Constructing The Executive Summary in a Business Plan

LAST WRITTEN, MOST IMPORTANT SECTION

Without exception the Executive Summary is the most important section of any business plan. It is the very first part of your business plan that anyone will ever read. First impressions count when it comes to your business plan. The Executive Summary is also perhaps the most detailed “sales oriented” business presentation you will make in everyday business interactions. Its importance is particularly true for non-profit organizations seeking funds, and for small businesses in search of investors or in need of expansion funds.

When speaking with investors, it will be the Executive Summary that they will initially ask to see. If, and only if, your Executive Summary makes a lasting impression on them will they then request a conference call with you and a copy of the full business plan for further financial discussions.

Instances that include startup businesses and non-profit funding will require a detailed, accurate, and persuasively written business plan to succeed with foundations, bankers, or investors. You will want to wait until the end of your business plan’s construction before writing the Executive Summary. It is not really possible to write a summary or overview of something that is not already defined or constructed.

An Executive Summary should be just that; a summary of all of the details outlined in the content of the rest of the business plan. Ideally, a business plan should contain at least 25 pages of detailed content with the Executive Summary 2 to 3 pages in length. When constructing your Executive Summary, remember to follow the subtitles or subsections of your business plan extracting the most important point(s) of each section for the summary. Keep the summary content interesting by avoiding a straight up “copy and paste” from the other sections of the plan to the summary. Remember, if you would yawn reading the same content repeatedly throughout a report, then don’t do it in your own business plan. Your goal in writing your business plan is to present the best possible face for your company to potential money sources. Don’t undermine your own efforts by making your plan’s content incredibly boring. If you do, your readers [money sources] will likely think you hired a cheap writer, wrote the content yourself, or simply are short of talented individuals to help you.

Other language faux pas to watch for in your writing the executive summary content include:

• Excessive use of ‘I’: I should be used only in a couple of places in the summary if at all.

• Any sort of reference to the reader, this includes “you” or proper names.

• Keep your sentences alternately structured so that your reader does not tire from 2 pages of Proust styled writing. Keep an Executive Summary exactly that; a summary.

Another way to look at the Executive Summary is as “the hard sell” of your business plan. It should be succinct and precise, interesting and engaging, factual and personable, business-like, and yet very likeable. Think of the Executive Summary as the business plan’s own “personality” if you will. A personality is a guiding core that determines how and what to expect in your interactions with the individual or company. In a similar way, a businessman reading the Executive Summary should be able to make reasonable calculations as to what to expect when he interacts with you, the primary representative of this personality or company.

When you sit face to face interviewing a person, you get a good feel for their personality. You also have the luxury of alternating a soft-sell pitch and a hard-sell pitch if you are the party being interviewed and if such a tactic is needed. In the context of a business plan, you, the owner, are the one being interviewed. The problem you are immediately faced with is that often you will not have the opportunity to alternate your soft and hard sell pitches because you will not necessarily be face to face with your banker or investor on the first contact or presentation of your business plan.

Since paper cannot talk and is not as innately interesting as people usually are when sitting across from you, your dilemma becomes how to sell the bank or investor representative on your company without the luxury of getting to soften him up. On paper, the most effective way to sell your company is to write very professionally while presenting only the most powerful facts from your plan sections.

The most powerful facts in your business plan are those which deal with numbers, statistics, research, financials, and, ultimately, profits and profit margins. In other words, financial facts and results are the most powerful elements in your business plan. If you do not know how to exploit them in a selling manner, then find a staff member, professional writer or advertiser, or a talented marketer to write your Executive Summary for you.

When constructing the Executive Summary, it may be helpful to first write a mini-outline very similar to a book report that we all produced in school. If it is 3 pages typewritten, then it is long enough to warrant an outline. This will help you to focus structure and flow within the context of the Executive Summary.

The first things you will write immediately at the top of your Executive Summary are the full contents of your Company Profile section. This is the one area where it is acceptable to have a small repetition of facts. The facts of your company’s Mission and Vision, along with its Legal Structure are things which must appear in the top of the Executive Summary. They are also facts which are nearly impossible to rewrite in a creative manner and for the sake of consistency of content, you do not want to rewrite these portions. They are simply too factual and short to rewrite without losing your business credibility.

