The Effective Executive Summary Brian Crowley What is the Executive Summary The most significant single section of the business plan intended for outsiders is the Executive Summary. Venture capital and private equity investors, bankers, and corporate investment officials typically receive many business plans each week — more than could possibly be read from beginning to end. To help determine if the plans are worthy of further review, financiers invariably begin by reading the Executive Summary. If the Executive Summary suggests a promising business for investment or loan funds, then the experts will read further. If not, then they quickly reject the plan. Essential information that is buried in a later section has no value if the reader never gets that far. The primary objective of the Executive Summary is to entice investors to delve further. Keys to an Effective Executive Summary What makes for an enticing Executive Summary? First, it is important to remember that it is not a preface to or abstract of the business plan. Rather, it is the business plan in the most concise form possible.An effective Executive Summary describes all of the key elements of a business plan in two to three pages. It must include the following essential information: • A synopsis of the company’s strategy for succeeding • A concise account of the management team’s qualifications that make the • company successful (be sure to include a description of your team’s contribution to • previous successful business ventures) • A brief description of the market (along with the ingredients for success that make • your company unique in that market) • A brief description of the product or service • Key historical and forecasted financial data, such as annual revenue and net • income, for five years • An estimate of the amount of the funds you need, a statement of how you will use the money and how lenders or investors will get their money back. How The Executive Summary Helps shap the Plan Executives cannot realistically expect the Executive Summary that they write at this early stage of business plan preparation to be polished and ready for presentation. Indeed, they should be prepared to revise it substantially after the rest of the plan is written.The preliminary version of the Executive Summary at the early stages of preparing a plan serves several purposes: It provides guidance and a sense of the plan. Drafting the Executive Summary forces you to think long and hard about the factors most essential for business success. It also forces you toprioritize issues and to set aside for later consideration those of lesser importance. It builds confidence in the plan. If you outline the key elements up front, you will be less likely to experience writer’s block and other forms of procrastination later on. Getting the plan’smain points down in short form will allow you to move on to the full plan with a sense ofdirection and vision. It involves the management team early on. Writing a draft of the Executive Summary provides an effective way of involving all members of the management team in the analysis essential for a successful plan. This team effort secures valuable input and consensus on themain issues. How The Executive Summary Helps shap the Plan It leads to a better final product. Rewriting is the key to successful writing. An Executive Summary drafted to guide the writing of the body of the plan will need to be tackled again atthe end of the process and rewritten as needed. The result will be a better business plan and a better Executive Summary than would otherwise have been achieved. Once you have completed all of the other components of the business plan, you should go backto the draft Executive Summary. First, be sure that the Summary is consistent with all of the detailed information in the other sections of your business plan and that it addresses all of the items noted above in the Keys to an Effective Summary section of this chapter. Then ask yourself the following fundamental questions. Does the Executive Summary demonstrate: • that the business has been thoroughly planned and researched? • a business proposition that makes sense? • an accurate understanding of the value proposition of your product or service? • that the business proposition offers real competitive advantages? • a knowledge of the industry and target market? • a sense of enthusiasm for the business? • a realistic picture of the risks inherent in the business? If it has addressed the basic content and conveyed the basic messages above, it will likely compel the reader to read further to obtain a fuller understanding of your strategies, plans,and goals. Uses for the Executive Summary An effective Executive Summary can serve two purposes for executives seeking to raise financing: It helps preview the plan and protect the business. If your business plan is lengthy, it may be cumbersome to distribute. If you are sending your plan to financial sources who don’t know you who might not be interested in what you offer, you may want to send only the Executive Summary with a cover letter. If these sources read the summary and are interested in seeing the whole plan, you can mail it or present it in person. This also will help to protect the confidential details of your plan. It involves readers in the plan. An Executive Summary that is concise, well written, and convincing will capture attention. It makes the plan stand out from the crowd and thus will make readers eager to learn more about the company. Where Do We Start? Executive Summary Planning The best executive summaries convey new ideas in a clear and concise manner by presenting a lot of information in as few words as possible—typically not longer than 2 or 3 pages. It is important to describe your concept or business, what it will do, how it is different, and why it will be exciting to prospective investors. In the executive summary planning phase, address the following questions: 1. What do you do? Provide a description of your idea or the business proposition. Describe the significant problem that your concept or business addresses. 