An executive summary is the first thing potential investors will read when they receive your business plan. In some cases, it is the only thing they will read.

Below I give you tips and tricks to write an executive summary that will secure venture capital, angel, bank and family and friends investments.

This is the exact 7-step process I used to raise a small round of $45,000 from investors in 2018. It worked for me, so I wanted to share with you — mastering these steps will help boost your company to the top of investors' lists.

First, what is an executive summary?

Your executive summary (ES)is a brief review of your business and or marketing plan. Think of it as the few short paragraphs you see on the back of a book. Giving you insights into what the book is about and even leaving some cliff hangers to entice you to read the whole thing.

Ever read a book intro and thought “Yeah, I’m not reading this book.”

That’s exactly what investors do when your executive summary is bad. Time is money and they will focus on other ventures to increase their return on investments.

We’re going to fix that.

1. Structure Your Exec. Summary to Be Readable

You must have a header that is large font and bold stating this is the executive summary. Since the ES is the first part of your business plan, it will have a 1.0 to the left of it. Giving your startup plan structure shows your investors the business has structure. People are not going to fork out large amounts of cash to someone who cannot properly edit a word document.

Font size for the heading should be around 16 and the paragraphs about 12. You do not want to make your readers pull out their binoculars. Ease of readability is key.

I like to use red for numbers and black for letters. It needs to be formal but also a bit colorful to grab attention. Unfortunately, Medium does not let you type in different color fonts so pretend that 1.0 is in red.

1.0 Executive Summary

2. Define the Problem

This is probably the most important part of your executive summary. You must clearly define your problem and build value underneath it. All great businesses are faced with a problem and go about solving it innovatively. Telling the investor what problem you’re solving allows them to think about the market size, if it’s a problem that needs to be solved, investment size and so on.

The next part is to build value underneath your problem. You must give examples and situations of how people or things are suffering because of the problem. This is exactly what salespeople do. They find pain points and build underneath them to persuade their customers to buy their solution.

Example:

Our entrepreneurial team at Revamp Recruiting launched our product in response to the overwhelming amount of aspiring college athletes and the underwhelming attainability for a large majority of those athletes to be seen by college coaches.

In one of my business ventures above, we explain how there are a large number of college athletes (referring to a large market size) and the difficulty of being seen by college coaches (problem). It shows our investors we are going after a large market with a clear problem.

3. Provide a Solution

Directly following the problem, you must give your main solution. Most businesses will have multiple products and or services. This is not where you list them all but to give your broad solution into how you tackle the market’s problem. Later in your business plan, you will dive into product and service specifics.

Your solution must be concrete and specific. Investors need to know exactly how you’re tackling the problem. If they don’t understand how your solution fixes the problem, you will never raise any capital.

Example:

Revamp prevents young athletes from being overlooked by using detailed analysis and video footage to help them market their abilities and talents in order to compete at the next level of competition. The use of technology, whether on the internet or via smartphone, has streamlined the recruiting process. Revamp Recruiting will offer data such as statistics, academic info, and photos and videos in order to create value to the student-athlete in the marketplace.

We clearly explain how athletes have trouble getting recruited and how we’re going about solving that. We define clear examples how technology will enable us to scale athletes’ talents and market them to the best schools. We mention our solution through a broad scope and dive into exact products later on.

4. Market Potential

It’s great if your solution solves a difficult problem. But more importantly than that, do enough people suffer from that problem?

Talking about the market is essential because it lets the investor know how big or small your pool of customers is. This is where you can throw in a few statistics such as population, industry size, annual revenue, and so on. Keep the stats brief, there’s also a section later in the business plan where you dive deep into the market details.

A big mistake that many entrepreneurs make is they tell investors they want to capture a small percentage of a large market. Such as, “we want to capture 1% of the massive advertising industry.” That is telling investors you will capture 1.9 billion dollars of a 190-billion-dollar market. Sorry, not going to happen anytime soon.

Huge industries equal soul-crushing competition. Massive companies will squish small startups like a bug. It is incredibly difficult to steal market share from large competitors but, not impossible. It’s best to dominate a niche market and grow from there. Believe it or not, companies like Amazon and eBay did exactly that. Amazon started with books and eBay with collector items.

5. Unique Selling Proposition

This is the step where you tell investors why your product is superior to the rest. Do you have patents, first-mover advantage, copyrights, proprietary solutions, etc. What is going to make people want to buy your product over the rest?

The best value prop is to present a product no one has seen before versus a product with minor changes that barely differentiates itself from the competition. Maybe your product or service is not different than anyone else’s, but the way you provide that service is better. Such as, direct to consumer, quicker shipping, easier access, etc.

Example:

At Revamp Recruiting, we are changing the game. Unlike other companies, we come to you to film and market your players. Video recruiters have you film your own players and send it to the company via drop boxes. Here at Revamp, we travel to your practice field and run you through our proprietary filming process. Each position player has a specific step by step video process which was developed with the help of Division 1 baseball coaches.

We show investors that we have a completely different business model than competitors. This gives us a competitive advantage over those in the same industry.

6. Management Team

List your founders and give small backgrounds on each of them to brief your investors on who will be running the company. This gives you the ability to show experience, credibility, degrees, certifications, etc. that prove to investors you can handle a startup venture. You also want to provide who is CEO, COO, CFO, CTO, etc and if you are hiring help.

Anyone can come up with ideas, but not everyone can execute them. Investors often invest in the people running the business, not always the idea.

Ownership will be recognized as a general partnership between Tyler Hickey CEO, Blake Lazur COO, and Matt Lynch CFO. With over 15 years of combined experience within the recruiting process, all three owners have confident knowledge and valuable connections within the recruiting industry. Each owner has a bachelor’s degree in Entrepreneurship and 2 other bachelors’ in finance. All 3 partners combine 6 years of college baseball and 10+ years of showcase travel baseball.

7. Investment

The last section of your executive summary is when you will ask for an investment or loan. You must flat out give an amount of money you are looking to raise.

Depending on how much money you need will correlate with the number of investors you need to meet with. If only in need of $50,000 you can secure that from Angel investors. If you are looking for $100,000,000, you will need to seek out multiple venture capital firms.

Do not provide the amount of equity you will give up and or interest rate repayments. This will all be done through negotiation after the investors agree they will fund you. Simply state the amount of money you are looking to raise to completely fund your venture.

Later in the business plan, you will detail the desired financing which will show what the injection of cash is going towards.

Revamp Recruiting has startup capital of $15,000 but will need to obtain a $45,000 cash injection from outside investors. This amount has been determined by using supportive projections to assure startup coverage, positive cash flow sustainability, and high growth.

Clear amounts of money allow the investor to calculate their risk and assess potential returns. If the investor agrees, you will negotiate the valuation of your business and exchange capital for equity. If working with angel investors, you typically will pay back the loan with a high-interest rate. Although some angels want equity stakes as well.

This 7-step process will enable you to provide your investors with a detailed summary of your business plan. Effectively touching on each aspect will increase your chances of obtaining startup capital.

This article was originally published by Blake lazur on medium.