Executive Summary

Executive Summary

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The executive summary is arguably the most important section of the business plan. It must be concise, specific, and well-written. It
summarizes the highlights of the completed business plan and provides a brief snapshot of the plan, with sales, spending, and profit
summary figures. The summary emphasizes those factors that will make the business a success. It must contain sound numbers
for market size, trends, company goals, spending, return on investment, capital expenditures, and funding required.

For new businesses or businesses seeking funding, credibility and excitement are key elements of the executive summary. Venture
capitalists receive hundreds of plans each month, and just a few are actually being read from cover to cover. A quick 20-second scan
of the executive summary is the basis for screening which plans to read and which companies to interview for investment. When the
plan is the vehicle used to attract financing or investment, the executive summary should make it clear to the reader who is a
potential source of funds why this is a sound investment.

Business Background

The business background section of your business plan generally consists of two to four sections that present information that is
specific to your business. You may have gathered substantial information about competitors and the industry in general in the
course of considering your business plans. This is not the place for that information. Instead, concentrate solely on those
characteristics of your business that are specific to your particular business.

The business background generally includes the following:

a document describing the business entity and its general operation
a document describing the product or service that your business will provide
a document describing your facilities, if appropriate
a document describing the people in your organization, if appropriate


The Business Entity

The business entity portion of the plan provides information that is specific to your business. This document sets forth the current
status of operations, the management structure and organization, and the identification of key personnel. If the plan is being created
for an existing business, historical information is also included. The business background provides the reader with information
regarding:

the type of business (e.g., wholesale, retail, manufacturing, service, etc.)
type of legal entity (e.g., corporation, partnership, sole proprietorship, etc.)
when the business was established
where it is located
the type of facilities, if any (e.g., retail establishment, manufacturing plant, etc.), although you may need to devote a separate

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section to this subject if your facilities are very important to your business
the number and type of employees
the organizational structure (table of organization showing who is responsible for what)
operational information, such as a schedule of the hours the business is open
identity of key employees, including a description of their abilities that make them vital to the success of the business. You
may decide to devote a separate section to employees, if you think they are key to your success.

The information provided should go beyond a simple statement of facts. For example, if you chose to incorporate rather than to
operate as a sole proprietor, what factors influenced your decision? Explaining why a particular decision was made goes a long way
in helping the reader understand your decision-making process.


Don't forget yourself when you think about key employees, particularly if you're starting a new
business. You need to present your educational background and prior business experience in a
way that establishes your ability to succeed. While you probably won't include a copy of your
resume, much of the information that appears on your resume will appear in the plan. Don't be
afraid to present yourself in the most favorable light that you can honestly and objectively
portray.



The business background is also the place to identify the goals and objectives of the business by explaining in general terms what
business you are in or want to be in. How is it unique and why will your goods or services appeal to customers? This requires
consideration of competitors who are appealing to the same customers. Why will customers prefer your business to theirs?

Note that startup businesses face a special challenge when drafting the business background. In the absence of an existing
business, the background will be couched in terms of what the business will do, not what it has done. This makes it even more
important to have a clear picture in mind of how your business will look and operate once it's up and running. When you have a track
record, it's easy to point at the results you've achieved as an indication of your potential for success. Without any history, you'll have
to work a little harder to make sure that you've developed, and presented, a realistic idea of what it will take to make your business
work.

Product or Service Description

If you have reached the point where you are trying to write a description of what it is that your business actually does or sells, you've
probably been thinking about your product or service for quite some time. Now is the time to take a step back and reflect. Because
of your familiarity with the idea (after all, it is your idea), you will have to consciously avoid giving it short shrift in your plan. Don't
provide needless detail, but remember that the product or service idea you have hasn't been kicking around in the heads of the
people who might read your plan. You may have to set the stage a little bit to make sure that a reader understands exactly what
your product or service is.

The starting point is a clear and simple statement of what the product is or what service your business will provide. Avoid the
temptation to compare your offering to similar services or products offered by others. Reserve that analysis for the marketing plan,
where you will discuss competitors and potential competitors.

Instead, focus on those factors that make your offering unique and preferable to customers. Explain what it does, how it works, how
long it lasts, what options are available, etc. Of particular importance is whether you are selling a stand alone product (e.g., lunch) or
a product that must be used with other products (e.g., computer software or peripheral devices). Be sure to describe the
requirements for any associated products (especially vital for software). And, if there are special requirements for successful use or
sale, say so.

Another issue to consider is whether you hope to sell items on a one-time or infrequent basis or whether repeat sales are the goal. If
you're opening a bakery or restaurant, you're going to count on the same customers returning on a regular basis. But a heating
contractor installing a new furnace or a consultant helping to implement a new order processing system probably isn't going to do
that for the same client again any time soon (we hope!). A similar issue is how long the product or service will last and whether you
intend to upgrade or supersede the product or service at some point in the future.

A useful way to present some product or service information is to create a features/benefits analysis. A feature is a specific product
attribute or characteristic. A benefit is the advantage a customer or user will derive from the product feature. Consider the following
table, which illustrates this type of analysis for a theoretical high-tech wrist watch:

Auto-Watch Features and Benefits Analysis
Feature
Benefit
battery has an indefinite life - recharges whenever watch is
exposed to light
consumer doesn't have to deal with time, inconvenience, and
expense of periodic battery replacement
time signal from National Institute of Standards and
Technology updates time automatically by radio
consumer never has to set the time and can rely on near
absolute accuracy
dial lights up at night when looked at
consumer doesn't have to use two hands to see time in dark
receives global positioning satellite signals and uses to
determine time zone
consumer doesn't have to adjust watch while traveling


Timing is also an issue. Be realistic about the time it will take to develop the product or service. For example, if you're writing the
plan while the first prototype is being built, provide a timetable for completion of development and estimate how long testing will take
before production in commercial quantities can begin. Timing issues are also addressed in the financial projections that you prepare
and in the market plan you create. Both of those analyses, however, rest on the product or service being available on schedule.

Business Facility Assessment

There are a number of issues you should address in your business plan regarding the choice of a facility. Not surprisingly, the most
important consideration is usually one of location. The first question to address is why you need a business facility. At one extreme,
a consultant may perform most services in space provided by clients. That consultant may not need a facility at all and may
maintain a small home office to store reference materials and business records. At the other extreme, a manufacturing business
may require, for example, access to rail transport, room for manufacturing operations and storage, parking facilities for a lot of
employees, etc.

Once you have assessed your facility requirements, you'll also want to look at the cost. There are numerous factors, some unrelated
to your business, that will figure into your planning. For example, you may be faced with the choice of leasing property or buying it
outright. The trends in the local real estate market could have a big impact on your decision. If real estate prices are rising quickly,
buying may provide some protection from the risk of escalating rent and afford a way to mitigate losses if the business doesn't work
out.
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