How to Write a Business Plan Executive Summary Ebook


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How to Write a Business Plan Executive Summary Ebook

  1. 1. By: Adam Hoeksema
  2. 2. Please pass the guide around to any and every entrepreneur that might benefit! The ExecutivePlan philosophy is free information so feel free to include the ebook on your website to give to yourvisitors or email to your friends. The only thing that I ask is that you do not re-sell this ebook. It is meant to helpentrepreneurs so please distribute freely.
  3. 3. IntroductionFamous venture capitalist Guy Kawasaki said in hisbook, The Art of the Start, “Of the effort you put intowrite a business plan, 80 percent should go into theexecutive summary. These are the most importantparagraphs of your organization’s existence.”There you have it. Right from the mouth of one ofthe most influential and accomplished venturecapitalists in the world. Your executive summary willmake or break your capital raising efforts. That iswhy this book is so incredibly important. But beforewe jump in, I want to tell you a little bit about mybackground and my company, ExecutivePlan.In the spring of 2007 as a college undergraduate, I entered the Taylor University Business PlanCompetition. I had never written a business plan before and had little entrepreneurialexperience; so naturally, I set out to find resources to help me write a business plan executivesummary for the first round of the competition. Surprisingly, I only found a handful of articlesand videos that explained the purpose and the process of writing an executive summary.What I found instead were 1,000s of business plan executive summary templates. I wasconfused because the templates were all the same. I thought the purpose of an executivesummary was to stand out from the crowd.Over the past 3 years I have developed the belief that it is the basic principles of your executivesummary that will make it successful -- not only the way it is formatted. So in July of 2010, I setout to write, produce, and promote the most comprehensive materials on the market forbusiness plan executive summary writing.Only a few short months into this process I became recognized as one of the leading authoritiesin business plan executive summary writing around the world. It has been an incrediblejourney so far. I love working with entrepreneurs as they seek to raise capitalthrough investment, loans, and grants. I also love collaborating in the innovationthat entrepreneurs around the world create. I hope that the following pages provide immensevalue to you in your capital raising process.Sincerely,Adam HoeksemaFounder & CEO –
  4. 4. Table of ContentsThe Capital Raising Process Prescreening Screening Due Diligence Commit Capital RoundHow to Write an Executive Summary What Not to Do What to DoAudience Friends and Family Bankers Angel Investors Venture CapitalistsExecutive Summary Resources Executive Summary Templates Executive Summary Review ServiceAbout ExecutivePlanThank You!
  5. 5. The Capital Raising ProcessAccording to the United States Small Business Administration there were approximately 27.5million U.S. small businesses in 2009. This means that at any given time there are millions ofsmall business owners seeking to raise capital. There are numerous sources of capital forentrepreneurs including: • Friends and Family • Bankers • Angel Investors • Venture CapitalistsThe capital raising process is similar no matter who you are requesting capital from. The basicprocess will look something like this: • Prescreening • Screening • Due Diligence • Capital CommitmentOf course each capital source will be different, but we can learn the principles involved bypicking apart each stage of the process. My expertise is in executive summaries, so the bulkof this eBook will focus on the first stage of the capital raising process. I choose to focus onthe prescreening round because I believe that once an entrepreneur makes it through thatfirst impression with a potential investor or banker, the strength of their personality,experience, and the business opportunity will take over. I cant teach you how to have amore likeable personality, I cant change your experience, and I cant start a business for you,but what I can do is help you create a more powerful, effective, and memorable firstimpression on any VIP.According to the Angel Capital Education Foundationreport titled, Important Things for Entrepreneurs toKnow About Angel Investors, approximately 75% ofangel investor applicants are denied funding in theprescreening round. This means that 3 out of 4entrepreneurs applying for angel investment may bedenied before ever meeting the potential investor!
