Table of Contents
I'm the type of person who has to actually see something before I do it. If I can't see it in my head, it takes me forever to do it. I guess you can say that I'm a very visual person.
Business plans are no different. If you would have asked me what a business plan was when I was just coming out of university, I would have told you something right out of a text book.
Today, I know better. After years of looking at business plans (And doing them), this is something you just can't learn from a text book. Experience is the key here. You can't B.S something you don't know nothing about. If you know your business, you will already know the more important points about your business such as the industry, market, competitors, and operations. However, structuring an executive summary may be elusive. I'm going to help you out here with two samples, one is a successful summary and the other is a poor one. You want to structure your summary around the good example and stay away from the poor one.
I've decided to use a fictional company called Terra Engineering for my business planning examples. The following two examples will show you how to structure a successful and unsuccessful summary. Pay close attention to how the successful summary is outlined:
- There is no "fluff". Believe me, nobody wants to hear about 100% customer satisfaction or how your product is the greatest without any substantial proof. Stay away from "fluffy terms". Stick to the facts and keep the summary under two pages.
- Always start with who owns the company and what it does.
- Get right to what kinds of products or services it sells. Remember this, whatever you state, it must be backed up by facts in the bulk of the business plan.
- Summarize the findings in your business plan regarding the industry and market. Don't, I repeat, don't get into a detailed discussion here. Summarize! If you have any guaranteed contracts, state them here.
- Summarize owner qualifications.
- If you are using the business plan to leverage additional financing or asking for funding, state what it is you are asking for in this section.
Compare the successful summary with the bad example. Notice how the successful sample flows while the bad summary seems to be all over the place with no substance. For the sake of your company, stay away from sounding like the bad example.
Pro Tip: Sometimes it is easier to write a business plan executive summary after you write the business plan. This way you can review and summarize your company's strengths and other key points of difference using the plan as a reference.
Alright, let's get down to it. Study the following example and try and pick out the important points.
Terra Engineering is a fictional company who's main product is environmental consulting. Remember that this is only an executive summary example and should be used as a guide.
Successful Executive Summary Example
Here's an executive summary example: Terra Engineering
Terra Engineering is a new company that will provide high quality technical and environmental engineering services to its clients. Terra Engineering is scheduled to begin operations on July 16, 2004. Terra Engineering will be a partnership, owned and operated by Norm Johnson and Rupert Smith.
Terra Engineering will provide a wide array of environmental consulting services to its market which includes: Site Specific Environmental Services; Permitting; Strategic Planning; Project Design and Management; Technical Third Party Services; Environmental Policy Development and Liaison Services.
Terra Engineering will target small to medium sized companies and government organizations within the Southern part of Michigan including Detroit and surrounding areas as well as Southern Ontario. Terra Engineering will seek major contracts with medium sized firms.
Those contracts will be serviced with the assistance of strategic alliances, both with other engineering companies such as Randolf and Associates and Barnard and Barry Environmental, as well as other professional groups.
The environmental industry in Southern Michigan and Southern Ontario is an evolving sector which is comprised of companies and organizations that provide environmental technologies or goods and services which:
Reduce human health risks and ecological damage;
Improve eco-efficiencies and cost-effectiveness in processes; and
Address environmental issues and problems.
In total, the environmental industry is represented by over 9,500 firms which range from one person operations to large multi-national firms. Presently, environmental firms average over 25 employees, with a total of average revenues over $3.9 million. This industry is a large employer of a highly skilled and productive workforce.
It is estimated that approximately 221,000 workers are employed within this industry which is 1.6% of total state employment. The environmental market in Michigan and Southern Ontario is valued at an approximate $25.8 billion.
Key leading sectors within the environmental industry include environmental consulting/engineering like Terra Engineering; waste management; water supply and purification and waste water treatment. Overall, the environmental industry and Southern Michigan and Southern Ontario is a growing one.
