I was recently reviewing an executive summary for a company. The summary did a good job of articulating a large market, a team to address this market and details on the technology the company intended to use to solve the problem. The company also addressed how their technology was protected and patented, which is important. However, something was missing. When I got done reading the summary, I had no idea who would buy their solution and why.
As entrepreneurs in the technology field, we often focus too much on telling people details about our widget or device. For example, our sensor can detect up to 9 chemicals within 10 microseconds. These technical details seem important to us given the we have spent large amounts of time getting our technology to work. As we talk to people and present our technology, we fail to realize why no one understands the value of these details. We fail to realize that every detail we mention needs to be positioned in terms of solving a customer's problem.
Now, let's go back and review how we could improve that executive summary. Having a large market, a good team and technology is important. However, we need to fill in the gaps with details as to why someone would buy our technology and how many people have the problem we solve. We must start with a customer or potential customer who has a PAIN. Our executive summary should include little to no stats or information on the details of the product or technology. It should focus on outlining the customer's problem and how they view your solution as solving this problem. Similarly, the market section should emphasize how many people have this problem, and how much is cost them to avoid solving this problem. The team section should highlight to capabilities of your team that are going to help you address your market opportunity. Everything should focus on explaining who has the burning problem you want to solve, and how you are well positioned to solve this problem.
Let me stop for a second an emphasize that your biggest competition may be that the customer decides to do nothing. Your potential customer can always chose to do nothing. Even if it cost them millions or billions of dollars, they can chose to do nothing. In all of the business plans and executive summaries I have read and created, I have found this by far to be the most under articulated competition. Realistically articulating how your customer's ability to do nothing impacts your ability to address your market will go a long way towards building credibility with your audience.
If I were investing in a technology company, I would want to know as much as possible about the individual characteristics of the customers you intend to have. I would want to know that their is a small targeted group of people who need your solution. When I say "need your solution", I mean that they are losing significant amounts of money without your technology or that they could make tons of money by implementing your solution. Connecting your solution to a customer's problem/pain will go a long way towards helping people understand that you have a valid business opportunity.
As an attempt to understand how to articulate the customer's problem, I recommend the following exercise. Spend some time with your team building a case study that articulates the details of a potential customer's problem that you can solve. Think about what they are doing now to solve this problem (i.e. ignoring it). Think about how much their current solution to this problem is costing them. Think about how much time, money, and energy they will spend implementing your solution. Think about what other options exist to solve this problem besides yours. Spend some time understanding what would have to change in their organization, both technically and operationally, to implement your solution. Would they have to reorganize in order to use your solution? Would they have to buy all new equipment? Can they even use the output of your solution? Does a $10M per year company care about saving $10K? Push your self to think about the reasons why this customer would pay you to solve their problem (i.e. what is their return on investment).
Once you have a chance to put together this case study, use this as a basis to figure out how many people have similar problems to the customer you outlined. Use this to help define the true market opportunity. If there are large and small companies in your market, who would be the most likely to adopt your technology first and why. Again, this process may help you focus on who your customers really are, what problems they have that you solve and how you are going to solve those problems.
I have written and read many executive summaries that read like the one I mentioned. My goal is to help you understand and avoid the mistakes I have learned from my experiences. As technology entrepreneurs we tend to want people to see us for our technology or our product. The reality is that customers only care about their problems and how to solve those problems. Sometimes you may even have to help them understand that they have problems. Further, you have to help them understand that the cost of your solution is significantly less than the cost of ignoring the problem.
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