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How to Write a Great Executive Summary

how to write a great executive summary

 

This is a best-practices guide to learn how to write an executive summary for your startup which serves as an example and shows you a template of what’s needed to write it.  

And, in this post, you’ll also discover the differences between writing an executive summary for investors in hopes of getting funding versus writing it as a guideline or mini business plan for your startup.

What is the Purpose of an Executive Summary?

An executive summary is an abbreviated version of a business plan which precisely highlights the main sections of it.  It’s meant to be a lean version of your business plan with no extra fat.

Why is an Executive Summary Important?

For Investment

If you’re looking for investment from venture capitalists, you’re going to need an executive summary because they will want to see what makes your startup a great investment for them.  This is true if even you’ve had a warm introduction to the VC and especially true if you’re cold-emailing them.

However, executive summaries are preferred because investors don’t want to read huge business plans. Reading business plans take up too much of their time, and time is money. So, writing a business plan will usually be a waste of your time too.  

Assuming you’ve never spoken to the VC you’re emailing, it becomes the first interaction the VC has with you.  That’s how they get to learn about your startup, your team, and how you’re going to make them money by investing in you and your startup.

The goal of your executive summary is to get a meeting with venture capitalists or angel investors.  

Then in that meeting, you will usually do your pitch deck presentation, answer questions, and ask questions.  The goal of that presentation is to get another meeting with a term-sheet which outlines the terms of the investment and how much they’re willing to invest.  

It can also be used to help you with filling out applications for startup accelerators since you’ll need much of the information in an executive summary.

When You’re Not Seeking Investment

Writing an executive summary is an amazing tool for entrepreneurs and startups to utilize even if they aren’t seeking investment.  

Writing an executive summary for your startup is a great way to nail down your plan of attack.

It’s a document startup founders and entrepreneurs like yourself can go back to time and time again to help you refocus and stick to the plan. 

It will also help you with multiple aspects of your business development that require the information written in your executive summary such as for your website, marketing, and accounting.

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The Attention Grabber

This is the first section you should write to get the attention of an investor.  If they don’t like what you have to say here, then they may not read any further. So, make it compelling.

Explain why your idea is so big or revolutionary in a few brief and to-the-point sentences. Speak about what you’ve developed and why it’s unique to solving a large problem.

Also, according to Garage Technology Ventures, if you have any well-known or highly successful teammates with awards or accolades, then now is the time to mention that.

Why Now?

Having a sense of urgency from a market that needs your solution can be a strong motivator for investors so they can get in on the action while the time is right.  If now is an especially important time-frame, then briefly explain why.

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The Problem

Define your target customer/market’s pain point or problem (current or emerging) and how your solution is going to alleviate that problem.

For instance, what will they be able to do once you fix their problem?

Show the size of the problem and the size of the market so you can show a contrast between the two.  Is there a percentage of people in that market with the problem or do they all have this problem? Explain concisely.

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The Solution

What’s your solution to your target customer/market’s problem?

What have you created to fix it and how will it fix it?

Don’t use acronyms and industry-specific terms.  Explain it in laymen terms. 

How will you get it done?  Be brief and concise.

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Business Model

Describe your business model when writing this section of your executive summary.  But regardless of whether you’re looking for investors or not, you should always know your business model.  

Below I explain why business models are important to have, how to create a basic business model, and I address the key points so you can know how to make a sustainable business model for growth. 

Business models are important to have because it gives business owners and startup founders like yourself a clear vision of your primary mission and how you’re going to make money through your mission.

However, having a business isn’t just about selling and buying.  

It’s about adding value to people and solving one or more problems within a niche or community. But it’s still extremely important to be able to make money sustainably.

According to an article from the Harvard Business Review by Kevin Laws, titled “Successful Startups Don’t Make Money Their Primary Mission”, it describes how founders and their startups are much more likely to succeed if they focus on a mission rather than focusing on dollar signs.  

This is because they’re providing value to their target customers first, and asking for money second.

Below you can see the formula of how to create a basic business model:
We solve _______A________ by providing _______B________, to help _______C________ accomplish _______D________ and we make money by charging _______E________ to get ______F_________.

A: Problem
B: Product/service offering
C: People using product/service (specific)
D: Specific Task offering improves/completes
E: Users or it could even be a 3rd party i.e. advertisers etc
F: Value provided for money (may be a different value than what was provided for
option C).

This basic model doesn’t go in depth about how your startup can be sustainable.  But below, you will see what you need to factor in to make a working business model.

A Sustainable Business Model for Growth Addresses the Following Key Points

  • Provides excellent value to the target customer by addressing a key problem they face through a value proposition / unique selling proposition
  • Who your target customers are
  • What your revenue streams are
  • A fair and competitive price point for your product or service in the market
  • There are net profit gains with a 40% or higher profit margin after all company expenses
    • Expenses such as Rent, utilities, services, personnel salaries, contractors, etc.
  • Adequate opportunities for lead generation through multiple different marketing / customer acquisition channels
  • Consistent lead acquisition month over month
  • High customer satisfaction and retention
  • Key performance indicators

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Target Market & Size:

Knowing your target market and size of market is crucial for any business or startup to know.  The more you know about your target customers, the more successful you’ll be at creating a successful product/service that matches your target customer’s needs.  