  6. 6. PrescreeningPrescreening is essentially your first encounter with the investor or banker – your firstimpression. Remember, you only get one first impression so make it count. There are basicallytwo ways in which you are likely to make an initial connection: • Elevator Pitch • Executive SummaryThe Elevator PitchBecause an elevator pitch is simply your verbal executive summary I want to start by spendingsome time perfecting your elevator pitch.An elevator pitch is not: An elevator pitch is:• A sales pitch • Practiced and perfected• A presentation • Clear and concise• Any longer than one minute • Includes a call to action or a next step• Unplanned • Intriguing• Only informational • An answer to the question, “What do you do?” Make sure to download our Free Elevator Pitch Example. An elevator pitch is just what it sounds like, if you stepped on to an elevator with a potential investor and knew that you had 7 floors before he got off, what would you tell him about your business? These “elevator opportunities” happen everyday when someone asks, “So what do you do?” Obviously not every person you speak with is a potential investor, so you might tweak your pitch a little bit, but ultimately you need 200 to 300 words that you can recite on command when the opportunity presents itself. Here are a few guidelines as you create your elevator pitch:
  7. 7. The GrabJust like your executive summary needs something to immediately grab the attention of thereader, your elevator pitch should start with a statement that intrigues your audience. Maybe itis simply the name of a partner, customer, or team member that elicits interest by the namealone.Big ProblemCreatively and quickly state the problem that your company seeks to address. For example,businesses hate to constantly replace the ink cartridge for their printer.Unique Solution - Explain your unique solution to the big problem. Do this quickly. For example,if your company developed a new chemistry based nano-technology ink cartridge, don’t worryabout the details of the chemistry, simply explain the results. “You can print twice as much forthe same price as traditional ink cartridges.” Vision You explained your solution to the problem you are addressing, now let them know your vision. Again keep it simple. For example, “We seek to develop and commercialize the best products in the ink cartridge industry.” Letting your audience know your vision is vital. To your surprise they might be able and willing to help.Request - Finally you need to requestsomething. Don’t just say, “nice to meetyou.” Maybe you can ask for their businesscard, a time to meet with them again, or anintroduction to another VIP that you wouldlike to network with. Make sure to visit
  8. 8. If you want to see hundreds of great examples of elevator pitches check out an incredible newwebsite called The concept is simple, create a short 1 to 2 minute video elevatorpitch of your company and upload it onto the site. You will then create a profile for your businessthat investors will be able to review and then contact you if they are interested in learning more.Currently, it is free to become a member of the site. If you dont want to go to the hassle ofcreating your own video, you should at least check out the website and watch some of the othersuccessful entrepreneurs pitch their business.As you work on your elevator pitch, keep in mind that this will be your first impression; thereforeyou need to be ready to give a powerful and memorable pitch to anyone who asks. Practice.Practice. Practice. Surprisingly, the more you practice the more natural it will sound. Awesome Startup Tip #1 Did you know that you can submit your startup to various blogs and websites where they will review your new startup for free and provide publicity and press Recently I started my own Submit your Startup coverage for your startup. There is an website. Each week I pick one startup to feature incredible website, Submit Startup that on my widely read blog. Make sure to submit a provides an extensive listing of all of the link to your website and a few sentences aboutblogs, websites, ezines, etc. that allow you your company at Submit your Startup to to submit your startup for a free review. ExecutivePlan
  9. 9. The Executive SummaryFinally, we can get into the meat of the book. Your executive summary will make or break youropportunity to raise capital. As I mentioned at the beginning of the book, famous venturecapitalist Guy Kawasaki said in his book, The Art of the Start, “Of the effort you put into write abusiness plan, 80 percent should go into the executive summary. These are the most importantparagraphs of your organization’s existence.”The most important paragraphs of your organization’s existence? Wow! Those are strongwords, but I believe they are warranted. Lets start by looking at a couple of reasons why yourexecutive summary is so important.1. It may be the only thing a banker or potential investor ever reads2. Again it serves as your first impression3. It sets the tone for your entire business plan4. It is the difference between securing a meeting with investors and being denied funding5. It is the key to the multi-billion dollar small business financing industryNow that you understand how incredibly important your executive summary is, lets take a lookat the basic structure and outline of a strong executive summary. Awesome Startup Tip #2 Did you know that you can get access to hundreds of free business tools at Business Toolkit You can utilize tools to help your startup including: • Financial Statement Templates • Sample Contract Agreements • Government Contracting Forms • Franchise Agreement Forms • 90 Day Startup Cash Flow Needs Tool • Federal and State Tax Forms • And Much Much More!
  10. 10. Executive Summary StructureYou have 2 pages – just 2 pages to intrigue your readers and leave them begging for more. Asuccessful Executive Summary is so much more than just a summary... In fact if you arestarting with the intent to summarize your document, you are setting yourself up for failure. Consider a movie preview. A successful movie preview will grab your attention quickly, and in just 2 or 3 minutes leave you so intrigued that you just have to watch the movie. Notice that a movie preview is not a summary of the movie. The purpose is to give you just enough information to get you interested. Some previews even end with a suspenseful cliffhanger so that you just have to go watch the movie immediately. There are a number of similarities between a movie preview and what your business plan executive summary should be. Now I want to borrow from famous author, speaker, and venture capitalist Guy Kawasakis blog article “The Art of the Executive Summary”. The article is written by Kawasakis colleague Bill Reichert. He provides an incredible generic summary and outline for your executive summary. Let me explain this outline in my own words. The main sections are as follows: The Grab – When it comes to your executive summary the grab is probably the most important section of your entire executive summary. In two or three sentences you should pull the reader in to learn more. Maybe you just signed a partnership agreement with Google, maybe you won your first government contract, or maybe your product won a prestigious award for your industry. If you can’t claim any of these accolades, you may want to start with a quote or a testimonial from one of your clients of an industry VIP.
  11. 11. Big Problem – The first ingredient of a good business idea is a Big Problem. Without a problem,pain or annoyance of some sort you dont have a sustainable business. Here is an example of abig problem, there is too much traffic in Chicago and everyone hates traffic. Everyone in theroom should be saying “yeah, I hate that.”Unique Solution – The big problem is the easypart. Now you have to convince the reader that youhave come up with a unique solution to the bigproblem. If you have these two ingredients youhave a good business idea. Maybe you developed anew traffic control system that will save 1 minutefor every person in Chicago each day during theircommute. 1 minute each day is valuable when youare talking about a couple million people.Market Potential – This is an area where the optimistic entrepreneur often gets in trouble. Justbecause you are in the medical device industry which might be several hundred billion dollarsdoes not mean that your market potential is several hundred billion dollars. Your marketpotential should be built from the ground up, with a number of factors in mind. Does yourgeographic location impact your ability to sell your product or service? What is yourproduction capacity? If you got a million dollar sale would you be able to fill it? If not, thenyour market potential should be adjusted accordingly. It is alright for you to dream into thefuture about where your business can go 10 years down the road, but investors want to knowyour realistic market potential for next month and next year.Competition – You need to address your competition, but don’t stop at simply identifying yourcompetition. You need to explain how your solution has a unique and sustainable advantageover your competition. If your competition can simply replicate your business, why would anyone be willing to invest in your business - a business with no unique, long term advantage?Management Team – Depending on what industry you are in, this can be the most importantpart of your executive summary or one of the least important sections. Your investors orbankers are putting trust in the team not the idea. Ideas are easy to come by, but executing onthose ideas can only be accomplished through a strong team. Quickly show why your team hasthe experience and know-how to execute your business plan.
