Executive Summary and Business Plan Outlines Introduction The most significant single section of a business plan intended for outsiders is the Executive Summary. Venture-capital investors, bankers, and corporate investment officials typically receive many business plans each week-more than they could possibly read from beginning to end. To help them determine which plans they should spend time analyzing, financiers invariably begin by reading the Executive Summary. If the Executive Summary suggests a promising business for investment or loan funds, the experts read further. If not, they quickly reject the plan. Essential information has no value if it is buried away in a later section and the reader never gets that far. Your objective in the Executive Summary, then, is to entice and convince investors to study your business plan further. Keys to an Effective Executive Summary What makes for an enticing Executive Summary? First, it is important to remember that it is not a preface to or abstract of the business plan. Rather, it is a much-shortened version. It is the business plan in the most concise form possible. An effective Executive Summary describes all of the key elements of a business plan in two pages or less. It must include the following essential information: • A synopsis of the company's strategy for succeeding • A brief description of the market (along with the ingredients for success that make your company unique in that market • A brief description of the product or service • A brief description of the management team's qualifications that make the company successful (be sure to include a description of your team's contributions to previous successful business ventures) • A capsule summary of key historical and forecasted financial data, such as annual revenue and net income, for five years • An estimate of the amount of venture capital or loan funds you need and a statement of how you will use the money If all this sounds like a lot to explain clearly in two pages or less, it is. In fact, composing an effective Executive Summary is one of the most difficult writing tasks that an executive faces. Business Plan Outline I. The Business A. Description of business and possible uniqueness B. Marketing plan C. Analysis of competition D. Operating procedures E. Personnel information F. Financial data II. Financial Data A. Income statement B. Balance sheet C. Asset worksheet D. Ratio analysis (ROI…) E. Financial standards (comparable markets or industry type) F. Pro-forma financial data (at least five year) G. Cost control H. Breakeven analysis I. Effects of loans or investments III. Supporting Documents A. Tax returns of principals for last three years (if applicable) B. Personal financial statement(s) (you can get these forms at any bank) C. Copy of franchise contract (if applicable) and all supporting documents provided by the Franchisor D. Copy of proposed lease or purchase agreement for building space or related items. E. Copy of licenses and other legal documents F. Bios of all principals and management team G. Letters of intent from suppliers, collateral letters… Executive Summary Format Executive Summary Contact: Key contact personnel? Need: What total amount of funds needed? Industry: What industry/project type? Location: Where will the project/industry take form? Use: How will the funds be dispersed? Vision/Mission: Briefly describe the overall plan for the project. Products & Services: Briefly describe the overall products, services, and or entertainment to be provided Market Strategy: What is the overall strategy to capture your market and retain market share. Insert Uniqueness of project and strengths All Principals and Management Team Include all principals involved and the management team: Example John Smith, President and CEO • Mr. Smith has owned and operated ABC Company for over 23 years with $300M in annual sales employing 250 people • Well versed in industrial acquisitions in the United States. With over 25 years of diversified industrial experience, he has closed more than $1 billion in industrial acquisitions and sales since the mid-1980s Proforma: Example (Expressed in millions…) Year 2003 2004 2005 2006 2007 . Total Revenue xx xx xx xx xx Total Cost and Mgt. Expenses “ “ “ “ “ Net Income Before Taxes “ “ “ “ “ Capital Gain/ Losses and taxes “ “ “ “ “ Net Income After Taxes “ “ “ “ “ Times-Interest Earned Ratio that exceeds... Any additional revenue from... will only bolster the NOI. Funding Requirements Amount: Total Needed $$ Term: Desired terms and conditions – should reflect flexibility as well Collateral: Collateral abilities Prepayment Penalty: none Draws: Incremental draws as needed to fund projects, in general. Use of Funds Specify the use of funds upon draws indicated as they apply to the project or other. Exit Strategy What are some of the exit strategies that will help the investment group(s) or lenders recoup funds provided? Conclusion Summary and Highlights – Final Impression Thank you for reviewing this opportunity. ####