What type of "Executive Summary" are you referring to?
In general an executive summary is simply a 1-page letter that says:
(a) This is what we did, or expect to do - (objective)
(b) This is why we did it or expect to do it - (rationale)
(c) This is our results or expected result and what we want from the reader - (outcome and recommendation)
What is an "Exit" strategy?
Just what it sounds like. ...How are you going to get out?
In the case of an investor, the exit strategy is: How is the investor going to get his/her principal and (hopefully) earned profit out of the investment?
Example: If an investor puts up capital to help finance a real estate venture project. The exit strategy may be that in 5-7 years after the initial purchase of the property, and several years of whatever they intend to do with it, the investment group plans to "sell" the property at a profit and send all investors a big fat check.
An executive summary is usually a part of a larger business plan. One of the components of the business plan or even a pitch to an investor is the exit strategy. If someone is putting in money into your business, they need to know, have you thought of how they will be in a position to take their money out!
Also- You always write the executive summary last - after you finish the entire plan. Its your menu card or your opening line - good enough to hook the listener/ reader, with just about enough information for them to want to go through. There are too many cases where the executive summary kills the entire pitch simply because it is either too boring or too casual. Touch upon 4 things in it - What, Why, How, and How much!
Hope this helps!
I agree with Alfred. Just to add a little more in the case that you're referring to an executive summary for a business plan you're hoping to use to get investors: Again, the executive summary is what Alfred said: What will your business do (what products or services do you offer)? Why are you doing it (what is the problem or pain point that you are solving for your customers)? How will you do that and how will you make money off of it (what's the basic business model)? It's a brief overview of what you'll detail in the business plan and its purpose is essentially to get the investors interested enough to keep reading.
The exit strategy is, again, what Alfred said: how you will get out of the business. When you look for investors (equity investors) they want to know what your plan is for selling the business or for an IPO. That is how they make their money. If your plan is to build your business, manage it until you retire, and then pass it along to your children you don't have an exit strategy that would be attractive to an investor. Instead, you should have an idea of what larger companies may want to buy your company after you've built it up a bit, how you'll make your company an attractive acquisition target, and when you think this could realistically happen and at what valuation. Agreeing with Alfed, once again, this is all about showing the investor how s/he will make money.
As far as I know, the exit strategy you are asking about is probably the term that means a "golden parachute" given the founders of a company as an inducement to leave. A lot of companies are founded by entrepreneurs who get a company started then they leave it to the investors to run the corporation their way.
Its predicated on the theory that although entrepreneurs often have concepts for starting companies that they are not always the experts that know how to make the most profits and they make way for those.
I agree with Alfred and Cate and love the article http://www.inc.com/guides/2010/09/how-to-write-an-executive-summary.html Adimolo recommended. I used to do them like Madon recommended, writing it last. I stopped doing that years ago because no one ever reads the business plan until way into the process.
I'd recommend creating the basic elements of the business plan first, including an exit plan...how the investors will get their money out of the business. Then I write the executive summary.
Then start getting the executive summary into the hands of the potential investors. After each meeting with the investors tweak your executive summary based on the questions and feedback that came up during the meeting. I've raised over $200 million over the years and generally ended up talking to between 20 and 30 investors before landing the funding. Taking more of a sales letter approach for the Executive Summary I closed deals in only 5 or 10 different meetings. After each meeting improve the executive summary and the financials. I've made as many as 17 or 18 modifications to the executive summary before landing funding.
Once they show interest and want to see the business plan just tell them you are updating it and it will be available in four or five days.
The executive summary should all have a positive spin on things because it is really your sales letter to the business owner.
Be sure to prove and backup everything you say in it...it can't be fluff. If you have a source of the market size, the top competitors, the changes in the industry, have your sources available...but don't put them in the executive summary.
If found the most important parts of the summary are talking about what makes your approach or your product unique, what problem it solves, why people wand it (not need it), why the management team you've assembled can pull it off and how will they get their principle back first (that's their biggest win) and how will they get their profit back next.
I've found talking about an IPO has little believability because the chances are so slim...out of 200 plus clients only one went public. Most of the time look for an exit by finding large companies that might be interested in your business that are synergistic...they want the distribution channels, the new products, the technology and patents or the talent you'll have put together.
Best of luck on your project.
Thank you to everyone here, I have found the answers to be real gold. Some of the suggestions which I would like to add.
In the Executive Summary add the point which you need to answer and know “What makes you different and why are you better than everyone else in your industry?” This is a question which investors want to know as an investor, they can invest in any company in the industry, so they want to know that you are their best ROI option.
