Chapter 4
Introductory Material, Executive Summary, and
Description of the Business
Chapter Notes
I.
Introduction

A business plan is a written document (usually 25 to 35 pages) that carefully
explains every aspect of a new business venture

The business plan describes why the business is starting and how it will make
money

Experts vary on the order of the topics in a business plan, but most follow a fairly
standard format

The first two steps in a business plan, the executive summary and the company
description, will be discussed in this chapter along with the cover page and
executive summary

The executive summary and company description are arguably the most important
sections of a business plan because they must capture the readers’ interest if the
entire plan is to be read

Business plans should be written with extreme empathy for the reader; make them
clear, concise, easy to follow, and interesting
II.
Cover Page and Table of Contents
a.
Cover Page

Includes key information pertaining to the new venture centered at the top
of the page:
o
Name of the company
o
Street address of the company
o
E-mail address
o
Phone number (land based and cell)
o
The date
o
Contact information for the lead entrepreneur
o
Company’s website address if it has one

A confidentiality notice should be placed on the bottom of the page

Company logo (if already developed) should be placed near the center of
the page

A sharp-looking photo or sketch of the product or service, or an
appropriate stock photo image, can be included to make the plan more
visually appealing and professional in appearance
b.
Table of Contents

The table of contents follows the cover page

II.
III.
The table of contents lists the main sections, subsections, and appendices
to the plan along with the corresponding page numbers
Executive Summary

The executive summary is a short overview of the entire plan, and is the first item
that appears in the business plan

In many instances, an investor will first ask for an executive summary and will
only request a full business plan if the executive summary is convincing

Rather than serving as an introduction to the plan, the executive summary is
intended to be a summary that provides readers with a good sense of the entirety
of the plan itself
a.
Format

The executive summary should not exceed two single-spaced
pages

The cleanest format follows the structure and order of the plan on a
section-by-section basis

There should be two versions of the executive summary:
o
One summary that is part of the business plan
o
One summary that is a standalone document for individuals
who want to review an executive summary before deciding
whether to request the full business plan

Some investors ask for a short PowerPoint (10 to 15 slides)
overview rather than a traditional executive summary

Entrepreneurs should write the executive summary last to make
sure it accurately reflects the entirety of the business plan
b.
Content

Each section of the executive summary contains a synopsis of the
same section in the broader business plan

It’s important that the first section of the executive summary,
covering the company description, begins by describing the
opportunity and shows how the proposed business meets the
opportunity

Most experts recommend that the executive summary state the
amount of funds being requested and the amount of equity the
business is willing to surrender (in a section called “Status and
Offering”) if the summary is being shown to investors
Company Description

The company description should start with a brief introduction that provides an
overview of the company and reminds the reader of the reason it is starting

There are two major points to be mindful of as you start writing this section:
o
A business plan is a story about an opportunity and how a business will
take advantage of the opportunity
o
You must establish credibility by using facts and providing proof of
research
a.
Company History

This section should explain where the idea for the company
came from

If the company has been in existence for a while, provide a
brief timeline in narrative form and talk about its major
achievements

You should also talk about the history of revenues, net
income, and sales growth
b.
Mission Statement

The mission statement defines why a company exists and
what it aspires to become

Written carefully, it can define the path a company takes
and act as a financial and moral compass

Articulate the mission or purpose of the company in as few
words as possible

Some companies also have mottos or taglines; these should
be mentioned in this section of the plan

There is no set procedure for how to come up with a
mission statement or tagline; founders often get together
and simply brainstorm ideas
c.
Products and Services

The products and services section should explain your
product or service, including a description of how it is
unique and how you plan to position it in the marketplace

Discuss how your company differs from others in terms of
the products it offers, its location, and its price range

Identify who your clientele will be and why they would
patronize your business instead of others

This is the ideal place to report results of your feasibility
analysis

Explain any proprietary aspects to your product or service
or explain how you will create barriers to entry

If you fail to candidly address difficult issues, such as
creating barriers to entry, you will lose credibility
d.
Current Status


e.
V.
This section reveals what major milestones in development
your company has already reached
Three issues are particularly important to address:
o
The current composition of your management team

If you are an early-stage venture, you should
mention future staffing plans
o
Early customer reaction to your product or service

Summarize any results of feasibility
analyses and indicate how close your
product is to being market-ready
o
The financial status of your company

How has the company been funded?

Do you have any debt, or have you
surrendered company equity?

Clearly state how much funding you are
seeking and for what purpose
Legal Status and Ownership

This section should indicate who owns the business and
how ownership is split up

Describe the founders’ agreement, outlining how
ownership is to be shared among founders, if one has been
established

If you have multiple founders and no founders’ agreement,
indicate that this step is pending to maintain credibility
with your readers

Indicate your current form of business ownership
o
You are a sole proprietorship or general partnership
if you have not yet incorporated or created any
other type of business entity
o
Better options for the long term include a
subchapter S corporation, a C corporation, or a
limited liability company (LLC)
o
You will need to retain an attorney to help you
resolve this matter
o
If you have not determined the type of business
ownership, indicate this step as pending so that you
maintain credibility with your reader
Selecting the Name for a Business

Selecting the name for your business is not a part of the formal business planning
process, but it’s an important activity

A company’s name is normally the first thing that people associate with a
business, and it can be an integral part of the company’s branding strategy

The brand is a unique set of attributes that allow consumers to separate it from its
competitors; you want a name that will facilitate rather than hinder the
differentiation strategy
a.
b.
Primary Consideration in Naming a Business

The company name should compliment the type of business the
company plans to be

There are four categories to discuss when considering this issue:
i.
Customer-Driven Companies

If a company plans to focus on a particular type of
customer, its name should reflect the attributes of its
clientele (e.g., Big and Tall Guys or ParentWatch)
ii.
Product- or Service-Driven Companies

If a company focuses on a particular product or
service, the name should reflect the advantages that
its product or service provide (e.g., 1-800FLOWERS, XM Satellite Radio, Whole Foods
Markets, and Jiffy Print)
iii.
Industry-Driven Companies

If a company plans to focus on a broad range of
products or services in a particular industry, its
name should reflect the category it is participating
in (e.g., General Motors, Linens N Things, Home
Depot)
iv.
Personality- or Image-Driven Companies

Some companies are founded by individuals who
place an indelible stamp on the company. In this
case, it may be smart to name the company after its
founder (e.g., Liz Claiborne, Magic Johnson
Enterprises)
Legal Issues

The general rule for business names is that they must be unique

To determine whether a name is available in a particular state, the
entrepreneur must contact the secretary of state’s office

Instructions for how to go about obtaining a trademark on a name
and a logo are available at the USPTO website

The process for finding a name for a business can be frustrating
because the most obvious names are often already taken

A complicating factor is getting an Internet domain name that is
the same as the company’s name


A brief mention should be made in the business plan that a
company’s name has been registered and trademarked, and that the
Internet domain name has been secured
If these activities have not been completed, mention this step as
pending so that you maintain credibility with the reader