When you open your Executive Summary with the Company Profile facts, keep it short and to the point and then quickly move to the next segment of fact gathering. Keep in mind as you write the Executive Summary, aside from the initial Company Profile, your primary source for gathering information will be in the other 5 summaries of the business plan.

Do not be afraid to end your Executive Summary bluntly after you have methodically and smoothly dumped the information from the other summaries into it. It doesn’t need to “flow” into the nuts and bolts of the business plan’s detailed content.

WHO PREPARES THEM

It is especially important to upstart companies (a company that has only recently been started) and non-profit organizations to have your financial plans and financial statements professionally prepared by your CPA or accountant. These are documents that will be scrutinized by bankers and other investors, and they must stand up to their examination mathematically. This is no place for cutting your costs to save on your final expense for the plan and it is no place for stretching things to fit your objectives. This is a place to be brutally truthful and accurate to your investors; they will respect you for it, even if they would have done things differently if standing in your shoes. Integrity of financial statements is an attribute that will be admired and respected even if the financial backer must decline your funding.

Having an independent CPA prepare your documents lends credibility to your financial statements since the CPA does not have a personal and vested interest in dressing up your figures for the banker.

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WHERE THEY GO IN YOUR PLAN

Your company’s financial statements and plans always go toward the rear of the business plan. The reason has a lot to do with use strategy. The financial pages of your business plan are not necessarily examined closely by non-financial business people with whom you are in contact. But the pages need to be in there to satisfy banker and investor number crunchers when presented to them. To non-financial business people, meaning non-bankers, the statements give your plan a finished and ‘together’ presentation and it gives them a certain comfort in dealing with you. But clearly, a business plan is usually created to satisfy the concerns of bankers and investors, so never disregard their importance to your plan.

WHY PROJECTIONS COUNT

Your company’s financial projections, particularly those related to a company’s return-on-investment, are essential to your overall business plan because they reflect your company’s management, business philosophy, style, efficiency, and ultimately your business productivity and bottom line. Bankers, foundations, and investors all look for the ROI [return on investment] statistics in any business plan. Your business plan represents your company, and the financials and projections are of utmost importance when financiers consider funding. Simply put, “They want to make sure that their profit margin is not undermined and that their expectations are real, not imagined.”

IMPORTANCE OF FINANCIALS IN UPSTARTS

The greatest point of importance to financial upstarts is that your financials indicate your commitment to your company and its overall efforts as well as your determination in your objectives to move forward. The financials tell bankers and others that you have given significant thought and work to answer questions about your company’s viability and growth projections.

It is in your financial statements that bankers see your objectives, work, and your heart. If your heart is in your company, it will show in your financials. If you are requesting a loan, your financials demonstrate, simply by their presence, your determination and work ethic. You didn’t wait for someone [other than your CPA] to do the financial figuring for you if you have included them, and this tells the banker or investor that you have chutzpah (audacity {Yiddish}) and will not shrivel up or go away if you are rejected by them. You have what it takes to find out what to do next and to keep on going; investors like that quality in a business owner.

WHAT EXACTLY ARE “THE FINANCIALS”?

A business’s Financial Plan should be included with the financials. A complete Financial Plan for your business will include all of the financials below as well as projections for your company’s breakeven figures, a financial assessment of industry risks, and the industry’s normal production and profit ratios. You will want to include your company’s P&L report with the Financial Plan as it is the most accurate document reflecting the company’s bottom line and profit margins; both of which are of great importance to bankers and investors.

The company’s Financial Statements can be summarized as: 1)Income Statement; 2) Cash Flow Projections, and 3) the Balance Sheet. All of these statements, or reports as they are sometimes called by staff accountants, make up what is collectively referred to as the financials. Most commonly, they are prepared monthly or quarterly for you to review and check. When preparing your business plan, you may want to take the final figures from these reports and summarize them on one page in an annual format with a line for each month in the report. This helps the reader to see your company’s year at a glance and on one page.

PLACEMENT OF YOUR FINANCIALS AND IMPORTANT FACTS

When you prepare, or have your accountant prepare, your financial statements and financial plan, be sure to read the final draft closely and take the time to sit with the person who prepared them. You will need to ask where every figure came from and you will need to be prepared to answer any question a banker raises without having to make a phone call to the accountant. Go over and over the figures with them until you absolutely understand each and every dollar spent.