In my last guest blog post I addressed 10 rules to follow when writing your business plan executive summary. Today I want to highlight a few of the reasons that your executive summary is so unbelievably important.
Famous venture capitalist Guy Kawasaki said in his book, The Art of the Start, “Of the effort you put into writing a business plan, 80 percent should go into the executive summary. These are the most important paragraphs of your organization’s existence.”
Here are 3 reasons that your executive summary might be the most important paragraphs you will ever write.
- Your Key to Startup Funding – According to the Angel Capital Education Foundation (ACEF) 90% of outside equity for startups comes from angel investors. This amounts to $20 billion in annual funding. The ACEF also approximates that only 25% of applicants for angel investment will make it past the pre-screening round. Typically the pre-screening round will consist of submitting your executive summary to the angel investor or investor group. If 75% of applicants are thrown out before even getting a chance to meet face-to-face with their potential investors, it is clear that your executive summary deserves your time and consideration.
- Your First Impression – The typical reader of your executive summary is a banker, potential investor or maybe a business consultant, who have all read hundreds if not thousands of business plans before. If your first impression on these VIPs is just a typical executive summary, how will they ever remember your business from all the others? Because you will not have the opportunity, in many situations, to meet with a potential investor before submitting your executive summary, this will be your only chance to make a great first impression.
- The Only Thing Most People Read – Most busy bankers and investors will consider themselves “executives”, which means they probably think they are only supposed to read your executive summary. Obviously you are hoping to compel the reader to continue through the business plan, but you should write your executive summary with the assumption that this will be the only thing the reader ever looks at. This does not mean you need to discuss every detail of your business plan, but rather focus on developing a persuasive argument for why your business opportunity is special.
Clearly your executive summary is a vital ingredient to many of the most important elements of your business. Follow the advice of Guy Kawasaki and invest significant time and resources into developing the perfect executive summary. It it may just be the two most important pages you will ever write.
Author Bio: Adam Hoeksema is the Co-Founder of ProjectionHub which is a web application that helps entrepreneurs create a full set of financial projections without the need to have a Phd in spreadsheet modeling.