How Your Executive Summary Can Make or Break Your Business Plan
An executive summary is used as a cover letter to a business plan. Whereas a cover letter is often discounted in its importance, the executive summary should not suffer that same fate. This section is the single most important part of the business plan.
"How can a letter be so critical?" You may ask. Because it may be the only page a loan officer reads (if it's done incorrectly). Think of it like a movie trailer; if the trailer catches you interest, you want to see more. You invest ten dollars and see the movie. If it doesn't meet your movie-watching criteria (for whatever reason-it's not your kind of movie, it has actors you don't like, the plot stinks, etc.) you invest your money in a different movie--one that you do like. It's the same with bankers and businesses.
Here's how you can write an executive summary that will impress any loan officer:
1. Do your research. This summary, as its name implies, summarizes information on your competitors, your customers (market), and market trends. These numbers need to be real. The only way to get them is by doing research. If you're not sure where to start, you can get more information on doing market research through the Small Business Administration. Don't try to fake out the banker. Remember, he has access to this information as well.
2. Ask for a realistic amount of money (even if it's more than you want to borrow. In the executive summary you will ask for a specific amount of money. Bankers want to see that you know what it takes to start a business. If you ask for too little, your business has no chance of succeeding. Your lender knows this. He doesn't want to see you back in six months asking for more money. As long as you have a realistic way of re-paying the loan in a reasonable amount of time, don't be afraid to ask for what you really need. To insure the comfort of your lender, your summary will show a clear, realistic plan for paying this money back.
3. Have solid individuals in charge of your business finances. If you don't have solid financial or business training and/or experience, having a Chief Financial Officer or a CPA listed in the body of the summary as an additional contact person or company owner is important. Even if you have to give a small percentage of your company to the CFO or CPA it may be worth it to get the financing you need to get started.
4. Be willing to give. Your executive summary should indicate what you're bringing to the company. How much are you investing? Where will that money come from? What collateral is available to secure the loan? Lay it out in up front, so the banker knows you're deeply committed to the success of your business. If you're not willing to put anything into the company, the bank won't be either.
5. Build anticipation. To build the lender's enthusiasm, make references in your summary section to what's included in your business plan.
Put all the information together in a cover letter format and you've got an executive summary that will have your banker wanting more.