The Executive Summary Entrepreneurship ENT-301 Professor Mark M. Glenn, MBA March 7th, 2019 The Executive Summary What is an Executive Summary? “An executive summary is the brief introduction to a business plan. It should describe your business, the problem that it solves, your target market, and financial highlights (Berry, n. d.).” Elements of an Executive Summary. While still a business tool and not a personal statement, the Executive Summary does include some insights into the business’ personality and the goals are for the organization. These elements should be succinct and easily understood. Clarity is important as it allows the reader, potential investor and financial institution insight into how the venture will succeed. Berry (n. d.) reveals that the Executive Summary should include: · Who you are. Start with your business’s name, location, and contact information. · What you offer and the problem your business solves. Include a brief description of the product or service you offer and why it’s necessary. Your business doesn’t need to serve a larger social problem, but it should address a need or opportunity in the market. · Your target market. Sometimes the product itself defines the market, such as “Peoria’s best Thai food,” or “Mini Cooper dashboard accessory.” If not, then a brief description of the target market. · Business plan purpose. Say whether you’re seeking investment or trying to secure a bank loan. An executive summary is only really necessary when you are sharing your business plan with outsiders. · Size or scale. For example, with an existing company, that information might be as simple as adding recent annual sales or number of employees to the basic company information in the first bullet here. For a startup, it might be a brief description of aspirations, such as a sales goal for the next year or three years from now. I often recommend a simple highlights chart, a bar chart with sales and gross margin for the next three years. · Critical details. Mention any defining details that would matter to the person that will ultimately read the summary–like that the founders are all MBA students at the local university, or that your business has been awarded a prestigious development grant. Remember, some readers will only look at the summary of your business plan (Berry, n. d.). What Makes an Effective Executive Summary? The Executive Summary should be effective, even though brief in length. It should produce results similar to an Abstract opening paragraph in an academic essay. The Executive Summary creates an appeal for the reader to proceed further into the business plan, which will expand in further detail the elements of the plan. Berry (n. d.) suggests: Write it last. Even though the executive summary is at the beginning of a finished business plan, many experienced entrepreneurs (including me) choose to write the executive summary after they’ve written everything else. Ideally the executive summary is short—usually just a page or two, five at the outside—and highlights the points you’ve made elsewhere in your business plan, so if you save it for the end, it will be quick and easy. Keep it short. I know experts who recommend a single page, just a page or two, no more than five, and sometimes even longer. I say less is more. Keep it as short as you can without missing any essentials. And—I can’t resist, because I read hundreds of plans every year—one page is better than two, and two is better than five, and longer than five pages (my opinion here) is too long. Keep it simple. Form follows function. Most executive summaries are short texts, often with bullets, broken into subheadings. Illustrations such as a picture of a product, or a bar chart showing financial highlights, are usually welcome. Organize in order of importance. There is no set order of appearance of the different key items included. Quite the contrary, in fact—use the order to show emphasis. Lead with what you want to get the most attention, and follow with items in the order of importance. I tend to like summaries that start with stating a problem, because that can add drama and urgency. When it’s finished, repurpose it as a summary memo. It’s the first chapter of a formal plan, but you can also use it as a stand-alone “summary memo.” Investors often ask startups to send a summary memo instead of a full business plan. “If your business will manufacture or sell products, or provide a variety of services, then be sure to include a Products and Services section in your Summary. (In this case the products and services are obvious, so including a specific section would be redundant.) Bottom line: Provide some sizzle in your Executive Summary... but make sure you show a reasonable look at the steak, too (Haden, n. d.).” What is the Difference Between an Executive Summary and a Rocket Pitch? Think of an executive summary as being a lot like a pitch, but with constraints. A good summary sells the rest of the plan, but it can’t be just a hard sell—it has to actually summarize the plan. Readers expect it to cover your business, product, market, and financial highlights, at the very least (see below for more detail on this). Of course you’ll highlight what will most spark the reader’s interest, to achieve this plan’s immediate business objective. But your readers expect the key points covered. It’s a summary, not just a pitch (Berry, n. d.). Conclusion The Executive Summary should be brief and to the point. It is not an Elevator/Rocket pitch but should include enough strong points to interest the reader to seek details of the venture found in the business plan that follows the Executive Summary. The Executive Summary should act as the key to the business plan and generate questions that the business plan will answer. References Berry, T. (n. d.), How to Write an Executive Summary, Retrieved March 6th, 2019, from: https://articles.bplans.com/writing-an-executive-summary/ Haden, J. (n. d.), How to Write a Great Business Plan: The Executive Summary, Inc., Retrieved March11th, 2019, from: https://www.inc.com/jeff-haden/how-to-write-a- great-business-plan-the-executive-summary.html Week 3 Lecture: The Business Plan Entrepreneurship ENT-301 Mark M. Glenn, MBA February 23rd, 2019 What is a Business Plan? You have that idea that you feel will be a successful venture. While there are numerous obstacles, issues, and challenges to overcome, once the opportunity is identified and recognized, developing a business plan would be a solid next step. A good business plan is simply a document with a specific purpose. According to Rogoff (2007) a good business plan will: 1. Test the feasibility of your business idea. 2. Determine the best financial resources to start your business through investors or partners. 