Summary . . .
refers to a synopsis of the key points of a business
plan. Sometimes referred to as an executive summary, it appears at the
beginning of a business plan and highlights certain aspects of the
company’s proposal that are particularly important to prospective
investors. It is one of the most important parts of a business plan.
The importance of the summary can be illustrated by a
simple fact: Few venture capitalists will spend more than five or ten
minutes on a business plan before deciding whether they are interested
enough to study it seriously. The two portions of the business plan
most venture capitalists focus on during this critical first reading
are the summary and the financial information (projections). If the
summary does not heighten their interest, few investors will turn to
the financials or consider the company further.
Because of its importance in getting investors to
investigate further, the summary should be prepared with particular
care. It should be short (two to four pages is ideal), concise,
descriptive, well organized, and enticing.
A lot to ask of a summary? Maybe, but while no
professional investor is likely to invest in a company on the basis of
two pages of reading, many will decide against investing just that
quickly. To ensure that the potential investor does not discard the
company’s business plan after reading only the summary, the plan
writer should be sure it provides the investor with the right
information about the company.
An effective summary should include the following
. Give the name,
address, and telephone number of the company. The name of the
person the investor should contact and how he or she may be
reached should be prominently displayed.
Company identity and contact
. A short description
of the company’s business should be given here. How did it get
started? What is its market niche, and why will it succeed?
Business of the company
What are the strengths of the
company’s key management personnel? A short itemization of the
relevant accomplishments of key management members should be
. This paragraph should contain a
short description of the company’s product and what makes it
unique. A brief analysis of the company’s competition and why
management believes its product will succeed in the marketplace
should also be included.
. How much money does the
company need? Does management have any preference as to equity
versus debt? If the funds are requested on a staged basis, this
should also be set forth. If there is collateral available, it
should be described.
. How the company plans to use the
funds should be detailed here.
Use of funds
. A short financial history
of the company should be provided here. This can be done in a
narrative or in a chart listing four or five key figures such as
revenues, income or loss, assets, liabilities, and net worth for
each year of the company’s operation.
. This section should contain a
summary of the key elements of the company’s projections for the
next three to five years.
. Any plans the company has to go public
or to provide the investor with other exits in the next three to
five years should be spelled out. The investor wants to know how
he will get his money out.
Plan, Business Plan Format,