Writing an Executive Summary of a Business Plan

                                                                                         

Writing an Executive Summary of a Business Plan

Most experienced investors/lenders have hundreds of business plans come across their desk during any given year and it's virtually impossible for them to read each one in their entirety. As a result, business plan writers are required to develop a strong and convincing executive summary.

An executive summary is simply a quick overview of the entrepreneur's proposed business venture.

Investors and bankers read the entrepreneur's executive summary and decide which business plans can be eliminated and which warrant a further investigation. Knowing this, the entrepreneur should begin to realize the importance of the business plan's executive summary. Moreover, if investors and bankers are not interested or aroused by your executive summary, chances are they will not read the entire business plan. And if an investor does not read your business plan, chances are she will not provide the necessary financing for the business venture.

Your Executive Summary should address the following items:

• The nature of your business venture;
• A brief explanation of the product or service your business will offer;
• A brief analysis of the market;
• The background of all management;
• A brief summary of the your marketing plan; and
• A brief summary of your financial plan and capital requirements


The ideal Executive Summary is one or two pages in length and convinces the reader that the business plan is worth reading in its entirety. Therefore, as the author of the business plan, your objective should be to write an executive summary that will tantalize and spark the interest of an investor, banker, or other reader so that they will read the entire business plan.

Other Tips when Writing Your Executive Summary:
• It is extremely important to focus only on the "positive" aspects when writing the executive summary.

• This being said, never lie in your executive summary in an attempt to get a banker, for example, to read the entire business plan. Tantalizing is extremely different from lying. Of course you should never lie in any other section of your business plan either.

• Never make false claims (knowingly) in your executive summary in an attempt to get an investor to read your plan. False claims may get your business plan read, but after wasting an investor's time, you won't get the financing you require.

• The Executive Summary always appears directly after the Table of Contents.

• The Executive Summary is always the last section to be prepared. In other words, Never, Never, Never write the Executive Summary until you have completed all other sections of your business plan. If you do, you'll find yourself constantly rewriting it and rewriting it, and rewriting it.

For your convenience, I have created a sample executive summary of a factious company called "Scholarship Information Services". The proprietor, Sara Smith, has developed a business plan to acquire the necessary external financing to start the business. What follows is the executive summary of her business plan.

Notice the sample Executive Summary below addresses all points referenced above and is approximately one page in length. Good Luck writing your own executive summary and may you experience the many joys entrepreneurship can bring.


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(Sample)

EXECUTIVE SUMMARY
(for Scholarship Information Services)

Sara Smith will register "Scholarship Information Services" as a sole-proprietorship in early January 2008. The business will be a service which helps students and their parents finance higher education (university and college). This will be achieved by providing them with addresses of foundations, trusts, and charitable institutions that provides grants and financial aid towards higher education.

The cost of attending colleges and universities has risen sharply over the past number of years. In fact, a 20% increase in tuition fees have been seen in many areas throughout the United States and Canada. In monetary terms, students are paying between $1,000 and $2,000 more in tuition fees each year.

The company's PRIMARY target market will consist of university students and their parents, while the SECONDARY target market will consist of senior high school students and their parents. In Year One, concentration will be directed towards markets throughout eastern United States. In year Two, the company intends to expand its marketing efforts to include all regions throughout the United States. Scholarship Information Services anticipates to enter the Canadian market by year three.

The total cash and capital asset investment required to successful launch the product is estimated at $50,000. The owner, Sara Smith, will invest $10,000 cash, while the remaining $40,000 will be secured through a small business loan. The business loan will be used for initial promotions, general start-up costs and to purchase the necessary equipment as outlined in the business plan. In addition, the loan will enable Scholarship Information Services to implement the crucial strategies needed to successfully operate the business.

The company's 2008 forecasted "Return on Total Assets" is expected to be 22%, while its Return on Owner's Equity is expected to be 28%. Also, the forecasted "cost of goods sold" and "total sales" are forecasted to be $12,000 and $104,000 respectively; leaving a gross profit of $92,000. A lower gross margin is expected in 2009 which is the result of changes in corporate objectives and strategies. These figures, along with a detailed explanation, appear in the forecasted financial statements section of the business plan.

Upon securing the necessary financing, one team member will be hired as a research and development consultant. A second team member is expected to be hired in September of 2008. Sara Smith will train and guide each team member. It is Ms. Smith's intention to incorporate a modern day leadership style which embraces customer and employee satisfaction. A high level of autonomy will be given to each team member in order to increase productivity, creativity and efficiency. Our generous employee profit sharing program, which is discussed in the business plan, will ensure each of our human resource objectives are fully achieved.

It is important that Scholarship Information Services start the business as soon as possible. The company does not hide the fact that competition increases as an industry becomes attractive. Therefore, as soon as we can enter the industry, the sooner we can take advantage of its attractiveness and build a strong corporate image. When the required business loan is secured, not only will Scholarship Information Services benefit financially, but our customers will as well.

In summary, the enclosed business plan provides detailed information regarding our planned functional areas, namely; the operating requirements, production processes, marketing initiatives, financing issues, research & development, human resources, organizational structure, and information systems. As you will see, all functional areas are inter-related and each supports our overall business strategy.

About the author:
Karl Johnston has been assisting regular people experience the joys of entrepreneurship and self employment for over 15 years now. He has written well over 100 business plans for individuals wanting to start or grow a business.

He has created a website that contains over 5,000 pages of FREE information relating to starting and growing a business. To view this business information, visit www.peibiz.com


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