  12. 12. Financial Projections – Based on your market, your business model and, your historicalperformance you need to develop a bottom up financial forecast. If your plan is for a group ofinvestors, dont spend too much time on this section because everyone already knows that youhave no idea how much money you might make. Investors typically wont make a go / no godecision based on your financial projections. They will essentially make their own financialprojections. That being said, you should have some sort of graph or table with current revenueand expenses as well as projected net profit going forward for at least 3 years.Request – Now it is time to make a request. You should restate why your company providesvalue. Remind the reader of the big pain that you are solving and your marketpotential. Finally reemphasize your team and its ability to get the job done. Ask for the dollaramount that you need to reach the next major milestone for your business. You dont need todisclose how much equity you are willing to give up or what interest rate you are willing topay. This should be done later through face to face negotiation.Awesome Startup Tip #3If you are from Silicon Valley you will know Vinod Khosla, one of the most famous venturecapitalists of all time. As you are working through the capital raising process make sure to visithis website, Here. He provides a number of free presentations, white papers, and articles onraising venture capital and building great companies.Soon I am going to dig into more details of how to write an executive summary, but first I wantto quickly address the rest of the capital raising process.Screening – Only 25% of entrepreneurs will make it to the Screening round of the capital raisingprocess. This stage will typically consist of a more in depth look at your business. It willprobably include a meeting or presentation and your business plan.Presentation Tips• Use the Guy Kawasaki 10/20/30 rule • 10 Slides • 20 Minutes • 30 Point Font• Never write paragraphs on the slide – use bullet points• If possible always use a diagram, graph or table to illustrate your point• Leave plenty of time for questions
  13. 13. Business Plan Tips • Business Plans are boring; dont be boring • Spice it up with colorful graphs, tables, and diagrams • Keep it to 25 pages max • Dont spend too long on your business plan – no one will read it anywayDue Diligence – If you are so lucky as to make it to the Due Diligence round of the financingprocess, it is probably time to bring in an expert. If you havent already, I would suggest thatyou work with a qualified CPA and/or attorney. During this round you can expect questions –lots of questions. The bankers and investors will likely dig into your personal backgroundincluding your credit history, former business ventures, personal tax returns, and any criminalhistory if applicable. If all comes back clean they will probably start to look at your business inmore detail. Do you have a patent? They will want to confirm that. Do you have sales ordersor partnership agreements? Again they will look to confirm everything.Commit Capital Round - This is the final round. You have madeit through the executive summary round, the initialpresentation round, and the due diligence round.Congratulations. Now you have about a 50/50 shot at receivingfunding. You will probably be asked to come back in for a finalinvestment presentation. Sounds terrifying. If you are wellprepared, this round should be a breeze. The potentialinvestors clearly have an interest in your business because theyhave brought you this far. Now this is your chance to get themto buy in on your vision and also to show them how they willmake a lot of money of course.If it is a bank loan that you are attempting to secure, you probably will not be asked to comeback in for a final presentation. In fact if you made it past the due diligence round at the bank,you have probably raised capital for your business!Awesome Startup Tip #4Part of the angel investment and venture capital process is the “term sheet.” This is basically alegal document that outlines the terms of a business agreement. Term sheets are commonlyused in equity financing of private companies. If you are a startup in need of investment, youare probably on a tight budget. This means you dont have the money to be paying lawyers$300 an hour to draw up all of your paperwork. I hate to break it to you, but you will need toinvolve your lawyer at some point. Luckily, Orrick, a Silicon Valley Law Firm, has developed afree “Term Sheet Creator” You will simply fill in the blanks and a rough draft of your term sheetwill be created. At this point you may want to involve your own lawyer or a lawyer at Orrick topolish it up. You can access this tool atTerm Sheet Creator.
