Executive Summary – Introducing Your Business
The first section of your business plan is the Executive Summary which provides a succinct overview of your business. An executive summary needs to immediately make an impact and have the reader wanting to know more. The executive summary in a small business plan can be as few as one to two pages and never more than five. Remember that many of the things that are mentioned in an executive summary will be expanded upon in other sections of your plan.
Follow the format below for the introduction of your executive summary and be providing the reader with the information that need to know (to get interested), fast!
Outline of an Executive Summary Introduction:
- Briefly describe your business idea, and key products or services. Include a brief statement about how your business will fill an unmet need, or provide something that is fundamentally bigger, better, faster or less expensive than what is available today.
- Describe the target market for your products or services, including relevant industry trends, competition, and potential customer demographics.
- Summarize your plan for reaching and engaging customers in your target market with an offering that meets their needs. Include your plan for advertising, pricing, and distribution.
- Highlight the key members of your management team and their relevant experience and qualifications.
- Provide a high-level overview of your financial projections, including revenue, expenses, and expected profits within 3 to 5 years. This should be in the form of a paragraph or two, not tables of numbers. A revenue or profit graph is optional.
Example of Executive Summary Introduction
The following example uses the outline above to quickly get the reader’s attention with relevant information about the business. Using this format, if the investor or lender is interested in this type of business, they will surely want to have further discussions with Acme Engineering.
Acme Engineering – Introduction
Acme Engineering Consultants is a dynamic startup engineering consulting firm that aims to revolutionize the industry through innovative solutions and exceptional service. Our business idea is to provide comprehensive engineering expertise in civil, mechanical, and electrical disciplines to meet the evolving needs of our clients. By leveraging cutting-edge technologies and a team of highly skilled engineers, we offer a range of services including feasibility studies, design, project management, and technical consulting.
What sets Acme Engineering Consultants apart is our commitment to filling the unmet need for integrated engineering solutions that are faster, more efficient, and cost-effective. We understand that clients are seeking not only technical excellence but also practical and sustainable solutions that align with their business objectives. Our unique value proposition lies in our ability to deliver solutions that are fundamentally bigger, better, and faster than what is currently available in the market, all under one roof.
Our target market includes construction companies, architectural firms, government agencies, and industrial enterprises. These sectors are experiencing significant growth, driven by infrastructure development, technological advancements, and the need for environmental sustainability. We have analyzed the industry trends and competition, and there is a clear opportunity to provide tailored engineering services that address the specific challenges faced by our target customers.
To reach and engage our target market, we have devised a comprehensive marketing strategy. Our plan includes a multi-channel advertising campaign that will utilize online platforms, industry publications, and strategic partnerships. We will leverage digital marketing techniques to showcase our expertise, success stories, and the value we bring to our clients. Our pricing strategy will be competitive, offering transparent and flexible pricing models based on project requirements. Additionally, we will establish strong distribution channels by building partnerships with key stakeholders in the industry.
Acme Engineering Consultants is led by our founder, Leo Cuthbert a 30-year engineering veteran with an impeccable LinkedIn profile, anchored by his 20 years at BigTechCo Engineering. Leo will be supported by a highly experienced management team with diverse backgrounds and a proven track record in the engineering field. Our team members possess extensive industry knowledge, technical expertise, and strong leadership skills. With their combined qualifications, we are confident in our ability to deliver outstanding results and foster long-term relationships with our clients. Four of our five leaders have worked together in the past, so team synergy is assured.
In terms of financial projections, we anticipate year-one revenue of over $1 million, followed by steady growth over the next 3 to 5 years. Our strong market positioning, efficient operations, and focus on client satisfaction are expected to drive increasing demand for our services. We have projected our expenses, factoring in the costs associated with talent acquisition, technology investments, and marketing initiatives. We aim to achieve profitability within the first two years of operation and have a positive cash flow to support our expansion plans.
Overall, Acme Engineering Consultants is poised to become a leading player in the engineering consulting industry. By addressing the unmet needs of our target market, implementing an effective marketing strategy, and leveraging our talented team, we are confident in our ability to achieve sustainable growth and success in the years ahead.
An executive summary introduction is the written equivalent of an elevator pitch. See our post on an effective elevator pitch, which also includes a template and examples.
Business Structure Outline
Your business plan introduction should include some basic facts about the current status of your business, particularly if the company already exists as a corporate entity. Letting the reader know how your business structure is currently set up is important but straightforward.