In relation to the Exit Strategy, a number of business owners put themselves in the position where they spend too much time working in the business and not on the business and this makes them indispensable. So look at this from the perspective of designing a plan where you aren’t the corner stone of the business. If you were to leave right at this moment, would the business collapse or would everything run smoothly. If the business would collapse, look at what needs to be reassigned over a period of time to whom and what documentation, systems and training would need to be made to make sure that anyone can do these jobs.
An investor and business buyers love the idea that they can walk into a business at any time and it will run smoothly, this makes it worth more than a business where if the owner left, the business could no longer function properly.
I hope this helps.
If you're thinking about these things in the context of a business plan, I'd like to be a little contrary.... as ever.
1) Exec summary.
First, remember why you're writing an exec summary - usually it's primarily a use is to get you in front of investors. You don't need to say everything, to summarize everything. You need to say something that is compelling enough to get a meeting (I refuse to send business plans to VCs ahead of a meeting).
I always start a business with an exec summary (so don't write a full plan first). Why? Because writing a summary forces you to be crisp and clear in your thinking. It helps you focus your mind on key topics and this helps you write a better plan. If you start with a detailed plan, in my experience, you get lost in the details and it's hard to come back up to 30,000 feet. Of course, this is an iterative process - you will update your exec summary as you flesh out your plan, but start with the summary and if you can't write a compelling summary, you probably don't understand your business.
Second point is to think about your audience. Serious investors will look at well over 100 businesses for every investment they make, so you have around 30 seconds to grab them.I love the pointers others have given about what should be in there, but I try to get it down to 1 (or maybe 2) pages and I always make sure there is some form of a "grabber" in the first paragraph.
Third, I use a format that a VC shared with me years ago. Basically, it's a one (or maybe 2) pager with a bar down the left hand side. In this bar you put the most important points in bullets so an investor can, within seconds, see something that is compelling. For example, you might put the market size or the three reasons that you're going to win, or list a couple of big-name customers. Whatever will grab attention.
Finally, think about tone of voice. Sometimes, using a "fresh" or provocative tone of voice will really make your summary stand out. Of course, this is not appropriate for all businesses, but think about it. Here's an example of one I did a few years ago (I was trying to negotiate a license on a really hot technology and wanted to generate funding interest in parallel).
I only sent this to 5 potential investors and got 4 "Please come and meet me" responses. Remember where we started... the primary point of an exec summary is to get you in front of investors.
2) Exit Strategy
This one is simpler. Investors typically don't want to invest in a company for ever. They usually don't want dividends, they want a capital gain (for tax reasons) and, if it's a VC, they will have a specific time horizon in which they need you to deliver that capital gain. This means that the investor must see a way to sell their interest in your business - it needs to be realistic, within the investors' time horizon (typically 3-10 years) and it needs to be big.
I usually try to prepare one short slide that positions what we do in the market and shows the other companies operating in adjacent areas. I then highlight a few who have a history of buying smaller businesses and give 2 or 3 reasons why they would buy you. Job done.
Hope this helps.
I assume you're presenting a business plan seeking investors.
What is the best way to write an Executive Summary?
Save it for last. By that time, you'll have gone through your many drafts, pared it down to the essence so you have your 10-20 page business plan, and can highlight what makes your proposal interesting and profitable.
What is an Exit Strategy in business?
This answers the investors' question of: How do I get my money back and make money. In investing equity, usually, you'll think of selling the enterprise to another company and create your short list in the beginning. (Less frequently: IPO is your exit strategy.) This also applies to ventures other than your typical business (e.g., real estate: acquire parcel, build property, sell for profit on the open market).
Thelma, perhaps this can help:
Good luck! Ugur
You've already been given some great advice already here! However, in addition, here are 2 great articles that perhaps could help you out:
How to write an executive summary:
Exit Strategies for Your Business:
1) Keep it shorter than you think it should be
2) If you wanted to exit/close shop, how would you do it
3) Google is a fantastic tool that will answer these questions far better than posting it here...
The best way to write an executive summary is to write it last, after all of the other sections have been completed. That way you can pull language from each section to create a succinct, powerful summary that gets the reader to turn the page and see the details.
An exit strategy is a way for the owner or owners to "step away" from the company they have built. It could be that the CEO steps away from the day to day and becomes chairman of the board. (Bill Gates, for example). The important thing is that you think about an exit strategy at the beginning. Too many entrepreneurs jump in without an exit strategy in mind, and then have a hard time separating themselves from the business. They instead, built the company on their shoulders and now can't see how to transfer that so they can focus on other things.