Singapore Entrepreneurs

Writing an effective executive summary can help you to gain the attention of your investor. How do you write an effective summary. This article gives you some tips on the why and how for writing an executive summary.

It is always interesting to listen to new ideas. I believe that most people will be able to come up with many good and brilliant ideas for an enterprise. The real interesting question to me, is how many of these ideas are translated into businesses. Between the idea stage to the formation of the business stage, there are two intermediate stages which any entrepreneur will go through: the executive summary stage and the business plan stage.

One has to note that both stages are inter-changeable. In the real world, one can first write a full business plan (which usually takes about 3-6 months (according to my freelance consultant friends who do it as a business) and then summarize the whole plan into an executive summary. On the other hand in the business plan competition, one submits the executive summary for the first stage of the competition, and then submit the full business plan if they make it to the semi-final stages of the competition. Before turning an idea into a reality, the entrepreneur needs to have a plan in paper before searching for his team and approaching investors.

In this article, I focus on the executive summary instead of the business plan. It’s an arduous task to write a business plan and anyone who tells you that he or she could do it in two days, have no idea what they are talking about. A full business plan is a collection of all the different aspects in the business, for example, markets, financials, human resources, business model and strategy, team and etc. To give a sense of what it really is, will take me at least a few blog entries to do so. I will take the easy way out and explain the executive summary process.

According to most venture capitalists whom I have spoken to, they usually receive between 100-200 business plans per day. At the end of the whole process, they drop 95% of the plans and take the remaining 5% which they think are possible businesses that they can invest in. So, for each of us here, we have a 1/40 chance of getting our business plan through to them if they receive the maximum number of entries. One will ask how these people can finish reading 200 plans so quickly, and the answer is in the executive summary.

In essence, the executive summary gives a quick overview and provides everything that a reader (who can be under time pressure) must know about your business plan. What constitutes a good executive summary must possess the following: Clarity and Comprehensibility. You have to reverse your role as the writer to the reader to see whether your executive summary fulfills the following criteria:

1. The structure is organized and understandable.
2. Use uncomplicated language.
3. The idea is clear in the reader’s mind.

If at any time, you are asked to pitch your idea verbally to an investor, you need to further condense your idea in the
executive summary to a one minute elevator pitch.

There are six or seven ingredients which usually make up an executive summary (Note: there is no one size fit all method and the idea of this article is to give you an outline how to do it)

a. Type of business: Ask yourself what kind of business is your enterprise based on. Is it a product based or a service based company? You need to give a quick introduction of your company’s core competency in the start.

b. Problem and Opportunity: Usually, you pinpoint that there is a gap in the market, and the important part here is to signpost the reader that you have the game plan to turn that deficiency into a profit making enterprise.

c. Technology (only for technology startups): You need to explain in simple words that what your technology does. The rule of thumb is never to use technical jargon unless you are pitching to a venture capitalist who specializes in a certain area, for example, biotechnology. The way to get this right is to get a person with non-technical background to read your summary. If he or she can understand the technology, then you are halfway there.

d. Management Team: Who is on your team? Why are they on the team? What make their individual strengths to be useful to the business? You have to explain how the individual strengths of the team can complement the big picture and making the business work. Some business angels have said to me that they usually invests in the team, not the idea.

e. Route to Market and Business Strategy : How are you going to market your services or products to your customers? Can you give a few examples who your potential customers are? What are the risks that are involved in your business and what kind of strategies you are adopting to deal with them? These are important questions to determine whether your team has a good business model to turn the idea into opportunity. It is always important to remember that your business model must be sustainable and is able to fend off possible competitors.

f. Financials: How are you going to raise the money? How much do you need to get the whole enterprise going? Surely you have some idea on the figures that you need to sustain the company.

g. Exit: What happens to your company down the road in three years time? Do you want it to be bought out by a big company or do you want to go to IPO (“Initial Public Offerings”)?

If you have decided that you want to go forward as an entrepreneur, perhaps, you should try summarizing your ideas into an executive summary and see whether your idea can really work.

Technorati Tags: Entrepreneurship, Executive Summary, Business Plan

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