In this section, you will present the facts of who exactly your target market is and how large it is.  Break it down succinctly.

How many people are in the market?

What is the market value?  For example, XYZ is a $4 billion dollar market per year in the United States. To learn how to calculate the market value, click here.

Are you selling to companies or to consumers (B2B or B2C)?

Share basic market segmentation such as age groups, gender, location, the technology used (mobile/PC/tablet), etc. 

Section Tips:

If your purpose for this document is to show investors, then it’s important to realize three things:

  • Investors want to see that there’s a large market for your product.  A large market will have tens or hundreds of millions of people in it.
  • Accredited investors don’t usually just invest their money in startups but also their time and other resources of theirs. This includes harnessing connections of theirs since they want to see their investment to succeed.
  • If your target market is too small, then it’s going to be a waste of an investor’s time to invest in & work with you.  It will also likely be a waste of your time trying to get accredited investment.  

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Competitive Analysis & Advantage:

It’s really important for you, your customers, and potential investors to be able to distinguish the difference between you and your competition.  

When you have a great product that’s being offered, it’s highlighted even better when you can positively contrast it to your competition in both your executive summary and on your website.

For Your Executive Summary and Your Knowledge, Answer the Following Questions:

Who are your competitors?

What are the differences between you and your competitors?

What’s your competitive advantage over your competition?

Will it be easy or difficult for your competitors to adapt their product/service to eliminate your competitive advantage over them? Why and why not?

How will you show your competitive advantages to your target market?

How large are your competitors’ social media and online presences and can they easily outcompete you?

Section Tips:

  • Include a table that clearly shows differences between you and your competitors and don’t be afraid to widen the page margins to make it fit.  You can also display the page horizontally
  • Slight or marginal advantages are going to make your startup look weak.  
  • Patents and intellectual property rights are a part of what can make your startup more competitive, however, you still have to show how you’re going to execute your competitive advantages in your business model.  

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Expected Startup Costs & Revenues:

Many new entrepreneurs take the financial side of their startup for granted, especially if there’s no money flowing in yet in the beginning.  Making money can be a motivator to make more money, as can the absence of making money.  If you’re not writing an executive summary for investors, then you should still, most certainly spend the time on this section.

Answer the following questions:

Why is your business model scalable and leverageable? 

Are your costs low and profits high?  What makes it efficient?

 

What are your total annual fixed costs? (Monthly subscriptions, website hosting, office space, etc all added up)

How much revenue will you bring in from each customer? (Lifetime Value (LTV))

What are the costs involved in customer acquisition?  (CAC)

Explain your overhead on production or licenses, if any.  

What are your costs for holding warehouse stock of your product, if any?

How much are you paying your personnel including the founders?

What are your expected net revenues five years in?

Investors are usually looking for a 10x return on their investment.  If you want them to invest, you must be confident that you’re going to make A TON of money and you’re going to make them much much richer. 

 

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Management:

Writing a powerful management section is a really important aspect of an executive summary when presenting this document to investors.

It’s important to investors because they don’t just invest in startup ideas, but they also equally invest in the team behind the startup.

Investors want to know that if they invest in your startup, their investment will have a great likelihood of growing to its fullest potential.  

When submitting an executive summary to investors, the purpose of this section is to give investors confidence in you and your teammates.

 

Questions/Topics to Answer:

Why is your team uniquely able to address this market problem and challenge?

What is your experience with startups, managing startups, and managing people?

Explain the roles of your teammates. Who on your team is going to do what?

What experience do your teammates and you have?  Mention notable companies either of you have worked for and any major successes.

Who are your key advisors or mentors, if any?

Investors are far less likely to invest in a startup with one founder than with two or three.  This is because the magnitude of difficulty is very high to be able to successfully implement everything in your startup on your own.

Something to keep in the back of your mind: What type of management style and company culture are you going to promote?

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Investment Size, Investment Expectations for Investor ROI, and Payback for Investors:

How large is the investment you’re looking for?

What are you looking for from an investor? Just their money or more than that? Tip —> Explain concisely.

What do you expect to use that investment towards? Tip —> Break it down.

Define your payback options. How are you going to pay them back?  

Section Tips:

  • Some payback options are:
    • Giving investors a percentage of sales until they make their money back
    • Equity is another common form of payment via common stock or preferred stock
    • Equity plus a percentage of sales revenue per sale
    • Repayment via large/small chunks on a quarterly basis
    • A 2x, 3x, 5x or 10x repayment after a number of years
  • Many times startups seek more than just the investment they’re looking for.  
  • Startups are also seeking what else the investor can contribute. Some of these contributions can be their knowledge, their network, their experience within your target niche/product field, and even their active participation by them with you to make your startup more successful.

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Conclusion

Writing an executive summary for your startup isn’t just important for your investors, but it’s important for the development of your startup.

Executive summaries cover the most important aspects of your startup and what you plan to do with your business.

And, if you want to move forward with writing a business plan eventually, you’ll have the core fundamentals of it where you can continue to build upon each section with more detail.

The work you put into making an executive summary now will pay dividends later.

Just make sure that you’ve validated your startup before you write it so you don’t waste your time.

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