Guide to Writing an Executive Summary - Nancy Fulton

January 21, 2013

Guide to Writing an Executive Summary
by Nancy Fulton

The first step to creating an executive summary for your business is to write a business plan. A good business plan documents the following:

•What you do that people need or want
This should be a simple statement of less than twenty words.
•What customers your company servers
The customer is the person who pays for the product, not necessarily the one who uses it. For example, mothers buy baby clothes but babies wear them.
•What characteristics identify your target market
How can you know, almost instantly, if someone is customer for your product? For example, if you make expensive, high quality, organic baby clothes and sell them in London, then your customers live in london, are affluent, have a small child or know someone who does, and you prefer organic, natural, clothing.
•How you reach your customers
Since you know who the target market is, you should be able to document many fast, cost effective ways to reach them.
•What kind of financial relationship you seek with your customers
Do you want to sell something to customers one at a time, or sell them a subscription to what you deliver, or rent it to them, or sell a license that allows someone else to deliver your product or service, etc.
•Who your closest competitors are and how you are like and unlike them
Every product or service has competitors. The competitor for the car was the covered wagon or the airplane. You must be able to identify your competition and compare your product or service what competitors offer in terms of price and other features.
•How your product is better for your target market than what is offered by your competitors
Perhaps its smaller, prettier, easier to use, more secure, etc. Your product doesn’t have to be better for everyone, or cheaper than all the competiton, just for your target market. Many affluent people value quality and other features over a low price.
•How much you charge the customer for your products or service.
This price is based solely on what your customers are willing to pay and you should know what they are willing to pay because you’ve assessed what they are paying your competition.
•How much your product costs to produce
This has nothing whatsoever to do with your price. The only reason to ever compare the price you charge customers and your cost of production is to determine what profit or loss you’ll make on each sale.
•What trends, positive and negative, are impacting you and your competitors and how you anticipate you’ll use these trends to increase your profits.
Almost every trend can be turned to a company’s advantage if it is studied long enough.
•How your product reaches customers
Do you work with resellers? Do you sell directly through customers on your website? Do you sell through aggregators like Amazon? Once someone buys what you sell, who delivers it?
•What key external partners your company depends on
These may be suppliers who give you great pricing, marketing partners who give you great exposure in return for very low prices, etc.
•What assets your company has
Mailing lists, twitter and facebook groups with lots of followers, website, designs, patents, copyrights, an office or shop, etc. Note YOU and your employees are never assets. Assets are things that can be sold to others. They are things you own.
•What competencies you, your co-founders, employees and contractors have that will assure your success.
The ability to sell, manage, analyze the market and your performance, etc. You must document why you have the skills to make your business be successful.
•How you plan to grow
Once you’ve documented how your business runs, you must indicate how money you receive from third parties will help you grow and how you will compensate those who make that investment in your enterprise. Will you repay the money and give them a share of ongoing profits? Will you take the money you receive, build you company and then reinvest all profits until the company is very large then sell it, sharing the proceeds with your investors?

Once you have created a business plan which addresses, clearly, concisely, and in detail the information listed above, you can create an executive summary which covers the highlights clearly and persuasively.

If you are a company that has yet to start selling products to customers, some of these questions will be hard to answer. For example, you may have done the market research required to know your customers well, but you may not yet have any strategic relationships with suppliers or marketing partners. When you are seeking early stage funding, this is acceptable. You document the relationships you plan to seek, the resources you plan to acquire, etc. in order to demonstrate you have a plan for how your business will start and grow.

Writing an Executive Summary Based on Your Business Plan

Executive summaries can be as short as a single page, or as long as two or three pages, but like a good CV their job is not to answer every question but to share enough information that an investor can tell if he wants to know more.

One way to create an executive summary is to write a 1-3 page document with the following headings. Each heading should be followed by 1-3 short paragraphs.

1.The Proposition: What we do that people need or want and how we’ve done so far
2.The Customer and The Market: Who our customers are and how we reach them
3.The Pricing Model: What we charge for our products
4.The Channel: How we sell and deliver our products to customers
5.The Partner: Who our key partners are
6.The Competition: Who we are up against
7.The Advantage: How we stay ahead of our competiton
8.The Asset: What we already own that helps us increase revenues and cut costs
9.The Competency: Our team, its experience, and its fitness to build this busiess
10.The Future: How will we will grow
11.The Opportunity: How you can share in our success
12.The Details: How to get a full business plan

As you review the list of headings below you’ll see that you’re providing a very simple, very clear, version of your business plan that someone can read in a matter of minutes. Simple, clear, down to earth, executive summaries get positive attention from investors.

Things to Remember

In writing your executive summary there are several things to keep in mind:

•Most people who invest in startups have started businesses of their own. So keep things straightforward, simple, non-flowery. Pretend, as you write it, that you are talking to a person you are going to hire and you’re quickly explaining your business to them.
•Before anyone invests in, lends or grants your business they will talk to you and will thus have an opportunity to ask you questions about things they don’t understand. Thus your job is not to answer every possible question they might have in your executive summary.
•The best possible preparation for writing a good executive summary is to read at least a dozen. By the time you’ve read three or four bad ones you’ll understand why brevity, clarity and simplicity are so desireable.

Rules Regarding Accepting Investment & Loans from Individuals

You can’t just show your executive summary or business plan to anyone and accept investment based upon it. How you solicit investment, how you sell shares, how you accept and repay loans, what disclosures you have to make, and how you have to handle funders if your business goes out of business are all governed by strictly enforced laws. Consult with startup investment experts and legal representation before soliciting investors or accepting investment into your business.