In this series of installments I am discussing the executive summary and how to make it stand out. The executive summary should present the compelling reason for the investor to buy into the company.
Probably the most forgotten item in the entire business plan is the discussion of risk and how it is handled. Since this is often missed in the business plan, it is definitely missed in the executive summary. It is remarkable that this element is missed because it is this one element that will set one business plan apart from another. How the management mitigates the risk of business, plans for the unknown, will show how well the management thinks and uses their experience.
Clearly, the business plan can discuss risk and all its elements. The executive summary should just address it briefly demonstrating that management is thinking about the problems.
Three questions should be addressed:
- What other products/services is this company considering (if any) that would be launched instead of the main product/service? How will it affect costs and revenues?
- What other products/services is this company considering, for further growth, if they are different from the previous question? How will affect costs and revenues?
- If something goes wrong with your ability to make, sell, distribute, etc. what else could you do, that will ensure that the investors will get at least some of their money back?
The answers to these three questions could fill hundreds of pages of any business plan. In the executive summary, the risk elements should be addressed completely in one or two sentences. People remember the bad, and too much information will focus on the negative. Rather, by recognizing that there can be negative situations, a few sentences will focus the reader that the management plans for obstacles but will be successful.
