything longer and you risk losing your reader's attention or appearing unfocused.

A safe bet is to keep it under one page so that you're adequately getting a potential investor up-to-speed on everything your company does (and is planning on doing), yet not boring them with mundane details that aren't really relevant to them at the moment. There are always more details you can share once an investor expresses interest in your business and enters the process of due diligence—but at the goal of a good executive summary is to get them to keep reading and considering your company.

2. Don't Write the Executive Summary First.

Although it leads off the very beginning of your business plan, the executive summary should be written last. That way, you can cull information from the rest of the document and make certain there are no inconsistencies throughout. The executive summary is essentially a one-page report that needs to concisely capture all of highlights from the information contained in the rest of your business plan.

Organizing Your Executive Summary.

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.