2. How do you do it? What makes you unique? Describe the key differentiating factors that will allow you to gain, sustain and grow a market position (explain your advantage). 3. How do you make money? Describe the revenue model. Provide details of the primary revenue source and mention others if appropriate. 4. Who will buy this? Describe the market, the purchase decision makers in the market, the sales and distribution channel(s), and the sales cycle. Insure that the information is specific to your opportunity rather than a generalization of the industry. 5. How large is the market opportunity? What is the size of the specific market and how much of it can you expect to capture annually over the next few years. Executive Summary Planning 6. What are the competing solutions? Describe existing alternative products or solutions. Describe how your solution is superior to the competition. 7. When do you expect to be successful? Describe the major milestones (with time frames and challenges) for developing the business or concept. 8. Who are you and your strategic partners? Describe the principle participants in the business and the positions that need to be filled. Also describe any strategic relationships with partners or customers who will cooperate with you in the early stage of the business. If you have not developed any partnerships, describe who you will pursue and why. 9. What do you need to be successful? Describe what you feel is needed to meet the business objectives. 10. If you are seeking funding, how much are you seeking and how will you use the money? Explain how much money you require and how you will use the proceeds of any investment. How to Write the Executive Summary How to put it together Given the proposal cover letter is not part of the proposal per se, the executive summary remains the most important section of the proposal. Keep in mind the executive summary is the only part of the proposal that will be read by each and any member of the decision panel, if any. More important, experience tells you in reality that it's the only part that an executive, a person who has the definitive power over the final decision, will read from your proposal. Its called Executive Summary, not abstract This is the "executive summary vs. abstract summary" battle. All so-called experts say that you should write the executive summary like an abstract, that is, when the rest of your proposal is written. Because this part is called the summary of the whole document, logic dictates that you should write the document first in order to be able to summarize it. And that's exactly the pitfall to avoid when writing an executive summary for your proposal: the executive summary is not an abstract. We may even say, paradoxically, that the executive summary, unlike the abstract, is not a summary, it's your value proposition, your best, unique opportunity to sell your solution! How to put it together Treat the Executive Summary as a value proposition by doing so, you give an opportunity to people, particularly technical, who will write the rest of the document not to be aligned with your initial objective which is to focus on benefits (to be persuasive) instead of features (to be demonstrative). By keeping your executive summary concise and precise, you will enable the reader to seize your point quickly. An amazing consequence is that, following the rule of electricity saying that current takes the path presenting the least resistance, evaluators and decision makers, guided by their human nature advising them to save resources for later, will pick up the shortest or lightest proposal first. If it's yours, it will serve as a metric for the rest of the evaluation process. Should your message be persuasive, the reader won't find a better proposition. Using Themes What is a winning theme? Have you ever heard about Continuous Business Alignment (CBA)? It's a not-that- well-known management discipline that makes sure an organization, as a whole, is aligned to its customers' needs. More specifically, it ensures, in fact, that all services and work forces, namely employees, are focused on proper, continuous, circular alignment of processes with both their strategy (organization's mission statement) and their tactics (business goals and objectives). So, a winning theme, also called win theme, is acting as a CBA tool to ensure the rest of the proposal is aligned to the strategy and tactics defined in order to better persuade the evaluation team that the proposed solution fits all, and sometimes exceeds their requirements. Using Themes How to decide on a winning theme? Several win themes can and should support and substantiate your overall strategy within the same proposal. For instance, if your overall strategy is cost reduction, win themes could non exhaustively be: • faster delivery, same job but less time; • lower risk, lowered probability of loss; • higher return of investment (ROI), accrued benefits; • better environmental impacts, lowered