Everything You Need to Know to Write an Executive Summary
So you have a novel business idea and you've written a plan for it — that's all well and good, so long as the start of your written business plan succinctly encapsulates your reason for writing the business plan in the first place. You'll need to convince the reader of what you want to do and why early on, and then prompt them to read on. If they're not compelled to keep reading, your novel business idea won't even matter.
How do you do that? You write a worthy executive summary.
What is an executive summary?
An executive summary is "a nontechnical summary statement at the beginning of a business plan that's designed to encapsulate your reason for writing the plan," according to Entrepreneur.com. It's the first (and, really, most important) section of your business plan that essentially summarizes the longer proposal to hook the reader — the investor, lender, executive, manager or CEO whose time (and money) you're asking to take. If you hand them a super long document and ask them to read it, they'll first want to know why — and that's what your executive summary will explain.
"The most important reason to include an executive summary is that, in many cases, it is the only thing the reader will read," Pablo Bonjour, founder and CEO of Katy, a Texas-based SMG Business Plans, told INC. According to Bonjour, it's rare for an investor or lender to read a business plan in its entirety, at least in the initial stages of consideration for funding; an executive summary is therefore critical.
The executive summary is neither the background nor the introduction to your business plan; rather, it's the elevator pitch. You want to get your foot in the door and buy you face time with the investor to later go over the fine details. So how do you prepare a winning executive summary someone will actually want to read the rest of?
What belongs in the executive summary?
Because the executive summary is summing up the entire report, it's common to write the summary last. This way, you should know exactly what belongs in it. Here's a general guideline of what the executive summary should answer in brief:
- What is this about?
- What do you propose or recommend?
- Why is it important?
- What are the major findings or results of your research into this?
- How will these findings be applied?
- What more is to be done?
- What is the next step?
Of course, the information you need to include in your executive summary somewhat varies depending on whether your business plan is proposing a startup or making recommendations for an established business. That's because the main goals for startup business plans is, typically, to convince banks, angel investors or venture capitalist to invest by providing startup capital in the form of debt or equity financing. That means that you'll need a solid case for your business idea. For a startup, specifically, you should be sure to answer these questions in your executive summary:
- What is the business opportunity?
- How will the proposed business serve the market?
- Who is the target market (the customer base)?
- What is the business model (how the products or services will be appealing to the target market)?
- What is your marketing and sales strategy for your products or services (just provide an outline)?
- Who is your competition, and what's your competitive advantage and strategy for getting market share?
- What is your general financial plan (your financial analysis for at least the next three years)?
- Who will the owners and staff of your business be, and what expertise do they bring to the venture?
- What is your implementation plan (just provide an outline of the schedule for taking your business from the planning stage to the starting up stage)?
- If you're looking for funding, you'll also want to include how much, what will it be used for, your repayment schedule, the borrower's equity share and the debt-to-equity ratio after the loan, security or collateral is offered so that the reader knows the risks and returns.
For already established businesses, however, the executive summary should include some different information (think: achievements and growth plans). A typical executive summary outline for an established business should answer these questions:
- What is your business' mission statement (a few lines on what the company does, its core values and philosophies)?
- What company information should the reader know (a description of products and/or services, when and where it was formed, the owners and key staff, business locations, the company's current market value and other significant statistics)?
- What are your business' highlights (growth, year-over-year revenue increases, profitability, increases in market share, customer growth, etc.)?
- What is your financial summary if you're seeking additional financing for expansion or another plan
- What are your future goals for the business (including how any additional funding will be used)?
Of course, not all business plans are looking for funding. You may be looking for a $10,000 loan to remodel or a $30,000 loan to launch or expand a product. Or you may just be looking for a partner to whom to sell a percentage of your business. Make sure that your executive summary clearly delineates your wants and how you plan to achieve them, as well as what's in it for the reader depending on what you're asking of them.
How do you write an executive summary?
Writing an executive summary can be tough since there's a lot of pressure on you to nail it. It must make an immediate impact by clearly explaining the nature of the business, which means that it must be written well. Here's what you should know about writing an executive summary.
How long should an executive summary be?
An executive summary should be short and businesslike, generally between half a page and one page. The length, of course, depends on the plan and its nuances, but the summary shouldn't surpass one page (two at the absolute most). In that page, you should be able to cover the aforementioned key elements without boring the reader. You can leave any lengthy analyses, charts and reviews for the report itself — this is your elevator pitch, so you should be able to deliver it quickly.
If you can't explain the essence of your plan in a page, you probably haven't thought through it well enough yet. You can use smaller fonts and wider margins to give yourself some room but, ultimately, it's called a "summary" for a reason."
How should you start an executive summary?