  14. 14. How to Write an Executive SummarySorry that I had to go through those other capital raising basics. Now I will focus the rest ofmy attention on the nitty-gritty details of how to write an executive summary. I want to startby pointing out what NOT to do in your executive summary.What Not to DoNo Competition - At one point or another every entrepreneur will say it. "I have nocompetition." This is typically during the pre-revenue stages of business because once youbegin to offer your product or service you will quickly realize that every business hascompetition. You might be the only one in the world that manufactures your product, but thatdoes not mean you have no competition. Whether you have direct competitors or not you arealways competing for dollars with someone or something else. If you have no competition theneveryone in the world should buy your product, and if they dont, then what is it that is keepingthem from purchasing your product? That is your competition. It could be a childs collegesavings account, a date night with the spouse, or the mortgage payment. These are allcompetition because they consume dollars that are not available for your product or service.1% of the Market - The second biggest mistake that almostevery entrepreneur will make is believing that capturing 1% oftheir market is a conservative estimate. Just because 1%sounds like a small number does not mean any Joe Blow cansteal 1% of a market from the competition. Entrepreneursmust have this urge to pretend that they are conservative,when in reality almost every entrepreneur has some bit ofoptimist in them. Rather than just assuming you can capture1% market share out of a $100 billion market, you need tobuild bottom up, data driven projections. Your marketpotential is defined by your geographic location, your capacityto fulfill sales, and your ability to secure financing to name afew. Take these things into consideration when making claimsabout your market potential.Too Long – Again and again I have said that you need to keep your executive summary shortand sweet. The point of your executive summary is not to summarize each part of yourbusiness plan. Keep your executive summary to 2 pages or less at all costs. The reasoningbehind this rule is two-fold. First you want to respect the readers time. If you submit a 5 pageexecutive summary, you will probably frustrate the busy banker or investor. Secondly, whetheryou like it or not, if your executive summary is more than 2 pages very few bankers andinvestors will actually take the time to read the document.
  15. 15. Mission statement – It might seem counter intuitive, but you should not include your missionstatement in your executive summary. In the spirit of keeping your executive summary shortand to the point, I would suggest that you leave out your mission statement. Most executivesummaries start with the company mission statement. Do you realize that most missionstatements use the same flowery meaningless language? You must stand out immediately, anda boring mission statement is not going to help you stand out. If you feel compelled to includeyour mission, at least stick it in the body of the document, not the first impression. Focus on Projections – Some entrepreneurs like to focus on their financial projections when pitching to a group of bankers or investors. Dont get me wrong it is important to go through the process of building financial projections, but after you are done dont act as if those projections will absolutely come to pass. If you project a growth rate of 1,000% over the next three years, and the banker asks you why you think he should loan you $300,000, please dont say, “because we are going to grow 1,000% over the next 3 years. Bankers and investors both know that projections dont mean anything. Projections are dependent on so many variables that you might as well be pulling numbers out of thin air, so dont focus too heavily on your projections in the capital raising process.Awesome Business Tip #5Did you realize that SCORE (Service Core of Retired Executives) is a free business consultinggroup of veteran business professionals? They provide free consulting for businesses of anysize. They also have a number of valuable resources on their website HERE. My favorite toolsare their series of quizzes that they have made available on the following topics: • Business Planning • E-Commerce • Finance • Human Resources • Leadership • Legal • Marketing & PR • Office Management • Sales & Customer Service • Training
  16. 16. What to DoSo we went through a couple of the things that you dont want to do. Now let’s look at a longlist of things that you do want to do in your business plan executive summary.Grab Attention with First 2 Sentences - You only have one chance to make a first impression.Most of the readers of your business plan executive summary have read 100s if not 1000s ofbusiness plans. The first two sentences will set the stage for your entire business plan so becompelling, intriguing, and creative.Your Grab Should be Personal - You want to make the grab or the hook of your executivesummary unique to your business if possible. For instance, you could start with a quote froman expert in your industry discussing the potential for explosive growth in your industry, but itwould be exponentially better to write about a new partnership you have with Google, or therecent signing of your first major contract, or even an endorsement of your product or servicefrom an industry VIP.Be Compelling and Intriguing - Remember that the purpose of your executive summary is notsimply to summarize your business; rather it is to sell or call the reader to action. Similarly, thefirst couple sentences of your executive summary, known as the hook, must compel andintrigue the reader to action – to read the rest of your executive summary.Identify a Problem - I dont want to say that you absolutely cant have a successful businesswithout solving a problem, but typically you should find a problem or a need and solve it. Youshould identify the problem that your business addresses at the very beginning of yourexecutive summary. The goal is to get the reader nodding their head saying, “yeah, I hate itwhen that happens.”Typically, it is important to actually address a problem. If your business idea is not addressing aproblem, you will struggle with sustainable success. You might find temporary success if yourbusiness idea becomes a fad, but fads come and go. You must solve a problem to besustainable. Identify a Solution to that Problem - Anyone can identify a problem, but does your business solve an identified problem? Solving problems, meeting needs, these are the foundations of a great business. Make sure to describe how your business solves an identified problem.
