An effective and well defined executive summary can be the key to securing funding from a bank or outside investor. See what needs to be included and what the best way to approach writing your summary is.

What is an executive summary?

An executive summary is a brief introduction and summary of your business plan. It should describe your business, the problem that it solves, your target market, and financial highlights.

A good executive summary grabs your reader’s attention and lets them know what it is you do and why they should read the rest of your business plan or proposal. It’s not unusual for investors to make an initial decision just based on reading an executive summary, so it’s important to get it right. We’ll show you how to write an executive summary that sets your business plan apart from the rest.

Is an executive summary necessary?

Are you writing a business plan to show to investors or bankers? Then you need a good executive summary. Many people will read only the summary, no matter what. Others will read the summary first to decide whether or not they read the rest of the plan. The executive summary is essential in plans that are being written for outsiders. 

Now if you’re writing a business plan solely for internal use you may not need to write out an executive summary. However, there are some internal plans ––such as an annual operations plan or a strategic plan—that can use a summary to highlight necessary information and showcase a digestible version of the overall plan.

It takes some effort to do a good summary, so if you don’t have a business use for the summary, don’t do it. 

How long should an executive summary be?

The general rule of thumb is that executive summaries should be as short as possible. Your audience has limited time and attention and they want to get the details of your business plan as quickly as possible.

Try to keep your executive summary under 2 pages if possible, although it can be longer if absolutely necessary. 

You might even be able to write it on one page using a Lean Plan format. You can learn more about that one-page business plan format and download a template here.

1. A description of your product or service 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 for customers or an opportunity in the market.

2. A description of your target market

Your target market is who you think your customers will be. Sometimes the product name 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—your primary audience, or the people you think will spend money on your solution will suffice.

3. Competition

Assuming your business has competition (every business does!), then briefly describe how your business will differentiate itself. Are you competing on price, quality, or something else? Briefly describe what makes your business different here.

4. Financial Overview

If you’re an existing company, this might be as simple as highlighting recent annual sales and growth over the last year. For a startup, it might be a brief description of aspirations, such as a sales forecast 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.

5. Your Team

This is especially important for startup companies. Investors want to know who is behind the business idea and why you and your team are the right people to build the business. It also may be valuable to highlight any gaps in your team and how you intend to fill them. If you have potential partners or candidates in mind, briefly mention them and expand on their qualifications within your full business plan.

6. Funding Needs

If you are using your business plan to raise money for your business, your executive summary should highlight how much money you are looking for. Investors will want to know this upfront and not have to dig through a business plan to find this detail.

Other topics your executive summary may need to cover

Evidence of early success

If you are a young startup and you’re writing a business plan to raise money, you will want to include evidence of “traction” in your executive summary. This can include results from consumer surveys, pre-order numbers for your product/service or even early sales numbers if you did a soft open or limited time release. It doesn’t have to be much, but any early success provides proof that your business model, product/service and market research are well-founded.

Future Milestones

You may also want to discuss future milestones that your business hopes to achieve. This is particularly important for businesses within a highly saturated or complex industry, such as medical device manufacturers and drug companies, for example. They need to explain where they are in the process of getting regulatory approvals and what steps remain.

Evidence of Financial Stability

If you’re seeking a bank loan, bankers will be looking for evidence of your financial stability, including your net worth, assets, and financial history. Read on for tips on writing an executive summary for each of those scenarios.

Tips for writing an executive summary for investors

Before you develop your executive summary for seeking investment, understand how it fits into your business plan. The executive summary can be the first section of your business plan, or you might be developing a stand-alone executive summary that you plan on handing out without the rest of the plan.

My views on this are taken from eight years as an active member in an angel investment group, and more than 10 actual angel investments, plus membership in the Angel Capital Association.

Investors use executive summaries to screen opportunities

A well-prepared executive summary is useful for angel investment platforms like Gust, AngelList, and others to gauge interest in candidates. Introductions lead to requests for email summaries, not full business plans, so you’ll want to have an executive summary ready to go that causes investors to want to see the full thing.

Investors need the full business plan to complete due diligence when reviewing candidates

We’ve never invested in a business that didn’t have a business plan and your executive summary is the key to having your business plan reviewed. The full reading of the complete business plan comes only later in the process after we’ve screened summaries down to a very few that are interesting enough to do due diligence. 

Of the group I work with, for example, three-fourths of us will read every executive summary submitted to us. All of us will read summaries for plans that pique group interest, and half of us will look at the rest of the plan only if we are still interested after reading the summary.

Mention previous startup experience, or specific industry expertise

Let the investors know about any previous startup experience or specializations from the start because this makes a huge difference. Investors often say “bet on the jockey, not just the horse.” Keep it brief, just a reference to more information to come later, but make sure you’re able to back up your claims later on.

Outline how much money you intend to raise and how it will be spent

It’s a summary, so details will come later, but investors want to know quickly whether your startup is in their normal range of interest and the use of funds makes a difference, too. Spending to build inventory for existing orders, for example, is way less risky than spending to develop a product that is in design and prototyping. 