Like a good novel or news article, the executive summary should be strong and attention-grabbing. You'll want to hook the reader, but you don't want to confuse the reader with some story trying to create excitement (as one might do when writing a book or a newspaper or magazine story). This approach may work for some business plan readers, but it's risky and clarity here takes priority.
Essentially, your executive summary needs an executive summary — you need to write a compelling first few sentences in order for the reader to want to continue through the page and, later, through the many pages of your plan. If you have a compelling aha! moment or if you've identified a void in the marketplace, you might want to open with that and then go into why your plan is worthy of consideration.
If you're having trouble getting started, you may want to ask yourself these questions when putting together your executive summary:
- What makes your company unique?
- What void is your company filling if any?
- Do you have a compelling partnership?
- Do you already have customers and/or traction?
- Do you have patents or innovative technology?
- Do you have a different type of marketing plan in which you're confident?
- What is your competition doing that you're doing better?
- What are your pillars of success and why do you think you can achieve them?
- Who cares?
- Why now?
To make the structure of your executive summary as relevant and convenient as possible for the reader, you may want to consider writing it out in the same order as your business plan. Generally, that will look like this:
- The company description
- The problem
- Your solution
- The why now
- A brief financial summary
The "why now" section is easily your most important section because it means that your business plan is timely, and it'll light a fire under investors and lenders who show a pang of interest.
The truth is, however, that there is no set structure for an executive summary, but there are some general guidelines to follow:
- Understand that you don't need to explain everything right up front.
- Explain what your company does before diving into why you're qualified to succeed.
- Use bullet points to present your ideas clearly.
- Always keep your language short and concise.
- Always keep your language strong and positive (i.e. Use words like "will" instead of "hope to" or "intend to" or "might" or "probably.")
- Consider your audience and tailor to them. If your plan is to entice investors, for example, focus on the opportunity your business will provide them. If you plan is to get a small business loan, however, focus on highlighting what lenders traditionally want to see (read: management experience, collateral and strategies in you have to minimize the lender's risk).
- Put yourself in the reader's place. Does this executive summary generate interest or excitement in you? If not, why?
What should the tone of an executive summary be?
The tone depends on your readers, which requires ample research. You want to be sure that the language of your executive summary matches your audience and caters to their backgrounds. For example, if your reader is an investor with a degree in political science, the language you choose to use may be different than if you were writing for a reader who has a doctorate in philosophy.
In other words, use language that will resonate with your target audience. To do that, research the following five questions about them:
- Who is your reader?
- What is your reader's background?
- What has your reader invested in before?
- What are your reader's values?
- What does your reader care about, as exhibited through their work?
There are, of course, some key tips with regards to tone regardless of who your reader is. Those tips include:
- Keep your tone consistent.
- You personal pronouns ("we" and "our" instead of "the company") to induce a stronger personal connection to you and your brand.
- Keep confident with positive and forward-thinking language.
Consistency and confidence will go a long way.
What are some examples of executive summaries?
There are good and bad executive summaries and, now that you know some general rules of thumb to writing one, you can probably pinpoint both kinds.
Here is an example of a bad executive summary from UniLearning.com:
Now here is an example of a good executive summary from UniLearning.com:
Notice what the summary do differently. The second executive summary is detailed but not boring, confident and relevant, and it merely asks for the reader's time instead of their money right off the bat. From the bad example, you can take away these common mistakes that writers of executive summaries too often make:
- Trying to squeeze in too much background in the summary — The background of the business or business idea belongs in the background section or in an introduction of the business plan, not in the executive summary.
- Providing too much unnecessary detail — Detail belongs in the body of the document. Too much detail upfront can overwhelm the reader.
- Being inconsistent — Whatever the executive summary highlights must be in the report. This means that, if the executive summary mentions findings, the report should include findings. Likewise, the language information shared should be consistently relevant to the reader, and the tone of the summary should keep consistent.
- Including too much or too little in the executive summary — The summary is a "summary" for a reason, but it still needs to hook the reader with enough compelling content.
Now that you know what should go into an executive summary, how to write one and what an example executive summary looks like, you're ready to move onto writing your business plan — because, remember, writing your executive summary should probably be the last thing that you do. You can't summarize a business plan you haven't yet written.
Here, we explain in more detail how to write a business plan.
Key takeaways:
- An executive summary is a summary that states your purpose for writing your business plan that appears at the beginning of the document.
- The summary should address questions relating to your proposal, its importance, major findings, applications and next steps.
- Established businesses should describe the business' mission statement, information about the products or services, business highlights, finances and goals?
- The executive summary can be more impactful if you open strong and write clearly.
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AnnaMarie Houlis is a multimedia journalist and an adventure aficionado with a keen cultural curiosity and an affinity for solo travel. She's an editor by day and a travel blogger at HerReport.org by night.