Creating an Effective Business Plan & Executive Summary


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Which is better, a business plan or an executive summary? Academic institutions and the marketplace appear to be moving in opposite directions on this question. This presentation reviews the essential elements of an effective executive summary.

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Creating an Effective Business Plan & Executive Summary

  1. 1. Business Plan Vs.<br />Executive Summary<br />Robert Glazer<br />Founder, Acceleration Partners<br /><br /><br />
  2. 2. Business Plan?<br />The Business plan is dead<br />Academic institutions and the real world have gone in opposite directions <br />However, its contents do live on<br />
  3. 3. The Executive Summary<br />What is an executive summary?<br />Objectives of executive summary<br />Contents of an effective executive summary<br />Detailed components of executive summary<br />Things to do, Things to avoid<br />What else do I need?<br />
  4. 4. A snapshot of the business plan…<br />…NOT the entire business plan<br />What Is It?<br />
  5. 5. Effectively communicate the business opportunity and product offering to potential investors, partners and employees to:<br />Secure face-to-face meeting with associates or partners at investment firms (partners preferred!)<br />Convince potential partners to dedicate resources and help your company grow<br />Convince a potential candidate to pursue an opportunity with your company<br />You won’t get a check in the mail! <br />Objectives of Executive Summary<br />
  6. 6. Overview/Intro (“What We Do”) <br />Market Opportunity<br />Product/Service Overview <br />Marketing & Customer Acquisition Strategy<br />Competition & Competitive Advantage <br />Team & Advisors <br />Financial Overview<br />Milestones (optional)<br />Capital Requirements/ Use of Proceeds <br />Contents of an Effective Executive Summary<br />
  7. 7. One core statement that describes your business (1-2 sentences TOPS!)<br />Followed by:<br />One paragraph extension of the core statement that describes your business in more detail<br />Finish with one sentence of what you are looking for in terms of funding. <br />Overview/Intro<br />
  8. 8. Do not waste words on BS or buzzwords, you lose the reader instantly<br />“We are a b-to-b application integration service and solution provider for next generation e-businesses, providing essential tools to monetize traffic online (blah blahblah…)”<br />Simple, clear verbiage is most effective <br />“In order to meet the enormous demand for energy‐efficient homes, FreeGreen provides free, expertly designed, online plans for ready‐to‐build “green” homes and home renovations.”<br />Overview/Intro Cont.<br />
  9. 9. 50% of all executive summaries fail to answer this question effectively – and end up in the trash<br />Your business before market<br />No matter how sophisticated your product/technology or market opportunity, make sure a high school student can understand your value proposition<br />Ask your mom if she understands what you do after reading the overview<br />“What We Do”<br />
  10. 10. The market is often as important as the business idea<br />If the pie isn’t big enough, investors might not care about your slice<br />Provide market stats that are specific and relevant to your opportunity, not the overall market <br /><ul><li>.1% logic
  11. 11. Think ‘addressable’ market </li></ul>ANALYZE your stats, don’t just spout them<br />Separate short-term and long-term market opportunities<br />Market Opportunity & Sizing<br />
  12. 12. Detailed information on product and/or product lines<br />Stay at 5,000 feet<br />Describe business model without stating it implicitly by showing margins, pricing, costs<br />High level technical specs if relevant <br />Address scalability concerns<br />Discuss future development plans versus launch plans<br />Product & Service Overview<br />
  13. 13. <ul><li>Field of Dreams is a movie, not a business strategy
  14. 14. Painkillers and vitamins
  15. 15. Prove the demand
  16. 16. Remember: ‘free’ implies low-quality
  17. 17. “Social media” is not a marketing strategy
  18. 18. “We’re going to devote 50% of this investment to advertising” (good luck)
  19. 19. Creative marketing – piggybacking, leveraging others, business development, etc
  20. 20. Contracts talk, LOIs cut it, ‘they’re interested’ and ‘we’ve met with’ means little</li></ul>Marketing & Customer Acquisition <br />
  21. 21. <ul><li>Yes, you have competition
  22. 22. Ignoring your competition proves you are unprepared
  23. 23. Highlighting too many competitors proves you do not know your market and/or cannot differentiate your offering from others
  24. 24. The best plans identify current and future competition and intelligently discuss competitive advantages and disadvantages, as well as strategies for market success
  25. 25. Direct competition and wallet share competition </li></ul>Competition & Competitive Advantage<br />
  26. 26. Use a framework for analysis (ie direct versus wallet share) <br />Provide a paragraph that focused on major competitors, their products, strengths and weaknesses<br />Provide any factual, non-public information<br />Competition cont.<br />
  27. 27. Short, concise bios of key team members only!<br />Highlight relevant experience<br />Include:<br />Executive Team<br />Board Members (optional)<br />Current Investors (optional)<br />Advisors (beware of the promiscuous advisor!)<br />Team & Advisors<br />
  28. 28. Don’t predict 10 years out, keep it simple (3-5 years)<br />Include other key business drivers that give credibility to numbers (italics) <br />Revenue by market and/or product line<br />Gross and net margins <br />Roll-up SG&A<br />Show “Path to profitability” (but don’t use these words! …buzz…buzz…)<br />Financial Overview<br />
  29. 29. Show momentum and pace of progress<br />Key hires, product development achievements, funding, customer relationship, signed deals, implementation dates etc.<br />Reverse chronological order<br />Milestones<br />
  30. 30. State exactly what you think need<br /><ul><li>This isn’t a yard sale, don’t think they’ll ‘make you an offer’</li></ul>How are you going to use it<br /><ul><li>Be the investor, where would you want your money spent? Focus on growth opportunities and expenses with tangible return</li></ul>How does investor get their money back?<br /><ul><li>You must discuss the exit strategy & comps which support it. Ignoring the exit is a fatal flaw</li></ul>Capital Requirements/ Use of Proceeds<br />
  31. 31. SIMPLICITY – 3-4 pages tops<br />Perception is key: clarity and design of summary builds credibility from first glance.<br />PDF<br />Include an intro e-mail in first correspondence, reference a mutual third party if possible<br />Provide contact info at conclusion<br />Remember that you are trying to get a meeting or call, not a check. <br />Other Things To Do<br />
  32. 32. DO NOT ASK FOR AN NDA<br />No need for a cover sheet<br />Not a brochure, don’t need lots of graphics<br />Hobbies/personal info don’t belong in bios<br />Don’t get advisor/who-we-know happy.<br />Things to Avoid<br />
  33. 33. Take Control Of The Process<br />Get comfortable with sending your summary,<br />Don’t send more details without a meeting; the exec summary is the ‘in-the-door’ tool<br />Don’t fall for the business plan trap<br />Take control of the process!<br />
  34. 34. Executive summary<br />Intro e-mail<br />10 pp PPT presentation (4-6 bullets per slide)<br />Prepare back up materials (financial, model, sales pipeline, IP, contracts, etc) <br />Consistency in all materials and discussions<br />References<br />Be ready for “Yes”<br />What Else Do I Need?<br />
  35. 35. Robert Glazer<br /><br />(617) 264-0334 <br />Questions? Copies? <br />