  17. 17. Address your “Current” Market Potential - If you dont already know what your marketpotential is, you need to conduct some in depth research to determine what your marketpotential is. Your specific market potential can change over time. For instance, if you open arestaurant in Chicago, your market potential is probably limited to those that live or workwithin 45 minutes of your restaurant. You may have the opportunity to franchise yourrestaurant which would increase your market potential with each new restaurant. Just becauseyou plan to franchise your restaurant does not mean that you should say your market potentialis the entire United States. You might become the next McDonalds, but you are not there yetso stick with what your current market potential is in your executive summary.You might have a solution for a problem that millions of people have. That is great, but howmany of those people will you be able to reach in a cost-effective manner? For instance, youmight invent a relatively cheap water filter that could be used to help those without access toclean drinking water, but if you cant get your product to your market, then your potentialmarket is essentially meaningless. Make sure to discuss how many people that need yourproduct or service can be reached in a cost-effective manner.Identify your Competition - One of the most common mistakesmade by entrepreneurs is claiming that you have no competition.It may be true that no one is doing exactly what you are doing,but that does not mean that you have no competition. Whatkeeps your potential customers from purchasing your product orservice? That is your competition. Even if you create a trulyunique item that only costs $10, your potential customer maychoose to order a pizza instead of your gadget. Even though PizzaHut is not your direct competitor it is still competition. Anexperienced banker or angel investor will be turned off if youclaim to have no competition.If you have direct competitors, identify them. It is better to show the reader that you recognizeyour competition and have identified ways in which to differentiate yourself from theirbusiness.Not only should you identify your competitors, you need to differentiate yourself. Show howyou are unique from your competition, how you are sustainable, and how you plan to mitigatethe negative impact your competition will have on your business.Keep your Business Model Simple - You need to make it very clear to your readers, how youintend to make money. Complicated business models will scare investors and bankersaway. The competition for financing is fierce so most investors are going to look for easy waysto make money. They typically dont want to be bothered with new business models. Keep itsimple, short, and understandable.
  18. 18. Highlight your Management Experience - Your business might be a one person show. You maynot have a partner, but when it comes to securing financing for your business most bankers andinvestors are going to be looking to invest in businesses with at least 2 people. You cant do itall alone. You need to find a partner with skills to compliment your own. Then make sure toinclude this in your executive summary.Even if your management team is not experienced you need to include a section about yourmanagement team in your executive summary. Unfortunately, most investors are going to belooking for experience. Just because you dont have experience does not mean that you donthave a great idea or that you will not be able to build a successful business, but often timesinvestors and bankers will place a high value on experience of the management team. Makesure to include any and all experience that you and your team do possess.Cash is King - Cash flow projections are probably the mostimportant financial section of your executive summary. Anyoneinterested in financing your business will want to ensure that youhave a firm grasp on your cash flow. The worst case scenario for aninvestor is to invest in your company and lose everything becauseyou did not correctly project your cash flow needs, and you ran outof cash before your business reached positive cash flow.Show Skin in the Game - If you have already invested your own capital into your business, thenyou should disclose this in your executive summary. If you have not invested your ownresources into the business, then you probably are not ready to request outside financing.Bankers and investors are going to ask to see that you have “skin in the game.”Request a Specific Dollar Amount - If you are requesting a loan, investment, or a grant withyour business plan executive summary, make sure to include the specific dollar amount you arerequesting. This is a question that every VIP is going to want to know.Call the Reader to Action - Make sure to request a specific action from the reader. Do youwant the reader to meet with you in person? Read the rest of your business plan? Call you onthe phone? Visit your website? Just make sure that the end of your executive summary doesnot leave the reader wondering what the next step is.When were you Founded - Your reader will want to know when the company was founded.Even if you are a brand new startup it is best to disclose this information sooner rather thanlater.Include your Contact Information - Make sure to include your contact information so that ifyour executive summary does its job, the reader will have a way to contact you.
  19. 19. Include your Website Address - If you have a website for you business make sure to include theaddress for the reader to learn more about you and your company. If you dont have a website,get one. A website helps to build your credibility and establish trust.Break it up with Title Headings - You need to include section headings and titles to make theexecutive summary easy to read. If your executive summary is two pages of Times New Roman12 point font paragraphs the reader is going to assume that your 30 page business plan is justas boring. There is no chance they will continue to read 30 pages of text in the format of anovel. Break it up with headings and titles.Use Bullet Lists - Like it or not many VIPs probably wont even read your executive summaryword-for-word. Use bulleted lists to draw attention to some of your most important details.Add some Color - Graphs and tables are anothergreat way to add some color and interest to yourexecutive summary. Bankers and investors aregoing to look at your tables and graphs, but theymight not read your entire executivesummary. Make sure your executive summaryincludes key information in table and graphformat. This is a great way to tell your story.Include your Logo - If possible include your logo for credibility. It will also add some color toyour document and make it immediately stand out from the others.These are a number of the most important characteristics that your executive summary shouldpossess. Even though there are a number of executive summary structures and content basicsthat you should follow, it is probably even more important that you grasp the concept that I amgoing to look at next – your audience.
  20. 20. Awesome Startup Tip #6So once you write your executive summary what do you do with it? Well you may have a groupof potential investors already lined up, but if you dont, you will need to identify potentialinvestors. There are 3 primary resources that I am going to provide you with to get you startedin your search for investors.National Venture Capital Association – Visit and you will be well on yourway to finding all the Venture Capital information you could ever need. There are literallyhundreds of resources, as well as, venture capital directories to help you find the right venturecapital firm for your business.Angel Capital Education Foundation – Visit to learnabout angel investors. Raising angel capital is hard. It is more than simply submitting anexecutive summary and developing an investor presentation. ACEF will provide you withguidelines on how to approach, who to approach and when to approach angel investors.Angel Capital Association – Visit to find angelinvestors. There are extensive directories to find local angel investors. There are also a numberof links to reports and research that has been done on angel investment.All three of these resources will improve your odds of successfully raising capital. Make sure tolearn as much as you can about the process, but dont learn forever. At some point you need tostep out and approach potential investors. Dont give up easily because only 1 to 4% ofentrepreneurs successfully raise venture capital or angel investment, so keep pushing!
