Welcome to the second lesson of this course. The first part was an introduction. We got to understand some basics that make your business plan stand out from the pack. In this lesson, we will look at the first and the most important portion of your business plan, the executive summary.
The executive summary is the first and the most important section of your business plan. It summarizes the document, telling readers your product, market, financial projections, the long-term vision for the business etc. It’s a general highlight of the business plan.
How you write the executive summary will determine if any bank or investor will be interested in reading the whole document or not.
Think of the executive summary like this, you have meant to see this big investor to get a chance of him buying into your business idea. But this guy is so so busy, getting to meet him is almost close to impossible. Fortunately you stepped into an elevator, and holy Moses! There he was. How would you introduce your business idea, telling him the product/services you offer, how profitable the business will be, and ultimately convincing him to read the entire document (business plan), and possibly schedule an appointment with you. NOTE. It takes an average of 5 minutes for and elevator ride, and that’s all the time you have.
Because it is the first part of your business plan that would be read, the executive summary has to give a breath-taking first impression. Otherwise banks and investors may not even read the entire document.
HINTS TO WRITING AN EXECUTIVE SUMMARY
- Depending on the complexity of the business, your executive summary should be between one to three pages.
- It should be very easy to read and understand; use simple words. Most importantly it should be very catchy and interesting.
- It should contain some of the important information and facts in the body of the business plan.
- It should be written last.
- Allow other people to go through it and give you a feedback on the effect it has on them.
- Your executive summary should cover the purpose, main highlights and financial requirements of the business plan.
To help you understand how to write an effective executive summary, I have come up with specific questions that your executive summary should answer:
MAJOR QUESTIONS AN EXECUTIVE SUMMARY SHOULD ANSWER
- What business idea are you presenting in the business plan?
- What form of business is it (sole proprietorship, partnership, LLC, etc.)?
- What product or service do you offer?
- What is your target market and who are your costumers?
- What is the size of your target market and your projections for market growth?
- Who are your major competitors in the target market?
- How do you propose to beat the competitors and reach the market?
- What infrastructure do you require for expansion or further development?
- How much investment will you require for the business and do you require a loan or partnership?
- What is the cost of running the business and profit estimations?
- What your mission/vision statement for the business (future goals)?
- What prospects and challenges would you encounter in the business?
You would notice that the questions above seems to cover all aspect of the business, this is not out-of-place. You executive summary should hint on all aspect of the business plan. However it should be a summary, more details will be covered in the other sections. After going through your executive summary the reader should have an idea of your business and how you plan to run it, secondly the reader should be compelled to continue reading.
NEXT: BUSINESS DESCRIPTION AND VISION
After you must have written a “killer” executive summary, it is only logical to follow it up with a brief description of your company. This section should also be clearly written and in simple terms too. When writing the business description section of your business plan, ensure you provide important background information such as: what kind of business it is, when it was established, how it started, how you intend to expand etc.
The business description section of a business plan is divided into three major sub section they are;
- Business profile
- Business objectives
- Vision/mission statement.
Business profile: – this section of the business plan should give a detailed description of your business venture. When writing this section you should provide answers to the following questions:
- What type of business is it?
- What is the business legal form? (Sole proprietorship partnership, etc.)
- Is your venture a startup, take over, or expansion business?
- When was it established or when will it open? And who are the shareholders?
- What unique features does your business have that will make you succeed?
- What are your business strengths and weakness?
- What is the history of the business and what achievement have you had?
- What products or services do you offer and who are your customers?
Vision: – your vision statement should give an idea of where you see your business in the nearest future, what you want your business to accomplish etc. the vision statement is an important part of your business plan. It helps you focus on the future goal of your business, and take calculated steps to achieve these goals. A vision statement could take this form:
“To become the biggest distributor and suppliers of food items in Nigeria”.
Mission: – it is important for you to have a mission statement in your business plan. It would serve as a guiding code for your business. Your mission statement should be a slogan that helps you stay inspired to meet your daily targets. It should also state the benefits that your business will offer to customers, shareholders, employees, and the general public. A typical mission statement could take the form:
“That customers benefit from buying a high quality product at an affordable rate”.
The vision and mission statement are one of the dynamic sections in your business plan. You might find that you will have to change, improve or modify them as you run your business.
We have covered two sections in writing a business plan – the executive summary and business description. Study them closely and use the technique to write yours.
In the next lesson, we shall look at two other section; product/service description and market definition.