The following information should be included in the Business Structure section of your business plan:
- Business Status
- Type of Entity
- Current Ownership
- Current and Past Funding
The template below provides more details and examples for writing the business structure section of your business plan.
Business Structure Template
While the nuances of the different choices of business plan structure require some reading and understanding, in the end, you’ll select the business structure that’s right for you and include that in your business plan. This section of your business plan should be in a concise, easily readable format. Remember, it is a summary of facts and needs little, if any, editorializing.
Use the template below to Include information covering each item:
- One to five sentences on the status of the business (started or to be formed), when it was founded, and where it is or will be located.
- Type of entity (C Corp, S Corp, LLC, LLP, or Sole Proprietorship)
- Who owns the company, and how much each person owns. If there are more than two owners, include a simple “cap table” that shows the amount of capital invested by each person and each person’s ownership percentage.
- How the company has been funded to date (how much, by whom, and when was it invested).
Business Structure Types
There are many different types of business structures. Being familiar with the various business structure types will guide you toward the one best suited for you. Ultimately, this is an essential legal and tax decision you’ll want to make with your professional advisors. This article should help you prepare for that discussion. Your final decision will depend on both business and personal circumstances.
A sole proprietorship is a business owned and operated by one person. This is the simplest form of business structure, and the owner has complete control over all aspects of the business. It is also the easiest and least expensive to set up. The owner, or proprietor, is responsible for the debts and obligations of the company and has little protection against legal matters that may arise.
Advantages: Easy to set up and operate, the owner has complete control over business decisions, and all profits go to the owner. This type of business structure is ideal for small businesses owned and operated by a single person, such as freelance consultants or home-based businesses.
A partnership is a business owned and operated by two or more people who share in the profits and losses of the business.
Partnerships are easy to set up and operate, and each partner can contribute different skills and resources to the business. Partners also share the risks and liabilities of the company. This type of business structure is ideal for businesses that require different skills or resources that multiple owners, such as professional services firms like law firms or accounting firms, can provide.
Limited Liability Partnerships and Limited Liability Companies
LLP versus LLC?
A Limited Liability Partnership (LLP) is a type of business structure that combines a corporation’s liability protection with a partnership’s tax benefits. Here is some information on LLPs and how they differ from LLCs:
Limited Liability Partnership (LLP)
An LLP is a partnership in which each partner has limited liability for the partnership’s debts and obligations. This means that each partner is not personally responsible for the actions of the other partners, and they are only liable for the amount of their investment in the business. For example, professional service firms such as law, accounting, and architecture firms often use LLPs.
LLPs allow for flexibility in management, and profits and losses are passed through to the partners’ personal tax returns.
LLPs are ideal for professional service firms where each partner has a unique skill set or area of expertise. This type of business structure is beneficial for firms where partners want to be protected from the actions of other partners but still want to share in the profits and losses of the business.
Limited Liability Company (LLC):
An LLC is a hybrid business structure that combines the flexibility and tax benefits of a partnership with the limited liability protection of a corporation.
Differences: The main difference between an LLP and an LLC is that an LLP is typically used by professional service firms, whereas an LLC can be used for many business types. Additionally, an LLP must have at least one general partner liable for the partnership’s debts and obligations, while an LLC can have all members shielded from personal liability.
LLCs are ideal for small businesses that want a corporation’s liability protection but also want a partnership’s flexibility and tax benefits. They are often used by businesses owned and operated by a few individuals, such as family businesses, small retail shops, or restaurants.
Overall, choosing an LLP or an LLC depends on the specific needs and goals of the business. It’s important to consult with a tax or legal professional to determine which type of business structure is best for your business.
A corporation is a legal entity that is separate from its owners. It is owned by shareholders, who elect a board of directors to oversee the company’s management. The two types of corporate business structure examples most often used by small businesses are a C-Corp and an S-Corp. Each is discussed in more detail below.
A C corporation or “C-Corp” is a separate legal entity from its owners, known as shareholders. The corporation is taxed separately from its owners, and shareholders have limited liability for the company’s debts and legal obligations.
Advantages: C-corps offer some liability protection to their shareholders, which means that shareholders are not personally liable for the company’s debts and legal obligations. (An exception to this limitation would be where someone signs a personal guarantee for a debt or credit.) C corporations can raise capital by selling stocks and can continue to exist even if the ownership or management changes.
C corporations are ideal for businesses that require significant capital investment, such as large manufacturing companies or tech startups. They are also beneficial for companies that plan to reinvest profits into the company, as profits can be retained within the corporation and reinvested in the business without being subject to personal income tax.
