Wednesday, February 29, 2012
The executive summary of your business plan should contain the highlights of your plan. And where this may be obvious, consider this: most investors won’t read past this section unless you have something truly compelling.
Most entrepreneurs I know write the executive summary last, after they’ve completed all of the market projections and financial analysis.
When you’re ready to write the summary, you should include the following items in one page:
1. Problem the company Solves—It must be a large problem in the market place creating a great opportunity for you to sell widgets.
2. Product/Service offered—a description of your product or service that solves this massive problem that you’ve outlined above.
3. Competitive Advantage/Analysis—And please don’t say that you have no competition (unless you want an investor to immediately discredit you and move on to the next plan). Even if another company does not have a direct product that competes with yours, you’re always competing for dollars that are allotted elsewhere.
4. Target Market - This should address how large you think the market is (based on your research). This section should also contain your strategy to establish entry into that market (your beachhead).
5. Business Model—How are you going to make money? Investors are funding capital efficient deals only, meaning that you have a solid business model with excellent profit potential.
6. Sales Model—You should describe the channel, the sales funnel, and the metrics for selling your product or service into the market.
7. Intellectual Property—This includes trade secrets, patents, copyrights, etc that you own that have value.
8. Management Team—The team that you’ve built should show completeness and experience. Ideally you have some people on your team that have experience raising money for startups, significant industry experience, or something that gets an investor excited that these people are involved with your company.
9. Revenue, Costs, EBITDA projections for five years—Obviously a big section. Many investors are going to go right to this paragraph. Show the high level revenue potential over 5 years
10. Funds Sought and Use of Funds—Demonstrate how the dollars invested in your company will translate into business results.
11. Exit--Show potential acquirers and comparables to your company.
Overall, the executive summary should be interesting tell YOUR story succinctly and highlight the values you’ve built into your company. Make extensive use of pictures, graphs, charts and keep word count to a minimum.