A business summary is an essential document that provides information about the business. It introduces the reader to the main business of the company. Normally a business plan is prepared for raising capital from investors.
The biggest challenge one faces is, how to make the business plan interesting? Most of the business plan appear lackluster and fail to tell a convincing story. In a bid to create impact many cram the business plan with information. The end result is that it fails to impress potential investors.
A good summary is the one that communicates the message effectively. It's like convincing a person in 30 seconds. Let us understand why. The person reading the executive summary is someone who is going to finance your venture. Naturally, they are busy. Nobody has time to read a 75-page document which is pure hypothesis. If your executive summary fails to grab attention in 2 minutes, you are done.
Think like a copywriter or an advertisement director. A copywriter can convey the message in one or two headlines. Similarly, a director has 20 seconds does make the advertisement effective. Beyond that, it is a losing proposition.
While writing the executive summary, your focus should be on two words, "why" and "How." Why your business merits investment and how it will benefit your investor. A great business idea that doesn't answer these two questions has no value.
A business idea must benefit the consumers, the company, and investors. If it fails to satisfy these three, it needs refinement.
For example, while introducing the company, think about what makes your company great. If you cannot define your company in two sentences, then it is not yet the time to approach the investors. While writing it is advisable to exaggerate and then tone down to bring it to a realistic level. The vast majority of the introduction seems like they are taken straight from the book. Instead of writing "we aim to manufacture instant noodles that save cooking time," you could write, "we intend to use 15 years of experience to manufacture instant noodles that will redefine cooking." You can feel the difference. One is a plain statement and another a bit of exaggeration with a tint of Passion.
Remember, investors are human too. If you are passionate, they will feel it. They want to invest in companies that are passionate about what they do.
The same applies to product description. Show how you differ from competitors and how your product solves a problem in a unique way. Do not harp endlessly about quality. It is understood that you will make a quality product. While pitching a product think how it can be sold in two lines. The long product description is boring. Besides, investors are aware that most business plans are written by professionals. They want to hear your inner voice.
Next comes the money part. If your product fails to generate a return on investment, there is no point in funding. Again you have a maximum of 5 lines to describe pricing structure, profit margin, and competitive analysis. Think of this as a SWOT analysis.
The defining of the target market is crucial. Whatever you say, it must be backed by numbers. Be realistic here. Exaggeration can be an enemy. Any attempt to overestimate the market can make investors nervous. If you are selling a product for youngsters, stick to the group. This paragraph should contain information on various aspects of your target market like age, gender, size of the market, etc. This is an opportunity to demonstrate your knowledge about the market.
Many go overboard while pitching financials. Many stick to the standard format and try to cram information under the financial header. The effort to construct agreements through the maze of data often fails to impress the investors. This presents a unique problem. The investor interprets the data in a way that makes sense to him, and this could be detrimental to your interest. Often investors interpret the data as exaggerated and swiftly cut it to size. Each data point should be accompanied by a commentary. It should provide concrete answers like on what basis you zeroed on the numbers, are these numbers aggregate or per-customer basis? How much it will take to operate the company smoothly for a year?
Your elevator pitch should contain milestones. The entire data should match with your funding requirements.
The essentials of the executive summary
· It should contain the key points that you want to communicate. Pay attention to the headlines. Do they convey a meaningful message?
· Explain the biggest problem solved by your company. How effectively do you solve?
· Explain clearly the market size. Back your argument with data. Your summary must clearly explain the number of customers that will benefit. Estimate the market size quantitatively and qualitatively, i.e the number of users and value of the market.
· Explain what competitive advantage you enjoy. If it people, technology, or process, explain in clear words.
· What kind of business model you are pursuing? What is the pricing structure? Are you operating in high-margin business or volume intensive business?
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