Market drivers in the environmental industry include such pressures as: pollution prevention and eco-efficiency; performance in managing complex environmental issues and human health. Today, citizens, governments, businesses, lenders, investors, and organizations are becoming more aware of and placing more pressure on the importance of a healthy environment.
As a result, there is a growing demand for environmentally sound processes and solutions to possible present and future problems.
The entire market has identified the increasing demand for environmental services since similar driving forces as the mainstream market have taken effect. This is due to a number of key factors such as:
Increasing number of business start ups and expansions in all industry sectors including primary industry;
Municipalities are more aware and demand tightened environmental safe policies and procedures for the governments, businesses and organizations;
Major funding programs in Southern Michigan and Southern Ontario require environmental assessments and or third party reviews in order to meet federal/state legal requirements and program criteria before funding is disbursed.
The company's knowledge and awareness of the driving forces behind the increasing demand for environmental services like Terra Engineering by it's municipal and community markets will remain invaluable. Presently, the need for environmentally specialized firms and businesses to fulfill this need is apparent and has become increasingly large.
Terra Engineering will differentiate its company in the marketplace in 3 specific ways; the owners, Norm Johnson and Rupert Smith have been employed in the environmental industry for over 20 years and have unmatchable skills and knowledge of the industry; centralized location to the company's target market allows for full market reach and serviceability and a vision of growth for the company's market that will enable the application of contemporary tools to determine solutions for the surrounding areas.
Terra Engineering's sales strategy is three tiered. First, the company will plan on achieving first year direct sales of $82,000 in the target market. Secondly, the company will plan to achieve a more profitable level of sales equal to or better than $92,250 in years two and $102,500 in year three. Thirdly, the company plans to aggressively promote its services with a higher profit margins to allow for maximized profits.
It the first year of operations, Terra Engineering plans on breaking even. In years two and three the company will become more profitable as contracts and clientele increase and as the company learns to become more efficient in operations.
The initial start up expense for Terra Engineering include: capital $75,000, marketing $25,000, and business support $5,000. Capital funds will be used to purchase building improvements, specialized field equipment software, and technical field equipment.
Marketing funds will be used for trade show booth design, trade show attendance, company apparel and various print materials and advertisements. Business support funds will be utilized to hire an accountant.
In order to properly fund the start up of Terra Engineering, the financing package consists of personal equity, federal assistance and traditional borrowing. Mr. Smith and Mr. Johnson will contribute a total of $30,000 or 30% of the project's total capital costs.
Federal Environmental will be approached to invest $30,000 or 30% of the project's capital costs. The remaining balance of $15,000 or 20% will be financed by a commercial bank over a four year term.
Bad Executive Summary Example
Terra Engineering will operate on the concept of providing 100% customer satisfaction. We know we can offer 100% customer satisfaction because our owners and staff have all worked in the service industry before.
Our engineering services are top quality and will be of great benefits to our buyers. Based on what we’ve heard, our company is better than most of the other companies out there. We know our company will succeed.
We plan on selling to those companies that need engineering services in the environmental field. Based on our research, there are plenty of businesses who are need of the types of services we offer.
The need for companies to adopt certain environmental services is clear. It will allow them to regain control of their environmental operations including date and records management. This will provide a solid future and aid in the growth of the business.
The business will be based on a value based business model the sole intent to help all environmental businesses in the regional area. It is our belief that a portion of the profits for individual contracts to be re-invested in the poorer communities in the area. These re-investments can be to improve the relationships we have with those communities.
With my experience in the environmental field, I believe this organization will succeed and the staff to be employed with us will have all the extensive experience and expertise to get the job done. While with these organizations I have also gained an extensive network of contacts in the regional communities and they have come to trust my abilities and honest approach to environmental services.
We plan to be a corporation.
If you look at the bad example, there is no substance whatsoever. Stay away from this type of summary at all costs!
Remember, the executive summary is meant to summarize the most important aspects of your business. Stick to the facts about your business and stay away from fluff!
If your looking for a business planning workbook, try the link of the left hand side called "Developing a business plan". This will guide you through the planning process.