  21. 21. AudienceAs I said at the very beginning of this eBook, your audience may consist of four distinct and verydifferent groups of people. You may raise capital from your friends and family, bankers, angelinvestors, or venture capitalists. Each group will be looking for something completely differentwhen reading your executive summary. Now I will go into detail about the distinctions of eachgroup. According to a report distributed by the Angel Capital Education Foundation, total startup funding from venture capital funds, state funds, and angel investors totals approximately $20.8 billion annually. Friends and Family Surprisingly, friends and family contributed nearly three times the amount of capital to thousands of startups each year. With approximately $60 billion in startup funding coming from friends and family, entrepreneurs must consider this as an option as they seek to launch new businesses.Money issues between friends and family can ruin relationships, so when seeking capital fromfriends and family you must keep a number of things in mind. The following five steps willprepare you to request capital from this unique and powerful group – your friends and family.You cant treat them as bankers or angel investors, but you also dont want to be too casual.Consider these five steps before you begin the capital raising process: 1. Prepare a pitch - Just because you are requesting investment from your mom or a group of your college buddies doesn’t give you an excuse to be unprofessional. Take this opportunity and the potential risk taken by your investor seriously. Do your homework, and prepare a professional, persuasive and passionate presentation. You want your friends and family to buy into your vision, not just hand over some cash because they feel obligated or pressured.
  22. 22. 2. Have a game plan - When you are seeking angel investment or venture capital investment, you will need a strong business plan, but do you really need a business plan for your friends and family? Instead, you might consider a vision, strategy, and tactics plan. You will start by developing a vision for the future of your business, then strategies to reach your vision, and finally day-to-day tactics to accomplish your strategies. For example, assume that you have a vision of becoming the leading online retailer of picture frames. One strategy may be to utilize search engine traffic to bring in customers. Finally, you will develop tactics such as building quality links to your website through social media and professional article writing to boost your rankings in the search engines. 1. Have an exit strategy - Angel investors and venture capitalists want to know how you intend to grow their investment. They want to know when and how you intend to repay them – with interest. Your friends and family should be no different. Although you want to disclose the fact that investing in a startup is risky, you should also outline a detailed strategy for the investor to exit profitably. Maybe you will structure the capital as a high interest loan, or maybe they will own a percentage of the business and be repaid through the profits. No matter the structure, you should have a detailed plan for repayment.4. Consider making it official - Depending on the size of the investment you may consider hiring a lawyer to file the necessary paperwork to make everything official. Obviously this will give the investor peace of mind, and it should help you in the future as you seek angel investment. Making it official gives you credibility for future rounds of investment. Remember to use judgment though, if your buddy is going to invest $10,000, and the legal fees amount to $2,500, you may want to resort to a firm handshake. 5. Follow through - Again, investing in a startup is risky, and your friends and family probably know that, but they should expect to earn a return on their investment. Don’t view this capital as a gift; instead, follow through with what you promised. If things don’t go exactly as planned, be sure to communicate regularly so that they know what to expect. If at all possible, follow through. If you fail to deliver as promised you risk your entire relationship and your ability to raise capital in the future.
  23. 23. As you seek capital for your startup, don’t neglect the $60 billion opportunity represented byfriends and family, but tread carefully as you risk something far greater than the failure of yourbusiness – your relationships.Awesome Startup Tip #7I know that I already mentioned once, but I believe this resource is valuableenough to warrant a second mention. If you visit HERE you will find a service provider for anyand all of your startup needs. This is essentially a fancy directory with nearly 100 business planwriters, dozens of marketing professionals, accountants, and lawyers to name a few. Eachservice provider will also create a profile and elevator pitch so that you can get an idea of howthey can help your business launch and grow. BankersSmall business loans of less than $1 million outstanding totaled $711.3 billion as of June 2008,according to an SBA report titled, “2009 The Small Business Economy – A Report to thePresident” When we are talking about capital for small businesses, it is clear that traditionalcommercial bank loans are the single largest source of small business financing. Yes, it is truethat securing a loan from a commercial bank is difficult during the current economic downturn,but it is still far more likely that you find a loan, than an investor, to finance your smallbusiness.Due to the decrease in credit made available to small businesses in the recent years,competition is at an all-time high. Your loan application must stand out from the crowd on allfronts in order to be considered for a loan, and your executive summary must be written toallay the fears that are common among bankers.Audience Analysis - BankersBankers. Do you ever wonder why you see somany bankers out of the golf course on Fridayafternoons? It is because they are not readingyour entire 40 page business plan. In alllikelihood they take 15 minutes to look at yourloan application, maybe a bit more or lessdepending on the size of your loan request. Theyare not digging into the details of your businessplan so if you want to stand a chance at securinga small business loan you need to have a shortand powerful executive summary.
