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Definition: A nontechnical summary statement at the beginning of a business plan that's designed to encapsulate your reason for writing the plan .
Anyone looking at your business plan will first want to know what kind of business you're starting or already have. So the executive summary, or statement of purpose, should succinctly encapsulate your reason for writing the business plan. It needs to tell the reader what you want and why, right up front.
Because it's the first thing the reader of your business plan sees, it must make an immediate impact by clearly stating the nature of the business and, if you're seeking capital, the type of financing you want. Are you looking for a $10,000 loan to remodel and refurbish your factory? A loan of $25,000 to expand your product line or buy new equipment? Would you like to find a partner to whom you'd sell 25 percent of the business? What's in it for him or her? The questions that pertain to your situation should be addressed here clearly and succinctly.
Your executive summary should be short and businesslike--generally between half a page and one page, depending on how complicated the business or use of funds is. It should touch on the following key elements:
- Your business, its product, the market it serves and its competitive advantage
- Your business's legal form of operation (sole proprietorship, partnership, corporation or limited liability company), when it was founded, the principal owners and key personnel
- Major achievements, which would be anything noteworthy, such as patents, prototypes, important contracts regarding product development, or results from test marketing that have been conducted
- If you're looking for funding, include the amount and purpose of the loan requested, the repayment schedule, the borrower's equity share, and the debt-to-equity ratio after the loan, security or collateral is offered.
- The company's current market value, estimated value or price quotes for any equipment you plan to purchase with the loan proceeds.