The executive summary also referred to as management summary (an older term), is a short document that accompanies a larger document such as a business plan proposal, or a growth strategy plan. Usually, it summarizes the key points of a business plan or project report. It helps the reader get all the necessary knowledge without reading the whole document. On most occasions, it is inseparable from the original larger document.
Purpose of the Executive Summary
Its main purpose is to summarize the key concepts of a longer, more extensive document so that the reader can get acquainted with it in a short amount of time. Generally, when writing a business report or a long project report, most of the stakeholders (the guys that need and want to know what’s going on), will not have the time to read it. In some cases, they will read it only if the executive summary catches their interest.
In fact, the executive summary is regarded as the quintessential part of the business plan because it is the document that aids managers in making decisions.
What it contains
The executive summary contains the following main parts which can be further broken down depending on the type of report and on the type of business.
- A short statement of the problem or proposal that is being discussed
- Some background information regarding the problem/proposal
- Implementation details
- Conclusive statement
2 Types of Executive Summaries
Depending on the type of business, the executive summary will be shaped up differently. A startup generally aims at gaining more funds through investments or bank loans. As a result, their goal will be to convince venture capitalists, investment bankers or angel investors to invest in the startup.
An established business, on the other hand, could probably use an executive summary to inform the already existing stakeholders regarding past achievements, new projects to be undertaken, etc.
How to write an executive summary for a startup
If you are managing a startup, you are probably constantly looking for investors. Investors and executives are generally always busy and are not going to read your business plan proposal. However, they are willing to read a 1 or 2 page summary of your proposal. If you play your cards rights, you might get them interested enough and they will ask for a more inclusive report (your business plan).
Bottom line? Your executive summary needs to answer, or at least provide some information to all possible questions that can come up in an investors mind when looking for a company to invest in.
Below we have provided a list of sections that should be in almost every executive summary for a startup:
Startup Executive Summary Outline
- Background information – include information about you, about your company and contact information
- Team and stakeholders – an investor will want to know who is working alongside you to make a better judgment on the company’s reliability and seriousness. Most importantly, they will want to know who has a stake in your company.
- Business opportunity or problem you are solving – it should describe what existing problem it is solving, how it is improving a service, how it serves the market.
- Target market – who it is that you are targeting and why you decided to target that specific market segment. If you come up to an investor and tell them that you want to target the whole population on earth or even Europe, they will probably laugh you off goodbye. In two or three sentences, explain who your target customer is, and why you think that’s the optimal target, to begin with.
- Monetization – how you plan to make money out of this business idea. This is probably the most important part of an executive summary, and as such, it should be concise and clear. Investors will want to know almost every specific detail regarding how you will monetize your product or service. Try to include as many graphs or tables. After all, a picture is worth a thousand words, so you are saving up valuable sheet space.
If you are trying to get funding from a financial institution, they will be looking at this section very attentively. It’s important to show them that you have a long-term sustainability strategy (i.e: how do you intend to continue making money after 5, 10 years?). Try to include a three to five-year financial plan. The information needs to be neatly presented in a table. No banker will prefer reading a paragraph when he could analyze an excel table.
- Competition – every investor will want to hear about your competition. If you have not analyzed who you are competing against, they might as well throw your report in the bin and never look at it again. A thorough competition research should be based on an analysis of the product you are offering as well as on the segment of the market you are targeting. Additionally, depending on the marketing strategy you are employing, you might have different sets of competitors.
If you are running an HR related startup in France, most of the direct competitors will also be based in France. However, once you decide to allocate capital for a content marketing campaign, the competition circle might either enlarge (if the existing direct competitors are also competing through SEO), or it might shift to a different set of competitors which might be based in the US mainly.
- Sales and Marketing Strategy – briefly outline how you plan to advertise your product. You don’t need to get into much detail and explain your growth strategy. However, investors would be happy to know how you plan to reach out to customers and what kind of marketing channels you plan to use in order to gain traction. You could simply list them.
- Funding Request – be very specific and clear on the amount of funding that you are asking for. You should explain the purpose of the investment and where that money will end up being spent. This should only briefly explain whether you are looking for debt or equity funding and the length of time which that investment will cover.
- Financial Projections – here you need to summarize the key points of your extensive financial plan. If you can consolidate the most relevant information into a single table, you will be a step ahead of anyone else (this is not easy to do). Additionally, it is a good practice to include projections for at least the next 3 years.
- Conclusive statement – keep the conclusion short and captivating.
How to write an executive summary for a well-established business
There are some clearly visible differences in the executive summaries of startups and well-established businesses. Generally, an already established business is not avidly looking for funding (unless it’s for a specific project). Most business plans would be reflecting information related to past achievements, new growth strategies or plans, general financial and managerial highlights, new projects to be undertaken, and so on.
As a result, the executive summary has no choice but to express the above, in a more concise manner. So, what to include in an executive summary for a well-established business?
Established-Business Executive Summary Outline
- Mission Statement – if your company has a mission statement, you should include it here. In a few sentences describe the purpose of your business and its core values. The average length of a mission statement for some of the top 50 nonprofit companies is roughly 15.3 words, with the shortest one being only 2 words. The company with the most concise and clear mission statement is a company most people know about, TED: Spreading Ideas. If you manage to come up with a mission statement that conveys the purpose of your business in very few words, you will have an aesthetically competitive advantage over your competitors.
