Why You Need To Have A Powerful Executive Summary
One of the first big hurdles any aspiring entrepreneur will face is securing enough funding to make the vision a reality. One way or another, that’s going to mean having a series of face to face meetings with investors of one stripe or another. And getting them excited enough about your project to write a check.
The problem, however, is that in order to secure that face to face meeting, you’re going to have to bait the hook. You can’t do that with a stand-alone 50 to 100-page business plan. A document of that length is not going to be read at the outset. Thus, the importance of the Executive Summary.
The goal is to get the investor to read your well-written business plan. And take the next step.
Sometimes, the Executive Summary is the only thing the investor will read.
Before you read further, go grab two sheets of copier paper and set them on the desk next to you. Those two sheets will serve as an important visual reminder. That’s your “real estate.” That’s the maximum amount of space you’ve got to make your pitch. It’s even better if you can get rid of one of those two sheets, but you certainly don’t want to go beyond the two pages you’ve now got sitting in front of you.
Think very carefully about those two (currently blank) pages. On average, you can fit about 500 words onto a single printed page. So, you’ve got one thousand words to tell your story and get a potential investor excited. To succeed, you’re going to have to choose each word carefully.
Write the summary. Rewrite. And rewrite. “All writing is rewriting.”
The Opening Paragraph: Summary of Your Company
To know your readers, you must do your research. Understand your investor’s “sweet spots.” Be certain the language fits the investor’s background. The opening paragraph represents the “first impression” similar to when you first meet someone. Make your opening paragraph a clear and concise statement about what your company “is” and what it “does.”
The first paragraph needs to compel the reader to read the rest of the summary. If you have an “aha moment” or a major life-encountered experience that has compelled you to create the business, or if you have identified a problem for which you have developed a solution, you might start with that. Based on the information, a potential investor can decide at the outset if your company’s ultimate purpose is in alignment with his or her investment goals.
Forget The Hype: Describe The Problem and Your Solution
Once you’ve cleared the first hurdle and gotten the investor to read your opening paragraph, now is your opportunity to tell your story. This is going to be different for every entrepreneur and every company. There are no formulaic approaches here.
To tell your story properly, you need to be able to identify the “problem” and how your company will provide the “solution.”
First: identify the “problem (or need).” You need to tell the story in broad strokes without getting lost in the details. If interested, the investor will find those details in the business plan.
Second: describe the “solution.” You need to understand what your company’s core strengths are. Maybe it’s an innovative production process or a lightning fast development team. Maybe it’s your award-winning management group. Whatever it is, you need to be able to clearly identify those core strengths and to make them a prominent part of your story.
Explain how your company’s strength is going to “solve” the problem or fulfill the need you explained above.
Know Your Audience
There is the matter of language and tone. Know your audience. If you’re writing for a Green Business investor, you’re going to take a different tone than you would if you were writing for a real estate venture capitalist or private lender. Your tone and language will be different if your audience is of a more philanthropic stripe. Whatever the case, your chances of success are much higher if your tone matches your audience.
As important as matching tone and voice to your audience is, avoid using too much jargon, tech-speak and words like “unbelievable” “best” “greatest” “ground-breaking” and so on. These are words investors see so often that they have lost all meaning.
Remember, you’ve only got a thousand words to work with. Every time you trot out one of these over-used, ineffective words, you’re giving yourself less space to succeed.
Include The “Exit Strategy”, Leave Out The Equity Split
Part of mapping out the company’s broad strategy will naturally include growing the company to the point where you’re either prepared for an IPO or big enough to be of interest to a well-established player in your industry.
Whether or not you intend to “exit” the business at some point, you need to make the “return of investment (ROI)” plan attractive enough to the investor as to assure that an investment will pay off handsomely. A realistic and well-thoughtout “exit strategy” encourages the investor to continue reading the summary.
However, you don’t need to offer any specific incentives to investors at this point. If there is an interest, the investor will likely ask for more details of the financial plan. Leave this open for negotiation later.
What’s In The Financial Plan?
Many entrepreneurs get caught up in the marketing of their revolutionary product and assume that investors will “fall head over heels” and write a check. While you don’t need to have a CPA title after your name, understanding the market size and having a good plan to capture that market is important to the investor and your business. No financial plan, no business!
Provide a summary of your financial plan. Be ready to provide a more detailed financial plan as part of your business plan when requested.
Don’t be timid about asking for the loan or investment amount you need according to your business plan. Be realistic. Show that you have some “skin in the game” and that you have invested in your project. Explain how you are going to use the investor’s funds.
One of the “deal killers” would be if the investor feels that you plan to use the funds to pay off the other investor or lender’s existing debt.
Build In A Sense of Urgency
The worst thing you can do is ending your Executive Summary in such a way that the potential investor believes she’s got all the time in the world to make a go/no-go decision. There should be an element of urgency in your closing. This company’s time is NOW.
In many ways, this is identical to the “call to action” that marketers build into their advertisements. “Call now to reserve your spot!” You’ve seen this a thousand times because it works. A “call” is a simple and effective tactic.
At the end of the day, that’s what your Executive Summary is. It’s a marketing document whose goal is to excite an investor or private lender sufficiently to take the next step. To read your business plan and set a time to meet or discuss the plan further.
The most important thing is that a well-written Executive Summary gets your foot in the door!