The Importance of The Executive Summary & Financial Plan

The two most important sections of your business plan are the executive summary and financial plan. The executive summary is so important because that is what draws the reader in and encourages them to read through the rest of the plan. Conversely, the financial plan is so important because it will determine whether or not the reader decides to invest in your business.

The executive summary should be written last (even though it will be the first section in your plan). This is important because it allows the writer to get a complete grasp on their entire business (you will almost always discover something you hadn’t thought about yet). When you sit down to write your executive summary you’ll want to spend one to two paragraphs on each section. In this way you provide a quick overview of the entire plan for your reader. Make sure to keep it engaging and interesting, as I said before, this will determine whether or not they read the rest of your business plan.

Despite the importance of the executive summary the financial plan will actually determine whether or not the reader decides to take any action (investing, providing you with equipment, etc.) It consists of four main parts including the start-up summary, breakeven analysis, profit & loss statement and balance sheet. Each of these financial formulas provides the reader with a different angle or view on your business model. If you don’t have all the expenses and sales figured out yet that’s fine. Just make an educated guess and get it as close as possible to a real world scenario.

Most investors have spent a great deal of time analyzing new businesses and they’ll be able to provide you feedback on the financial assumptions you’ve made. This is also an important section for the entrepreneur. Your business may seem like a great idea until you actually start to figure out the expenses and potential sales. If this is the case, the prudent entrepreneur would take the opportunity to modify the business model before they’ve spent a lot of money (theirs or someone else’s).

If you’d like to learn more and download some free financial formulas for developing your business plan, check out the executive summary and financial plan pages.

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