Essential Elements of an Executive Summary

The majority of entrepreneurs trying to raise capital for their business fail because they do not present a potential investor with a clear, concise, well thought-out Executive Summary. A typical business plan is too long and detailed for most investors who typically will not take the time to read it through. The Executive Summary is short and gets quickly to the essential information required for an investor to make a decision.


The following elements should comprise approximately 3 to 5 pages using 12 point Times New Roman, Arial or other business type face for easy reading.


* What

Description of the project, product or service. What makes it unique and highly salable to the targeted end-user? This element should be written with enthusiasm! If you don't get the investor excited here, the rest of the Executive Summary may not be read.


* Where

The location for the project including what is special about the location.


* Who

The people and companies behind the project. Demonstrate their capacity to deliver (what have they done before). Show how they are compensated; from money they invest, for services they perform or goods they supply, or for resources they provide.


* Why

The Market Dynamics that will create a successful venture (description and quantification of factors creating demand). Include independent market research sources used.


* How and How Much

Business Model showing how and how much profit is generated. This should be a summary of the key numbers developed in an Excel type spreadsheet model. Show the key resources that make it possible including: intellectual property like patents, copyrights, trademarks, trade secrets, proprietary know-how, brand identification, franchises, and licenses. Don't overlook unique resources like political connections and industry insiders.


* Investor Opportunity

State the amount of funding sought; the use of proceeds (what will investment money be used for i.e. what will it buy); to what stage will the investment take the project (if not to completion, what happens next). Explain how the investment is structured including type of participation. If equity, is it common or preferred. If cash-on-cash return, explain the Return on Investment (ROI). If debt, explain the annual percentage return and whether or not you are offering an equity "kicker." State how long the investor's money is tied up. Spell out the repayment method and duration. Make sure the investor is clear on their rate of return per annum and for the entire period they are committed.


Refer to a fully detailed month-by-month spreadsheet showing:  income by source & total; expenses by category & total; net profit or loss per period; month of breakeven; months with amounts of payments to investor; month of return of principal; month of return of full profit; when and how the investor exits (show how and when they get out of the project with their principal and profit)


* The Key

I can hear you now. You have already done all this and they all still said no.


Well that's because you did not include the key. In today's economic environment, investors are less concerned about a return on their principal than they are about the return of their principal. Today's investors want to know how you are going to minimize if not altogether eliminate their risk. If you do not have a good answer here, you should forget about raising capital until the bull market euphoria returns sometime after the next half dozen years.


The new environment calls for credit enhancements and over collateralization for loans, claw back concessions from sellers, and there is no substitute for a plan that has thought through every contingency and provides a stop loss.


* The Summary

If you had hard-earned money to invest, exactly what do you need to hear, see and feel before you would rent that money out to a friend, associate or perfect stranger? Realistically what would you want in return to minimize and justify the risk?

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Gordon Bizar

Gordon Bizar - Expert Business Buyer and Finance Coach Gordon simplifies business purchasing and financing. He makes understandable the use of financial leverage to start, buy or build any business with little or none of your own cash. His unique expertise and success track record has led to his appearances on NBC's Today Show, PBS's Late Night America along with segments on more than 120 other radio and TV news and talk shows. He has been featured in articles in more than 25 of the nation’s leading newspapers including the Los Angeles Times, New York Times, and Wall Street Journal. Gordon personally bought and built companies in fields as diverse as manufacturing, financial services and business education. He also served as Chairman of the California Task Force on Taxation and Regulation of Small Business during the Brown administration and is sought after as a consultant by businesses large and small and government agencies such as NASA for their technology transfer program.

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