Talk to your legal or tax advisor about the benefits of issuing qualified small business stock or “QSBS,” which only C-corps can do.
An S corporation is a pass-through entity taxed similarly to a partnership. The business is not taxed at the corporate level; the profits and losses are passed through to the shareholders’ personal tax returns.
Advantages: S corporations offer limited liability protection to their shareholders, which means that shareholders are not personally liable for the company’s debts and legal obligations, except as noted above, where a ‘personal guarantee’ is provided to a lender or creditor.
S corporations avoid double taxation since they are not taxed at the corporate level.
This business structure is ideal for small businesses that want the liability protection of a corporation but also want to avoid double taxation.
Many tax ramifications of an S-corp need to be considered in light of your personal circumstances. For example, some founders like forming an S-corp where they have outside income and know the new business will lose money in the early years. As a result, they can write off the losses from the S-corp against their other income.
C-Corp versus S-Corp?
The factor many founders use to select between a C-corp and an S-corp is taxation. A C-corp is responsible for paying its own taxes based on the financial outcome of the business. The shareholders are not themselves responsible (even though they own shares in the company.)
In an S-Corp, the shareholders are responsible for paying the taxes attributable to the business results. That can become an issue if you are a minority shareholder in an S-corp that generates significant profits. You will owe taxes on your pro-rata share. However, the S-corp is not obligated to distribute cash to its shareholders to pay those taxes!
Overall, the decision to choose between a C corporation or an S corporation depends on the specific needs and goals of the business AND your personal circumstances. It’s important to consult with a tax or legal professional to determine which type of business structure is best for your business.
Examples of Business Structure Types used by Entrepreneurs
Samantha, Freelance Graphic Artist
Samantha is a freelance graphic designer who has decided to start her own design agency. After researching different business structures, she decides to form an LLC.
- Liability Protection: As the owner of an LLC, Samantha’s personal assets are protected from business liabilities. If the business is sued or faces financial difficulties, her personal assets (like her home or personal savings) are not at risk.
- Tax Flexibility: As a single-member LLC, Samantha can choose to have her business income taxed as a sole proprietorship or as an S-corp, depending on what is most beneficial for her situation.
- Credibility: Forming an LLC adds credibility to her business and makes it more attractive to potential clients.
Samantha chose an LLC because it offers her the personal asset protection she needs as a small business owner and the flexibility to choose how she wants to be taxed. Additionally, forming an LLC adds credibility to her business and gives her a competitive advantage when working with potential clients.
Robert, Website Designer
Robert is a website designer who has recently started his own web design business. After researching different business structures, he decides to operate as a sole proprietor.
- Easy and Inexpensive: A sole proprietorship is the simplest and least expensive business structure to set up and operate. Robert can start working as a business without having to file any paperwork or pay any fees.
- Complete Control: Robert has full control over his business as a sole proprietor. He doesn’t have to share profits or decision-making authority with anyone else.
- Tax Flexibility: As a sole proprietor, Robert’s business income is taxed as personal income, allowing for greater flexibility in deductions and expenses.
Robert chose to be a sole proprietor because it’s a simple and cost-effective way to start his web design business. He also likes that he has complete control over his business and doesn’t have to share profits or decision-making authority with anyone else. Additionally, being a sole proprietor allows him to take advantage of tax flexibility, which can help him save money and maximize profits.
Paul, Software Company
Paul is an experienced software developer who has decided to start his own software company. After researching different business structures, he decides to form a C-corporation.
- Liability Protection: Paul’s personal assets are protected from business liabilities as a C-corporation. If the business is sued or faces financial difficulties, his personal assets are not at risk.
- Ability to Raise Capital: A C-corp is the most common structure for startups and high-growth companies that plan to raise outside capital. Investors prefer investing in C-corporations because it allows them to purchase stock in the company and receive a return on their investment in the future.
- Tax Benefits: C-corporations offer tax advantages, such as the ability to deduct employee benefits, as just one example.
Paul chose to form a C-corporation because he plans to raise outside capital to fund his software company’s growth. He knows that investors prefer investing in C-corporations because they can purchase stock in the company and receive a return on their investment in the future.
Additionally, being a C-corporation provides personal asset protection for owners, which is essential for businesses that may face significant legal or financial risks. Finally, the tax benefits of a C-corporation allow him to maximize profits and reinvest in his company.
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