Chapter 4
Introductory Material, Executive Summary, and
Description of the Business
Key Words
Business plan—a written document (usually 25 to 35 pages) that carefully explains every
aspect of a new business venture
Cover page—includes the name of the company, its street address, its e-mail address, its
phone number (land based and cell), the date, the contact information for the lead
entrepreneur, and the company’s website address if it has one
Chapter Overview
This chapter begins Part III of the text, Preparing a Business Plan. Chapters 4 through 10
will walk the reader through the preparation of each component of the business plan. This
Chapter Summary
1.
The executive summary and the company description are arguably the most
2.
The cover page should include the name of the company, its street address, its e–
mail address, its phone number (land based and cell), the date, the contact
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3.
The table of contents should follow the cover page, and should list the main
4.
short overview of the entire plan and provides a busy reader with everything that
The executive summary is the first item that appears in a business plan. It is a
5.
that it’s not an introduction or a preface to the business plan. Instead, it is meant
to be a summary of the plan itself.
The most important thing to remember when writing an executive summary is
6.
Even though the executive summary appears at the beginning of the business
plan, it should be written last. The plan itself will evolve as it’s written, so not
everything is known at the outset.
7.
company. While at first glance this section may seem less critical than others, it
is extremely important. It demonstrates to your reader that you know how to
translate an idea into a business.
The main body of the business plan begins with a general description of the
8.
mission statement, products and services, current status, and legal status and
ownership. It is best to follow this order.
The subsections under company description category are: company history,
9.
A mission statement defines why a company exists and what it aspires to
become.
10.
The primary consideration in naming a business is that the name should
complement the type of business the company plans to be.
Chapter Outline
I. Introduction
II. Cover Page and Table of Contents
a. Cover Page
III. Executive Summary
a. Format
b. Content
IV. Company Description
a. Company History
V. Selecting the Name for a Business
a. Primary Consideration in Naming a Business
i. Customer-Driven Companies
b. Legal Issues
sections, subsections, and appendices to the plan along with their corresponding
page numbers.
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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
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
• 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
b. Table of Contents
• The table of contents follows the cover page
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II. Executive Summary
• The executive summary is a short overview of the entire plan, and is the
first item that appears in the business plan
a. Format
• The executive summary should not exceed two single-
spaced pages
b. Content
• Each section of the executive summary contains a synopsis
of the same section in the broader business plan
III. 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:
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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
b. Mission Statement
• The mission statement defines why a company
exists and what it aspires to become
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
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d. Current Status
• 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
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?
e. Legal Status and Ownership
• This section should indicate who owns the business
and how ownership is split up
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
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V. 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. 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
ii. Product- or Service-Driven Companies
• If a company focuses on a particular product
iii. Industry-Driven Companies
• If a company plans to focus on a broad
iv. Personality- or Image-Driven Companies
• Some companies are founded by individuals
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b. 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
Review Questions
1.
Why is it important for a business plan to have a cover page? What information
should the cover page contain?
Answer: The cover page makes the first impression for your business plan. The
2.
What is it important for a business plan to have a table of contents? What are the
attributes of an effective table of contents?
Answer: The table of contents makes it easy to find anything in the plan. It
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3.
What is an executive summary? Why is it often called the most important part of
a business plan?
Answer: The executive summary is the first item that appears in a business plan.
It is a short overview of the entire plan, and it provides a busy reader with
4.
At what point in the process of putting together a business plan should the
executive summary be written?
Answer: The executive summary should be written last. The plan itself will
5.
Why would an investor ask for a PowerPoint overview of a business plan rather
than an executive summary or the full plan?
Answer: Some investors ask for a short PowerPoint (10 to 15 slides) overview
6.
Explain the statement “The primary goal of an executive summary is to capture
the reader’s attention”?
Answer: The executive summary, along with the company description, must
7.
What are the subsections that are included under the company description
section of a business plan?
Answer: The subsections under the company description category are: company
8.
you can articulate its purpose clearly.
What is the purpose of a mission statement? Why is it important to include a
mission statement in a business plan?
Answer: A mission statement defines why a company exists and what it aspires
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9.
To what extent should the results of a company’s feasibility analysis be reported
in its business plan?
Answer: The product/service description section is the ideal place to report any
10.
Why is selecting a company’s name a critical issue?
Answer: A company’s name is normally the first thing that people associate
Application Questions
1.
a very busy individual who values his or her time. For this reason, anything that
will make it easier to navigate the plan is appreciated. Suggest that Jeremy divide
information.
