Do Business Well

As you begin to write your executive summary, consider not so much what you want to say, but what a prospective investor (or acquirer or key employee) wants to read. That person wants to be convinced that your business is going to be a winner. When you read your executive summary, you must constantly ask yourself: If someone handed me this executive summary, would I seriously consider investing in this company?

The best way to write your executive summary draft is to draw on the building blocks and to study well-done executive summaries.

• The building blocks. Each stage in the planning/writing process, if done right, makes the next stage easier. You should already have some written material on which to base the first draft of the executive summary.

I advised you to put together an initial table of contents for your business plan, based on the list of subjects that every business plan should cover. I suggested you make notes under each section about the material you expected to cover.

I suggested you have the members of your management team write drafts of individual business plan, based on their areas of expertise (assuming you have a management team). While they will need some time to complete this task, you can ask each as a first step to provide initial drafts of summaries. From your table of contents and management team summaries, you can write a first draft of the executive summary.

• Real plans. By studying examples Of other entrepreneurs’ executive summaries, both bad and good, you can begin setting your own standards. So I’ve provided an example of a poorly done executive summary and a well-done executive summary, along with an analysis of the strengths and weaknesses of each.

The executive summary in Exhibit 4-1 is actually an altered and disguised version of a real executive summary. But it remains as badly done in this state as it was in its original one. What’s wrong with it? You can probably spot some problems, but here are four prominent ones:

1. It says little about the company’s strategy. Information about the company and its strategy was near the top of the list. How does the company plan to carry out its goals, and what evidence can it offer that it will succeed?
2. It barely touches on marketing issues. We learn that the company’s product serves an industry with “excessive industrial demands,” but there’s little explanation or corroboration. What is meant by excessive, in quantitative terms, and how will the company take advantage of the situation?
3. It focuses too heavily on the company’s financial needs. Obviously, this business plan is intended as a financing document, but the company’s financial needs are overemphasized. Yet there’s nothing about the company’s financial projections.

Investors want to know how management will make the investment grow and pay them back with a hefty return.

4. It is internally directed rather than externally directed. Readers learn about the company’s plans for building a plant and hiring people, along with the founder’s qualifications. But they learn little about where these efforts will take the company in the marketplace.

Of course, you will likely see other weaknesses, such as the lack of explanation about the competition and the management team. But essentially, the business plan’s authors wasted space_;by devoting so much time to certain issues, they neglected others. It’s hard to get excited about the business plan.

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