The Executive Summary

© 2006 by Joseph B. LaRocco; All Rights Reserved.

An Executive Summary is a more finely tuned version of your full blown Business Plan. Some people get the two documents confused and others use the two terms interchangeably. There are no special set of rules for preparing either document although most people would probably agree that the Executive Summary should be contained in your Business Plan.

You want to attract potential investors, so a short, direct, targeted version of your business plan works best. Besides, you should be a little protective of your business plan. Don’t just send it out to everyone, especially if it contains confidential, proprietary or trade secret information. The Executive Summary is a good way to get your “story” out there to locate venture capital financing without sending people your full blown Business Plan. There are a number of reasons why you shouldn't just send your business plan to everyone, so it would be a good idea to familiarize yourself with the basics of When and Why to Use an Executive Summary Instead of a Business Plan.

A good stand alone Executive Summary should be 8-10 pages long, whereas most business plans are about 25 to 35 pages long. Here is an outline of a basic Executive Summary:

Company Description
Mission Statement
Products and/or Services
Financing Requirements
Use of Proceeds
Management Team
Competitive Analysis
Financial Forecast
Exit Strategy

Here's an important drafting tip: START OUT STRONG. The first section that an investor reads is your Company Description section. You need to make an impact on the reader, grab their attention and make them want to read every word of your Executive Summary. The best place to start is right at the top with your Company Description. Check out How to Make Your Company Description Stand Out for some great pointers.

Mission Statement. The Mission Statement should be a short statement of your company business and what it intends to accomplish as a goal. For instance, an internet service provider business might have the following Mission Statement:

   “NetSky Holdings, Inc. is an internet service provider (ISP)    focused on acquiring other ISPs and consolidating all of their    operations to achieve economies of scale. NetSky’s goal is
   to be recognized as one of the most profitable ISP
   consolidation enterprises in the ISP field.”

Limit your Mission Statement to 1 or 2 sentences in length. The two key points you want to convey to the reader are your confidence and the goal you are seeking to achieve. Strong and powerful statements are good because they show your business drive, but remember to keep it real. Don’t put price projections in your Mission Statement. For instance, do not say we expect to generate $10,000,000 in gross sales during our first year of operations. There is a separate section of the Business Plan for your Sales Projections.

Financing Requirements. When you write about your Financing Requirements carefully plan out your breakdown based on (a) your use of proceeds, (b) a careful analysis of the revenue you feel you will generate and (c) over what period of time you feel you will be able to achieve the all important “net profit”.

(a) Use of Proceeds. There is nothing wrong with micromanaging the money you expect to raise. In fact, if you are seeking $2,000,000 to buy equipment and sell widgets and you state the following:

Equipment $ 500,000
Salesmen $ 300,000
Advertising/Marketing $ 200,000
Materials $ 300,000
Working Capital $ 500,000
Overhead $ 200,000

TOTAL $2,000,000

you are probably not going to get any financing.

It is a good idea to sufficiently detail your use of proceeds in the Executive Summary. Investors will appreciate the detail, research, time and effort you have put into preparing the use of proceeds section. They will see you did your homework, researched your numbers, carefully analyzed the matter and were prepared. I cannot stress the importance of PREPARATION enough.

(b) Estimated Revenue. You don’t need to state your estimated revenue in this section. You actually break that down in the section entitled Financial Forecast. But keep in mind that what you put down later in your Financial Forecast will directly impact what you are asking for in this section. For instance, if your estimated revenues show a net profit in 18 months, it is not a good idea to base your Financing Requirements on 12 months.

(c) Time it will take to be Profitable. Again, you don’t have to actually state that in this section. However, it has a direct relation to your estimates that will appear in your Financial Forecast section and will probably come up in questioning by investors. So think ahead, think smart and be prepared.

The Business Plan is an important first step in the process of raising capital.