Jeremy and Susan Kramer are friends of yours. You were at their house recently
and noticed a copy of a business plan on their kitchen table. You knew that
Jeremy and Susan talked to their banker a month or so ago about the business,
and he asked them to complete a business plan as part of the process of applying
for a loan. Jeremy noticed that the business plan caught your eye and said, “Take
a look at our plan; we’d like your feedback.” In paging through the plan, you
noticed that it appeared to be well written and had lots of facts, but didn’t have a
cover page, table of contents, and wasn’t divided into sections. It was basically a
35-page continuous narrative. After a few minutes, Jeremy sat down at the table
across from you and said, “So, what do you think?” What would you tell him?
Answer: Advise Jeremy to begin his organization of the plan by adopting a more
empathetic posture toward the reader. Explain to Jeremy that the reader is likely
2.
John Ryan is part of a five-person group that wants to start a biodiesel firm. He
and his partners have been meeting daily for the past three weeks to hammer out
a business plan, which they plan to send to an angel investor who specializes in
alternative fuels. John volunteered to keep careful notes on everything that was
decided in the meetings and actually write the plan. When the discussions were
over, John put the plan together and distributed copies to everyone in the group.
Amy, a member of the group, called Paul, another member, a couple of hours
after she received the plan with a somewhat desperate tone in her voice. She
said, “John got the essence of our plan right and the writing is okay, but it looks
feedback.
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sloppy. There are typos throughout the plan, several misspelled words, and the
major headings are in a 12-point font in some places and a 14-point font in
others. I confronted John about it, and he got real defensive. He said, ‘If the facts
are all there and the plan is well written, what difference does it make if the font
sizes vary or there are a couple of misspelled words?’ What do think we should
do, Paul? I’m really worried about it. Is Amy justified in her concern? If you
were Paul, what would you say to her? What would be an appropriate course of
action for Amy and Paul to take?
Answer: Amy is right to be concerned. The professional appearance of your
3.
Mary Campbell is planning to open a retail store that sells upscale cookware.
She spent the past three months writing a business plan and is very proud of it.
It is well written, includes detailed industry analysis, and contains three years of
pro forma financial statements that a CPA helped her develop. Mary is targeting
an angel investor in her city, who has funded retail start-ups before. She met the
investor at a chamber of commerce function a month ago, and he seemed
interested in her plans. Mary just exchanged e-mail messages with the investor
and is disappointed. She offered to FedEx him a copy of her plan but he asked
for a 10-slide PowerPoint overview instead. She doesn’t have a PowerPoint
overview of the plan and will now have to scramble to prepare one. Is Mary’s
disappointment justified? Should she be worried that the request for a
PowerPoint overview instead of the plan is an indication of lukewarm interest on
the part of the investor?
Answer: Some investors now request a brief PowerPoint slide presentation
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4.
Scott and Rebecca Wheeler’s youngest daughter, Emily, has struggled with
asthma since she was born. In caring for Emily over the years, Rebecca designed
and made a variety of cards, posters, notes, and even decorated lunch bags that
encouraged Emily, educated her about her condition, and reminded her to take
her medicine on time. Scott and Rebecca are in a support group for parents with
asthmatic children, and many of the parents have encouraged Rebecca to start a
company to make the items she made for Emily available to other parents.
Rebecca has decided to go for it and is writing a business plan for the company.
One thing she’s unsure about is how much of her personal story to include in the
plan. Should she talk about how she developed the items for her own daughter,
Emily, or should she stick to the facts? If Rebecca asked you for your advice,
what would you tell her?
Answer: If you have an interesting personal story about how your product or
5.
Suggest an alternative name for the fictitious fitness club, Prime Adult Fitness,
discussed in the chapter. The Internet domain name must be available for the
alternative name that you suggest. Explain the rationale for the name you choose.
Additional Activities
1. Draft a Mission Statement
Purpose: students will practice writing a mission statement.
After lecturing on mission statements, show students the actual mission statements of
some successful businesses. Ask them what characteristics they notice about the mission
statements. Hopefully, they will notice the typical length, key words that convey emotion,
and perhaps even that many mission statements are used mainly for public relations
purposes.
business was created, you should share it in the business plan. This helps to put a
We (I) hope that our business impacts our customers’ lives by _____.
Suppliers and vendors will want to do business with us (me) because _____.
The number one reason the products/services that we (I) sell will satisfy our (my)
customers because _____.
2. Name This Company
Purpose: to practice developing a memorable business name.
Their task is to use the concepts in this chapter to develop a business name that will serve
as an effective brand. For example, the company names they develop should reflect the
four categories: customer-driven, product- or service-driven, industry-driven, and
personality- or image-driven.
3. Tagline, Slogan, Motto
Purpose: students will practice writing a slogan.
After lecturing on slogans and taglines, show students some actual company slogans or
