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Executive summary
An executive summary should be exactly that – an outline of the overall content of the business plan.
It should be no more than a page long, looking to grab the attention of the person reading it and give them a complete flavour of everything that is contained within the plan. It should be a brief, no-waffle, outline of the facts. Bullet points can be useful in keeping the summary to the point and sharp, they are also easy to read and digest.
A good executive summary will include:
- An overview of why the business plan has been put together – the detail on expansion plans or infrastructure investments, or maybe just to secure the ongoing working capital for the farm
- A brief business background – including any current potential future business partners who will be introduced as a result of the plan – plus a rough idea of the value of assets held within the business
- Capital costs and ongoing working capital requirements
- Timelines of any investment – especially with a completion date as a minimum, noting if planning permission is required or if it has been gained
- If the business is reliant on rented land – very brief details of agreements – tenancy type and length
- Key people to deliver the plan – their experience and position within the farming business (including contractors for building or infrastructure work) and any consultants being used
- The KPIs relevant to the farm needed to hit the budget, with an idea of the current business performance if it is an expanding enterprise
- Projections for earnings before interest, tax, depreciation and amortisation (EBITDA) and an indication of when the business will start to generate cash
- Any other capital expenditure expected in the coming years as it is always good to have an idea of how much further funding might be required down the line
- A sensitivity analysis should also be included – noting what movements in the farmgate price and key inputs do to working capital requirements
- Potentially, a ‘what if’ option should be included – if the project does not work out as projected. Is there a plan to:
- de-gear and continue
- reduce the size of the enterprise
- gain external income to ease cash-flow pressures
- or perhaps even a complete exit plan
It is not negative, but it shows the bank that the business has really thought about the implications of the plan should it not work out; it is a sign of open and good management
As with any business plan, the need is to be realistic, honest and pragmatic. If the business plan is constructed in a biased way, given a slant to make sure the numbers add up, it does no one any favours – with the first people being deceived being the business partners and family.