how to write an executive summary for your business plan

Center for Entrepreneurial Leadership February 3rd , 2007

What is it?Brief summary of all the sections of the B‐Plan

Also includes important financial numbers


Why?Executive summaries are also usually the first things read and analyzed by potential investors

So, it's a very important part of your plan


More importantlyIt’s the first step of any B‐Plan competition


Cover Page & LengthCover Page shouldn't be clutteredInclude only essentials like

Company NameTeam MembersL ith T liLogo with Tag line

2 3 pages excluding the cover page2‐3 pages, excluding the cover page


It should start with,Product / Service Description

Business Concept and Description of the Opportunity

Company Description

Mission Statement


February 3rd , 2007Center for Entrepreneurial Leadership

What and Why?Market = The world of commercial activity where goods and services are bought and sold. Th f M k A l i d l i h h i Therefore, Market Analysis deals with the various aspects of the market which the reviewer may or may not be familiar withnot be familiar with.

And Why?And Why?


Market analysis consistsIt should enable you to identify target customers, their expectations, income levels, expenditure, your distribution strategies etcdistribution strategies, etc.

It should be based on facts like surveys and established It should be based on facts like surveys and established data


How?Document current strategy of each primary competitor‐Spy on them!!SSources‐

Public InformationMarket research projectMarket research projectNewspaper reports, catalogs, interviews with distributorswith distributorsElse, go GOOGLE‐ing!!!


Contd.SWOT( Strengths Weaknesses Opportunities & Threats) Analysis of each competitor

Are you filling a void in the Market?

Formulate the market strategy.


In the Ex‐Sum…You can write a few lines about your market which you You can write a few lines about your market which you would have learnt from your Market Analysis

It is a good idea to use Visual aids like Figures and Graphs for the above purpose

It is recommended to mention the source of surveys and data

You should also write about your Market Strategy


Financials – Why do we need one?AssessmentConfirmationQuantificationCalculationBudgeting


Components

Financials

Assumptions Cash Flow Income Statement

Balance SheetStatement Sheet


AssumptionsAlways specify assumptions in financials

Valid assumptions such asRate of revenue exchangeDepreciation RateDepreciation RateSeasonal TrendsRoyalty etc…y y


Cash FlowTransfer of money in and out of the enterpriseCan be calculated as:

h f i lcash + source of revenue – expenses – capitalAvoid:

Unrealistic AssumptionsUnrealistic AssumptionsUnderestimation of Needs


Income StatementHow good the company is at making money.Include

Sales RevenueSales CostsGross ProfitGross ProfitOperating ExpensesOperating Incomep gNet Income


Balance SheetWhat the company owns and owes.The main formula is:

li bili i h h ld ’ iassets = liabilities + shareholders’ equityTo create a balance

Know your assetsKnow your assetsLearn different liabilitiesShareholder’s Equityq y


Wikipedia says:

Risk analysis is a technique to identify and assess Risk analysis is a technique to identify and assess factors that may jeopardize the success of a project or achieving a goal.g g


Analyze…Conduct a business risk assessment against each Conduct a business risk assessment against each business function.Eliminate non‐critical business processes from a

lcontingency planning project.List and prioritize business functions that require a contingency plancontingency plan.Revise contingency planning project tasks to reflect the new priorities.Manage the identified risks as part of operational management practices.


Assess…Economic/FinancialLegalOperationalMarketingGrowth


Continued…Determine the criticality of a process to your business.Assess the failure probability/risk criticality score.Develop a contingency plan based on the score.


To some it is THE critical factor.Include

P l D ilPersonal DetailsField of ExpertiseTitle of PositionTitle of PositionPrevious ExperiencePrevious SuccessEducationSpecific Skills


AvoidDepending on unqualified friends or family.Presenting ‘one‐man theory’.Failing to attract a knowledgeable board of directors.Assume previous success in other industry applies to

i dyour current industry.


What is it?It is not about shutting down your business rather exiting it gracefully.Al i l d f i h Also includes a strategy for investors to cash out.


Developing an Exit StrategyAsk:

Why are you getting into the business?y y g g

Do you see yourself running the business 20 years from now?

Are you in it for big money or a steadily growing family business?

Who are the investors in your business?


Sample Exit StrategyNike ManeuverMerger/AcquisitionBuyout by a partnerInitial Public OfferingFranchising your businessFamily Handover
