Does Your Executive Summary Generate The Responses You’re Looking For?

What Makes a Great Executive Summary?

Here are a few considerations to keep in mind for crafting what we believe to be the perfect executive summary. Your executive summary gives you the opportunity to provide more detail about your business. The key is to do so in a way that is compelling to a potential investor.

Honesty is always the best strategy.” 

Here’s Our Suggestions for Creating the Perfect Executive Summary:

  • THE EYE-CATCHING INTRO. The first paragraph of an Executive Summary should be compelling and capture the reader’s attention. Take your best shot. Play your strongest card by stressing that single feature of your business that is its most eye-catching and distinctive characteristic. Don’t rely solely on what you think is your strongest feature; ask others to tell you what they think.
  • BUSINESS DEFINITION. Your second paragraph or section should define your business, leading off with a clear statement of what your product or service is, and for whom it is targeted. You should then expand on the products or services and the variations so that the reader has a full appreciation of the company’s breadth of product line. This should be short.
  • THE INVESTMENT YOU’RE SEEKING. Right up front indicate how much capital you are seeking, and to what use the proceeds will be put to. This quickly allows the reader to assess the financial parameters of the investment and this puts into context what follows. Most plans avoid discussing what funding they are seeking until the end, if at all, which frustrates the professional or institutional investor.
  • MANAGEMENT. Management is the single most important part of an Executive Summary in the eyes of most investors. Yet most firms put the section describing management towards the end of the document or executive summary. You can always attach detailed biographies at the end in an appendix.
  • BOARD OF DIRECTORS (OR ADVISORS). You are judged substantially by the company you keep! Or attract.
  • FINANCIAL PERFORMANCE. Too many executive summaries place the historical and projected financial performance at the very end, whereas most investors want to know what the expectations are for the company in terms of how large will the firm become, and how soon will it be profitable. We recommend using a summary table that shows one or two years of historical performance where it exists, and five years of projected performance, and only 3 key variables such as revenue, gross profit and EBIT or net profit.
  • FINANCIAL MODELING. Today a financial model consisting of a simple income statement is unacceptable. Cash management is essential from the onset and an investor needs to see evidence that the company has built a fully integrated financial model before investing. This should be a fully integrated income statement, balance sheet and cash flow statement, extending out 3-5 years.
  • MARKET. Describe the addressable market that you serve, segmenting it so that it is sufficiently narrowed to the market you serve. As you describe the size and growth rate of the market you serve, you should reference the source for each number or each statistic you present for credibility. Too often we receive plans or summaries that dramatically size the industry or market well beyond the company’s ability to service, and does so without any reference to sources for where the numbers came from.
  • SALES & CUSTOMERS. If you are currently generating revenue, list your key customers and their purchase history and volume, and the outlook for future orders. There is no greater test of the credibility of a business than the existence of paying customers who, by their purchases, validate the business concept.
  • TECHNOLOGY. For companies in which technology is a key component of the story, describe it in your plan and how you plan to remain current or ahead of the rest of the industry. However be sensitive to the fact that a confidentiality agreement may not have been executed by the reader of your Executive Summary.
  • CLOSING PARAGRAPH. Why do so many Executive Summaries or business plans on a flat note? So often they do because the writer has run out of steam, or simply is not highly skilled at composing narratives. Avoid ending without having made a compelling closing statement and ‘asking for the order’.

Your Executive Summary should summarize the essence of the opportunity, and invite action such as a meeting, a conference call, or a request for additional information in a compelling and creative manner.

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By | 2019-03-31T13:30:58-04:00 March 29th, 2019|Daily Perspective|0 Comments

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