Valuation, in this context, is controversial. Valuation is what you say your company is worth, a number that determines how much ownership you give away for investment. Some investors want summaries to specify how much money at what valuation; others want to assign the valuation themselves and don’t like startups pushing their number too early.

Mention your exit strategy

Leave the details for later, but investors want to know that you understand they don’t make money unless you achieve an exit in a few years so they can sell shares to get their return. Too many founders think investors just want them to be successful, when in fact that means very little without an eventual exit.

Be persuasive, but focus on the facts

You want to make your prospective investor want to keep reading; convince them to invest in your startup. But do understand that the persuasion is in the facts, not in the wording. What keeps them interested is the content of the summary, not the tone. Facts that prove traction, potential market, or startup experience are infinitely more powerful than mere assertions of excellence.

Avoid obvious clichés

There are severely obvious pitfalls that you can fall into if you’re not careful. For example, never mention the team’s passion or commitment—they all have that, so it’s irrelevant. If you say that your startup is disruptive, or game-changing, or the next Facebook or whatever, you lose. Instead, show that with facts and let the investors say it, not you.

Tips for writing an executive summary for a bank loan

Contrary to the common misconception, bankers don’t ever take risks on business plans. To get bankers to read on, the executive summary has to cover the six main points suggested in the beginning of this article, plus a few selected other points that highlight stability, assets on the balance sheet, and financial history, showing that the loan is not risky. With one notable exception, banking law forbids banks lending money to businesses that don’t have enough assets to cover the full value of the loan, and then some. That’s against banking regulations.

Good professional bankers ask for a business plan as part of a loan application because they legitimately want to know and understand your business, but they don’t take risks. This summary isn’t about persuading or selling, but rather reassuring and describing.

So what works for the executive summary for bankers is quite different from what works for the summary for investors.

Outline your personal net worth

Where investors want to see management team startup experience, bankers want to see the personal net worth of business owners. The more collateral, savings or other investment you have available, the more likely you are to secure the loan.

Be transparent about your financial history and bankable assets

Where investors want to see future potential growth, bankers want to see past financial history and bankable assets. Try to have every piece of financial information about yourself, current investors and any past businesses available upfront.

Give evidence of your potential stability and longevity

Where investors want to look at possible exits, bankers want their commercial borrowers to offer future stability. You don’t need to have exact numbers, but developing a financial forecast that defines growth, future cash flow, costs and sales over the next 1-3 years can serve as evidence for stability.

Risk exception for bank loans

I mentioned one notable exception to the rule that bankers don’t take risks. In the U.S., the federal Small Business Administration (SBA) has programs that work with local business banks to guarantee some of the riskier small business loans to make borrowed money available to startups and small businesses. 

Like traditional bank loans, SBA loans require a solid traditional business plan that includes a good executive summary covering the five main points suggested in the first list above. It will still benefit you to have the financial stability elements laid out as you would for a bank, but the limitations may be less strict and provide more room for riskier businesses to gain funding.

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6 Tips for writing an effective executive summary

No matter why you’re writing your executive summary, there are some general rules of thumb that make it easier, and ultimately more effective. Here are a few to keep in mind as you get started:

1. Think of an executive summary as a pitch

Think of an executive summary as being a lot like an elevator 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.

2. Write it last

Don’t start writing your business plan with your summary. 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.

3. Keep your executive summary short

Be brief and concise. 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.

4. Keep it simple

Form follows function, so don’t over complicate or over-explain things in your summary. 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 a welcome addition.

5. Prioritize sections based on importance and strengths

Don’t bury the lead. Organize your executive summary so that the most important information appears first. There is no set order of appearance of the different key items included, quite the contrary, in fact— so 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 that tees up the solution in your business.

6. Use it for your summary memo

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.

It might be a short document, often attached to an email, or simply a summary in an email. You can also use it again to fill in startup profiles on investment platforms such as Gust and AngelList or to apply for an incubator or a business plan competition.

Download a template for your executive summary

If you’d like to start with a template, consider using a Lean Plan for your executive summary. It’s available as a free download here on Bplans, and it covers everything you might want to include.

View hundreds of executive summary examples

Take advantage of Bplans’ more than 500 examples of good business plans—all available online for free—to search for the sample plan that best fits your business’s profile, and then use that plan’s free example executive summary as a guide to help you through the process of writing your own.

More business planning resources

  • Sample business plans: Over 500 free sample business plans from various industries.
  • Business plan template: This fill-in-the-blank business plan template is in the format preferred by banks and the U.S. Small Business Administration (SBA).
  • How to start a business: An easy-to-follow guide with everything you need for starting a new business.
  • LivePlan: Easy, cloud-based business planning software for everyone. This online software includes expert advice, built-in help, and more than 500 complete sample business plans.

Business planning shouldn't be complicated. Plan, fund and grow your business with a simple, all-in-one platform. Get LivePlan.

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Tim BerryTim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.