  24. 24. Bankers will also want to see that you have some “skin in the game”, which means that youhave invested your own time, sweat, and capital into the business.Because bankers can be picky in these economic times they will also want to see some level ofpositive earnings and earnings growth.The best way to get a loan from a bank is not to need a loan. I know it is frustrating andcounter intuitive, but if you are currently running on fumes and have no working capital foryour business it may be a difficult sell for most bankers. The fact is, if you need a loan youprobably cant get one.Bankers will also want to see how well you manage the resources that you currently have. Youwill have to demonstrate your ability to manage the loan resources given to you through clearcash flow and profit projections.Last but certainly not least, bankers are concerned with collateral. They simply want to makesure that if your business does not go as planned, and ends up bankrupt or defaulting on theloan, they will still be able to recoup their capital. This is difficult for many small businessowners, but by allowing bankers access to your assets as collateral, you are significantlyimproving your chances of securing a loan.So to recap your banker is probably looking for: 1. A short, power-packed executive summary 2. Loan applicants with skin in the game 3. Positive earnings and earnings growth 4. Current working capital 5. Strong fundamental cash flow projections 6. CollateralNow you need to determine how to incorporate these six aspects into your executivesummary.In this scenario you may use your financial projection segment to note the key financial issuesthat bankers are concerned with. For instance, you may want to show a small table with thebasics of your balance sheet: Balance Sheet Current Assets $300,000.00 Fixed Assets $1,000,000.00 Current Liabilities $150,000.00 Long Term Liabilities $300,000.00 Owners Equity $850,000.00
  25. 25. Then simply state that your balance sheet demonstrates your access to working capital andyour fixed assets can serve as collateral.Bankers understand a balance sheet, so you dont need to waste your time or theirs byexplaining it. Just state what they want to hear. This is just one way that you can edit yourexecutive summary to improve your chances of securing a small business loan to take yourbusiness to the next level.Awesome Startup Tip #8If you are a truly a startup you may not be ready for angel investment or venture capital yet. Infact, you might simply need a small loan to jump start your business. There are a number ofSBA Microlenders and SBA Express Lenders around the country. You can call your state SBAoffice to find SBA programs near you. You can find that on your own, but what you probablywould not find on your own is the following 3 organizations that can provide small loans acrossthe entire country. You will actually be able to apply online. Before you apply you should knowthat because many of these loans are unsecured, a high credit score will be absolutely vital. Sohere you go:Strategies for Small Business – This is by far my favorite group. Visit their website to get a quickunderstanding and then give them a phone call and ask for Cliff. He has been very helpful to anumber of my clients in the past. They can provide loans of up to $25,000 with little paperwork and approval in 48 hours or less.Borrego Springs Bank– Borrego Springs is also an SBA Preferred Lender which means they canoffer loans to businesses in all 50 states. The SBA express loan is the least amount ofpaperwork and can provide up to $50,000.Accion USA- Accion USA is another SBA lender with a number of loan programs and products.You can simply apply online for up to $50,000. The Accion USA program is available nationwideAngel InvestorsAgain we start with an audience analysis. Investors are a diversegroup. For instance, you may find an angel investor that is aDoctor with more money than he knows what to do with, butlittle understanding of business. You may also find angel investorsthat made a good living in your industry niche that are looking tohelp other entrepreneurs in their specific area of expertise.Finally, you may find angel investor groups that are looking toinvest in various industries and even have a process set up foridentifying investments that they are interested in.
  26. 26. When it comes to venture capitalists, I don’t want to say they are all the same, but you will findfar less diversity between venture capital firms than you will between angel investors. Investorshave a very different mindset than bankers. Primarily, an investor is not concerned withcollateral because if you go bankrupt they are simply out of luck. Investors understand they aretaking a risk by investing in a small business, and are not as concerned with your collateral.So from the perspective of your executive summary, investors want to see a few things. I like tocompare investors to sharks so the following section identifies the three things that an investorand a shark want: 1. Blood = The Grab – Initially blood in the water will attract a shark. Similarly, what is often called “The Grab” will attract investors through your executive summary. The Grab is the first paragraph or couple sentences that entice the investor. Maybe it is the big account you just landed or the new advertising campaign with a famous actor as your spokesperson. The Grab should get investors to raise their eyebrows and think maybe this is worth looking into.2. Easy Prey = Easy Business Model – Sharks are looking for easy prey. For instance, they dont often mess with a dolphin or a whale because they are just too difficult to make use of. Similarly, investors are looking for an easy to understand and easy to implement business model. There are complicated business models that are successful, but the average investor just wants to make money the easiest way they know how.3. Meat = Sound Financials – A small fish might interest a shark and be easy prey, but ultimately a shark wants some meat. Investors also want some meat, or sound financial projections. A seasoned investor will take your financial projections with a grain of salt, because it is difficult to predict what will happen tomorrow let alone what will happen 3 to 5 years from now. Investors will concentrate on whether your assumptions are logical and well thought out. They want to determine your competence level, not your ability to predict the future.So keep these 3 things in mind when you are fishing for sharks or fishing for investors. Now tolook at a specific example of something you can do to improve your executive summary beforepresenting to investors consider the following. A reader wants to get a basic understanding ofyour business model from your executive summary. Enough detail to understand how thebusiness makes money, but probably not enough detail to take over and run the business.