- Company Background – this section should include a brief explanation of the company, some historical information (when and where it was founded) and how it grew to this point in time. Of course, if your company has some interesting background, you would want to include it in the executive summary so that all shareholders get the chance to learn that information. Additionally, you would want to describe the company’s main products and services, the owners and cornerstone employees. It is a good practice to also include some general statistics on the employees, their background and the extent to which the company’s services reach the global population.
- Business and Financial Highlights – some business like to keep these two sections separate. Depending on the size of your business, you can decide whether to keep them together. As a rule of thumb, factors such as business decisions, growth highlights, increase in market share, increase in organic search volume, are better reflected when supported by financial evidence. Think about it this way. When you mention a growth of 400% in monthly organic search volume, that is definitely great news for everybody. However, that doesn’t tell me anything related to the number of resources that were spent to achieve such growth or anything related to the increased revenues or sales that we had, specifically due to this change. If the growth you are mentioning is backed by financial data, it becomes more easily quantifiable by the board of management, stakeholders, or project managers. When the business operates globally, it would probably be very difficult to back up business highlights with respective financial highlights. Mainly due global business units and departments being too closely coupled.
- Objectives – this probably includes a timeline of the future goals the company has. There are several ways to represent the future goals. Most cryptocurrency companies nowadays use the term ‘roadmap’ (a simple visual representation on their website) to convey their future goals.Better established companies, however, use strategic planning tools to outline their objectives and future goals. One of the most used ones is the Gantt Chart. In the executive summary, you could include a summarized bullet-pointed version of the Gantt Chart that you have previously designed. Since the Gantt Chart consumes too much space, you can’t include it in the executive summary.
- Keys to success – this section is like playing a joker in a card game. You can include anything that you believe makes your business distinguishable from others. These “keys” provide the basis for your business plan to succeed. After all, decisions are based on the perspective one has on something. If you can convince your board of shareholders that plan X is meant to succeed because of Y and Z, then that is all you need to get the project up and running.
Executive Summary Best Practices
If you compare your business plan outline with the components that an executive summary should include, you will notice that most of them coincide. That is true regardless of whether you are a startup or a well-established business.
The most commonsensical way to write an executive summary is to take each section mentioned above and find the respective required information within the business plan. After that, try to summarize the key concepts for that sub-topic in 2 or 3 sentences maximum.
Try to replace any block of sentences or paragraphs with a visual representation such as a diagram, chart, or table if you can. Whoever is reading the executive summary will appreciate it because it saves him/her time, which is the main purpose of the executive summary.
Conclude the business plan’s executive summary with a captivating sentence. Something that will push him/her into reading the whole business plan. Or at least the sections that fall under his/her domain.
Common Characteristics of all Executive Summaries
- Needs to be short – Several sources say that it should not be longer than 2 pages. Handing out a single sheet, printed on both sides, is more appealing than a 5-page summary. However, sometimes business plans can be 50+ pages long. It’s practically impossible to summarize 50 pages in two pages. A good ratio for the executive summary length would be roughly 5-10% the length of the business plan itself.
- Clear and concise – Only include what is necessary, the gist of the plan or proposal. If the reader likes the main concepts, he will ask you for more details himself. All you are trying to do is grab his or her attention.
- Don’t be ambiguous – although the executive summary is short, it needs to explain the key concepts very clearly. Some concepts are hard to be summarized in only two or three sentences. If you think that a statement might create more doubts, then it is sometimes better to not include it at all.
- Modify it according to your audience – depending on whether you have/work for a startup or a well-established business, your audience will be different. Additionally, startups might need to make different versions of the executive summary. Bankers are mainly interested in financial plans. Thus, they might expect more details about the startup’s finances. Angel investors, on the other hand, might want to see reflected more information regarding the vision of the company and what it is trying to accomplish. To each his own!
- Don’t include material that is not reflected in the main document – Every section on the executive summary should correspond to one or more sections of the main document or business plan.
- Tailor language according to the target audience – If you are presenting your executive summary to a bank loan officer, you should probably include finance-heavy terminology instead of your usual day-to-day entrepreneurial language.
- Provide proof and justification – everything that is included in the executive summary should be accompanied by verified data and justification. Most of the time you won’t have enough place in the executive summary itself to provide the necessary justification. In such cases, explicitly mention which section of the business plan or strategic plan they need to refer to for verifying your assumptions and statements.
- Try to maintain a similar order to the main document – sometimes different sections need to be merged or moved in order to provide clarity and consistency. It’s good practice to try and maintain a similar order
Certainly, the above-mentioned outlines describe only the general structure of a typical executive summary. Depending on the business and industry you are working, the business plan or business report you are trying to summarize will include several other distinct sections (that we didn’t mention). For example, a cryptocurrency based startup will include more sections on the technology being used to implement the project, how secure it is and so on.
Nonetheless, the outlines described above should give you a good initial structure to base your executive summary on. After that, you can customize it on the go. Ultimately, you can always refer to the Common Characteristics of Executive Summaries section, regardless of the type of business, industry, or project you are in.
We will try to keep this content up to date as new trends or reporting methodologies arise. However, we also value our readers’ opinion and would love to hear from you. If you think that we might have missed something, or you want a deeper clarification on some terms and concepts, let us know in the comments section below. We will be happy to help!
Photo by Freepik.