toll to Mother Nature; • outsourcing, mitigation of operations coping with fluctuant costs; • faster completion of tasks, increased productivity; • rationalization of operations, chopping extra, worthless processes; • and so on... As we said, you should use several of them, the ones that reflect the most your strategy. Executive summary, executive summary, executive summary, … Think about executive summary as executive, then summary, as follows: Executive first. Intended for managers. Focus on value proposition, i.e. expected value, utility, associated costs, and total cost of ownership (TCO). Write it first, it will serve as guidelines for the rest of the proposal, and then Summary last. When the proposal is written or almost, make sure no important idea or information is buried and, therefore, missing in the executive summary. It's like a Q&A process. The only tradeoff you should be willing to make to this rule is: write the executive summary first, and, eventually and with parsimony, rewrite it when the proposal is done. The Executive Summary Content The Content Your executive summary should contain your value proposition, which should be grasped right away by your reader. Read the discussion How to write an Executive Summary to help you identify the necessary information for laying down your value proposition through the use of “win themes.” It is highly recommended that you use the suggestions below in order to properly and successfully use the executive summary template and sample. Identify 3 main benefits—no more, no less—that your executive summary will cover, putting them in descending order of importance. This is the way they will appear in your document body, since you want to grab the reader's attention as early as possible. For each benefit, write a simple, declarative, and persuasive sentence by applying the S.P.A. rule for your value proposition: • State your benefit by acknowledging your customers’ needs—this grabs their attention. • Prove your statement, by giving your customers several references (examples of past performance, clients, case studies, white papers, and so on). • Apply your benefit to your customers, by unveiling the real value that not only the customer but also the entire organization can get out of your offer. Use representation (numbers, facts, percentages, references, studies) instead of marketing puffery or commercial fluff. The Content Ask your customer for action. It's not the time or place to be shy. You're here to have your offer selected, so use action verbs in your value proposition to show the path of enlightenment to your customer. For instance, recommend your product or services, and give the information necessary to complete the action (who, what, when, where, how), such as how to purchase, or whom to contact at your company. Write your executive summary for best readability meaning the lowest grade level possible. This way, you ensure that no barrier hampers your reader’s full understanding of your point. Correct, edit, and revise your executive summary—but only when you're finished writing it. Since things sometimes get a little more complicated than you might expect, remember to consult a lawyer for further information before considering your executive summary as definitive. But doing all this You will build credibility, thus giving the confidence to your customer to make the right decision. Dos and Don'ts of Executive Summaries: Here are some tips on how to write your executive summary—and how not to write it. • Be persuasive (follow the executive summary format: state, prove, and apply). • Don't be demonstrative (don't focus on features). • Write your executive summary with active-voice sentences. • Use strong, enthusiastic, and proactive language. • Convert passive-voice sentences to active voice as much as possible. • Write simple, short sentences intended for reading by an executive. • Keep your executive summary short (1 page for every 20 to 50 pages). • Write your executive summary using an executive summary template. • Don't provide unnecessary technical details. Remember, an executive should be able to read it. • Avoid excessive jargon, and write the definition first. • Correct spelling, punctuation, style, and grammar errors. • Write primarily for your customer, not for yourself (use the name of your customer’s organization more often than yours—and don't start with a description of your • organization). • Write primarily about your customer (the benefits), not about you or your product (the • features). Executive Summary Template • State your 3 main benefits, thus acknowledging your customers’ needs: this grabs • their interest. • Prove your statement by giving your customer several references (examples of past • performance, clients, case studies, white papers, and so on). • Apply your benefits to your customer by unveiling the real value that not only the • customer but also the entire organization can get out of your offer. Use • representation (numbers, facts, percentages, references, studies), not vague • marketing copy. • Finally, call your reader to action, and give all the necessary information for • action (who, what, when, where, how). The executive summary presents your unique selling point (USP) in order to persuade your reader to buy into the recommended solution or services. The proposed format ensures that your message is oriented towards your customer. Indeed, you are not proposing a mere solution: you are addressing your customers’ needs.
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