  27. 27. So keep these 3 things in mind when you are fishing for sharks or fishing for investors. Now tolook at a specific example of something you can do to improve your executive summary beforepresenting to investors consider the following. A reader wants to get a basic understanding ofyour business model from your executive summary. Enough detail to understand how thebusiness makes money, but probably not enough detail to take over and run the business.Think about Google, probably one of the most difficult and diverse business models in theworld, but if Google were seeking investors they would probably say, “we make money bybringing the right information, to the right people, at the right time” That is in a nutshell howGoogle’s primary advertising business makes money. That one line gets to the point of thebusiness model, it is easy to understand, and it is somewhat intriguing to the reader who mightwant to know more.Try to breakdown your business model into a one sentence statement that describes how youmake money. Keeping it simple is what investors want to see these days.So as you write your executive summary for a potential investor, keep in mind that all investorswant: 1. A Compelling Grab 2. An Easy Business Model 3. Sound Financial ProjectionsNow that we have looked at the executive summary from both a banker’s and an investor’spoint of view it is time to move on to the final group of potential readers for your executivesummary.Awesome Startup Tip #9Ok now you have written your entire business plan executive summary, but before you submitit to potential investors wouldnt it be nice to submit it for review by a group of executivesummary experts? Well now it is possible. ExecutivePlan now has an Executive SummaryReview Application. Make sure to avoid those devastating mistakes and work through this 20question application today.
  28. 28. Venture CapitalJust to give you a jump start on your search for venture capital investors I have provided links tothe top venture capitalist firms in the world.The Top 100 Venture Capital Firms for Early Stage Start-ups - HEREThe Top 100 Venture Capital Firms for Later Stage Companies - HEREDespite the fact that the Angel Capital Education Foundation reports that venture capitalfinancing only amounts to approximately .5 billion annually, entrepreneurs are more intriguedand awestruck by the venture capital community than any other investor group.When applying for VC money there are 7 keys to writing a business plan executive summarythat will catch the eye of a venture capitalist. 1. Visually Appealing - This should be a no-brainer, but many entrepreneurs write an executive summary like they would write a novel. If your executive summary is simply a number of paragraphs stuck together, you might as well kiss your chances at venture capital good bye. Include graphs, tables, bulleted lists and even your company logo to add some color and break up the plain text. 2. A Strong Grab - If your first sentence does not grab the reader’s attention, you have probably already lost your chance to make a great first impression. Don’t start out like everyone else with a mission statement or some bold claim about the projected growth of your industry. Investors want to see traction in your business. Do you already have customers and are they satisfied? Have you signed any major contracts or partnerships that might be intriguing to the reader? 3. Explosive Growth Potential - Don’t ever forget that every venture capitalist has one goal in mind. Make a lot of money. Venture capitalists typically look for returns of 5 to 10 times their initial investment. If your best case scenario is to make a 100% return, then you probably are not a good fit for a venture capitalist. Make sure to show them how your business can hit it big. 4. Simple Business Model - Not only do venture capitalists hope to make a lot of money, they want it to be as easy as possible. You need to simplify your business model as much as possible. Typically, venture capitalists are looking for innovation and creativity, but when it comes to your business model – simple is best. No one wants to risk millions of dollars on something they can’t understand.
  29. 29. 5. Unique Competitive Advantage - You need to address your competition, but don’t stop at simply identifying your competition. You need to explain how your solution has a unique and sustainable advantage over your competition. If your competition can copy your business, then why would any one want to invest in a business that has no unique, long term advantage?6. Sound Financials - A set of financial projections that are built upon sound, data-driven assumptions will catch the eye of venture capitalists. It does not have to be too in-depth because investors know that no one can project what is going to happen in 3 to 5 years. If someone could make accurate predictions, then venture capitalists would be far more successful.7. A Clear Request - Imagine the frustration a venture capitalist would have after reading your entire executive summary if you did not clearly request a next step. Request the exact amount of investment you are seeking or request that the reader meet with you in person or even that they review the rest of your business plan.Make sure to follow these 7 tips if you want to write a powerful business plan executivesummary to catch the eye of venture capitalists.
  30. 30. Executive Summary ResourcesExecutive Summary TemplatesNow that you are ready to write your executive summary make sure to utilize my free executivesummary templates on ExecutivePlan. You may simply download the document and edit withyour own executive summary text. Make sure to make your executive summary your own. Notemplate is perfect and no template could ever be completely unique to your business, but ourresources are free and will certainly put you on the track to success.
  31. 31. Executive Summary Review Service This book has given you all the information you need to create an incredible executive summary, but many entrepreneurs still come to us asking for our consulting services. I will be honest, I do not even enjoy writing executive summaries anymore. What we do offer is an executive summary review service. If you just need that affirmation from a team of experts before you submit your executive summary to a VIP, then our review service is perfect! We would love to help you, so check out our website today at ExecutivePlan
  32. 32. About ExecutivePlanThe ExecutivePlan assists entrepreneurs in the process of writing business plan executivesummaries that are more powerful, effective, and memorable. We already provide numerousarticles, premium videos, eBooks, guides, and templates for entrepreneurs looking to write anexecutive summary that raises capital.Although the process is not easy, and will take dozens, if not hundreds, of edits to finallymaster your executive summary, you do not need to be an expert to write a successfulexecutive summary. The ExecutivePlan aims to empower entrepreneurs to accomplish this ontheir own, rather than paying for expensive business consultants.I wish you much success in your entrepreneurial endeavors and make sure to shoot me anemail at with any comments, questions, or remarks. I wouldlove to hear from you.