The Need for an Executive SummaryBy Ron Cocquyt on March 29th, 2017 /
Entrepreneurs are always encouraged to produce certain documents on behalf of their new business ventures. Over and over, they hear “Business Plan.” They hear “Marketing Plans.” And most of the time, they locate a template online that helps them craft either or both of these documents, or they simply skip the exercise altogether. For many, crafting these documents is considered a “waste of time” or worse, they are viewed with the same respect and excitement as a college term paper. Believe it or not, neither of these documents is of any value until the entrepreneur sits down and write an Executive Summary. Executive Summaries are usually included in the body of a Business Plan, but more often than not, they should be the first document drafted.
An Executive Summary is the entrepreneur’s guideline for making sure that he or she is committed to a project that has value. An Executive Summary should be no longer than two pages. It includes the following subject matter:
- Is there a problem that the new business is intended to focus on? Or is the new business intended to add to or make a significant impact on a currently existing situation? For example, a universal problem might be, “Websites do not necessarily communicate with their target audiences.” Or if the entrepreneur is looking to add to a currently existing marketplace, the situation might be “Creating the perfect hamburger will add to the dining experience.” It’s important that a problem or situation be isolated or defined on which the business will be focused.
- How will the proposed new business solve the problem or have a positive impact on a currently existing situation?
- What is the expertise or background of the individuals who will create this business?
- How will this business make money?
- How will this business sell its product or service? What process will it use for marketing its product or service and delivering its compelling message?
- Identify three important competitors.
- Present three years of projected revenues, expenses, and gross profits. This presentation needs to be simple but reasonably accurate. (If the business plans to seek outside investment, how much money will be required and what will be the terms of repayment?)
- What is the Exit Strategy? This decision will be the Most Important Decision the principal(s) will make.
Each of these points need to be clearly, concisely, and precisely explained while remaining within the two page limit. This document requires significant thought, clarity of thought, and accuracy. Generally it takes two or three drafts to get an Executive Summary written that explains all the vital points and provides both principals and outside interested parties with a clear idea of what the business is all about.
If you are considering creating a new business or even if you are an intrapreneur and have been given the responsibility of developing a new product line for a currently existing business, I strongly urge you not to begin until you have written a strong Executive Summary.
The Executive Summary provides focus and also indicates in which areas the business needs to direct its limited finances in order to get off to an initial successful beginning.
If you have questions about starting an Executive Summary or you need someone to review your Executive Summary, send it by e-mail to my office. I’ll be glad to read it, make suggestions, and return it to you.