3. Secure enough debt by establishing loans, lines of credit, or payment terms. 4. Identify the key people to work with you as employees, partners, or consultants. 5. Establish business relationships with your customers, suppliers, or distributors. 6. Create an operational template for the successful management of your business. “In today's competitive business environment, a well thought out business plan is more important than ever before. Not only can it assist you in raising the money needed to start or expand a business-by attracting the interest of potential investors-but it can also help you keep tabs on your progress once the business is up and running (Ford, Bornstein, Pruitt, Ernst & Young LLP, 2010).” “The business plan is the product of a strategic thinking or planning process. The strategic direction developed in that process can then be communicated in the form of a business plan to lenders, potential investors and associates within your company. The development of a strategic direction is a critical step for your company. It allows your business to leverage the knowledge and competence of its management team, staff and advisors to develop a strategic direction for the organization that will lead to its best chance for success. This gives you an opportunity to use the advising team you have put together (Nunn & McGuire, 2010).” The business plan should also address questions that are formulated when that opportunity is identified and an idea is formulated due to a need or niche being filled. Not only are these asked by the entrepreneur, but will also be asked by potential investors and financial institutions. The business plan will prove invaluable in clarifying what the venture’s goals are. These same questions could be asked on an annual basis to ensure that the venture remains ready for future opportunities. Typical questions addressed by a business plan for a start-up venture are (Cayenne Consultng LLC Ten Big Questions, 2015): · What problem does the company's product or service solve? What niche will it fill? · What is the company's solution to the problem? · its Who are the company's customers, and how will the company market and sell products to them? · What is the size of the market for this solution? · What is the business model for the business (how will it make money)? · Who are the competitors and how will the company maintain a competitive advantage? · How does the company plan to manage its operations as it grows? · Who will run the company and what makes them qualified to do so? · What are the risks and threats confronting the business, and what can be done to mitigate them? · What are the company's capital and resource requirements? · What are the company's historical and projected financial statements? Elements of a Business Plan. Parts of a Business Plan: 7 Essential Sections (2009) reveals that this process can be daunting, but important, “The task can seem overwhelming, but writing a business plan is an important step in helping your company launch, grow, and thrive. Business plans provide vision and a clear strategy. They’re also critical for businesses seeking funding. But where should you start, and what should you include? Like most daunting projects, drafting a business plan is best done step by step. While plans vary as much as businesses do, here's a summary of the seven main sections of a business plan and what each should include. 1. Executive Summary: The first section should be a concise overview of your business plan. It should be short, and must be well written. Your goal is to draw readers in so they want to learn more about your company. Though this section appears first, consider writing it last, after you've worked out the details of your plan and can summarize your thoughts succinctly and accurately. The executive summary for a business plan should include: · Your business name and location · Products and/or services offered · Mission and vision statements · The specific purpose of the plan (to secure investors, set strategies, etc.) 2. Company Description: This high-level view of your business should explain who you are, how you operate and what your goals are. The company description should feature: · The legal structure of your business (corporation, sole proprietorship, etc.) · A brief history, the nature of your business, and the needs or demands you plan to supply · An overview of your products/services, customers, and suppliers · A summary of company growth, including financial or market highlights · A summary of your short- and long-term business goals, and how you plan to make a profit 3. Products and Services: Clearly describe what you’re selling, with a focus on customer benefits. Include details about suppliers, product or service costs, and the net revenue expected from the sale of those products or services. Consider adding pictures or diagrams. In general, this section should include: · A detailed description of your product/service that emphasizes customer benefits · An explanation of the market role of your product/service and advantages it has over competitors · Information about the product/service's life cycle · Relevant copyright, patent, or trade secret data · Research and development activities that may lead to new products and services 4. Market analysis: Show your industry knowledge, and present conclusions based on thorough market research. Place detailed findings of any studies in an appendix. Your market analysis should include: · A sketch of targeted customer segments, including size and demographics of each group · An industry description and outlook, including statistics · Historical, current and projected marketing data for your product/services · A detailed evaluation of your competitors, highlighting their strengths and weaknesses 5. Strategy and Implementation: Summarize your sales and marketing strategy, and how you’ll implement them with an operating plan. This section should include: · An explanation of how you’ll promote your business to customers and enter the market · Details about costs, pricing, promotions, and distribution/logistics · An explanation of how the company will function, including the operations cycle (from acquisition of supplies through production to delivery) · Information on sources of labor and number of employees · Data on operating hours and facilities 6. Organization and Management Team: Outline your company's organizational structure. Identify the owners, management team and board of directors. Include the following: · An organizational chart with descriptions of departments and key employees · Information about owners, including their names, percentage of ownership, extent of involvement within the company and a biography listing their background and skills · Profiles of your management team, including their names, positions, main responsibilities and past experience 7.Financial plan and projections: This last section of your business plan should be developed with a professional accountant after you've completed a market analysis and set goals for your company. Some of the important financial statements that should be part of your plan include: · Historical financial data (if you own an established business), including income statements, balance sheets and cash flow statements for the past three to five years · Realistic prospective financial information, including forecasted income statements, balance sheets, cash flow statements and capital expenditure budgets for the next five years · A brief analysis of your financial data, featuring a ratio and trend analysis for all financial statements.” A business plan needs to have structure. While it should tell a clear and compelling story, that narrative needs structure to flow and take logical steps to allow the potential investor or financial institution to an affirmative decision (Harvard Business School, 2007). This structure should include the following in order: · cover page and table of contents · executive summary · mission statement · business description · business environment analysis · SWOT analysis · industry background · competitor analysis · market analysis · marketing plan · operations plan · management summary · financial plan · attachments and milestones Goals of an Effective Business Plan. Goals are those elements that a venture strives to achieve. These can also mark as milestones in a company’s evolution and enable a company to accurately measure its progress and growth. Examples of business goals are (Hofstrand, 2016): · Increase profit margin · Increase efficiency · Capture a bigger market share · Provide better customer service · Improve employee training · Reduce carbon emissions Along with identifying goals, a venture should understand that goals also need to meet certain requirements. These goal requirements will help the venture to recognize if the goals are aligned with the mission, vision and value statements that are the foundation of the company’s principles and philosophies. These goals should be (Harvard Business School, 2007): · Understandable: Is it stated simply and easy to understand? · Suitable: Does it assist in implementing a strategy of how the mission will achieve the vision? · Acceptable: Does it fit with the values of the organization and its members/employees? · Flexible: Can it be adapted and changed as needed? After the Business Plan. Leonard (n. d.) states, “You’ve written out your business plan. Congratulations. Maybe it’s really detailed. It could be full of optimistic financial forecasts for the next two years. Or perhaps you’ve used the Lean Canvas method and intend to fly by the seat of your pants. Regardless, at this point, your business plan is all theory and pie in the sky. The onus is now on you to make it actionable. Your business plan should not be static. Your business plan should be a working document that you can follow, edit, and change as required.” References Cayenne Consultng LLC Ten Big Questions (PDF). Cayenne Consultng LLC. 2015-03-28. Creating a Business Plan: Expert Solutions to Everyday Challenges. United States: Harvard Business School. 2007. p. 7. ISBN 1422118851. Hofstrand, D., (2016), Vision and Mission Statements -- a Roadmap of Where You Want to Go and How to Get There. Retrieved, March 7th, 2019, from: https://www.extension.iastate.edu/agdm/wholefarm/html/c5-09.html Leonard, R., (n.d,), 5 Things To Do After You Write Your Business Plan, Retrieved, March 7th, 2019, from: https://www.savvysme.com.au/article/7151-5-things-to-do-after-you-write- your-business-plan Nunn, L., & McGuire, B. (2010). The Importance Of A Good Business Plan. Journal of Business & Economics Research (JBER), 8(2). https://doi.org/10.19030/jber.v8i2.677 Rogoff, E. G. (2007). Bankable Business Plans (Vol. 2nd ed). New York, NY: Rowhouse Publishing. The Ernst & Young Business Plan Guide (2010). Brian R. Ford, Jay M. Bornstein, Patrick T. Pruitt, Ernst & Young LLP, John Wiley & Sons, Dec 15, 2010 - Business & Economics - 256 pages
Purchase answer to see full attachment