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What is a business case?
“Wanna make smart investments for your business? A Business Case is here to help! It’s like a financial map for your projects and products. It’s a document that explains the market and financial analysis to potential investors and decision makers.
Why use a Business Case?
Get funding: Show potential investors the benefits, risks, and costs of your project or product and convince them to fund it.
Get support: Clearly communicate the goals and benefits of your project to key stakeholders and get them on board.
Make informed decisions: A Business Case helps you and decision makers evaluate if your project is worth pursuing.
Prioritize initiatives: Compare different projects and initiatives to see which ones are worth pursuing.
Plan and implement: Use a Business Case as a step-by-step guide to plan and implement your project or product.
In short, a Business Case is a must-have tool for any business looking to make smart investments. It includes a report that explains the market situation and the business opportunity, backed up with a financial calculation. Most larger organizations have a defined outline for a Business Case, but the general idea is to present a solid plan for success.
The different components of a business case?
A Business Case is a must-have tool for any business looking to make smart investments. But what exactly is a Business Case and what does it include? Let’s break it down and find out!
First, let’s start with the Executive Summary. This is a quick and concise overview of your project or product, including what problem it solves, how it solves it, and what benefits it brings.
Next, we have the Problem Statement. This section explains what problem or opportunity your project or product is trying to address.
The Objectives come next. This is where you outline what you want to achieve with your project or product. This could be increasing revenue, improving customer satisfaction, or reducing costs, for example.
In the Alternatives section, you’ll analyze other ways to solve the problem or seize the opportunity. Should you outsource, automate, or do nothing at all? It’s up to you to weigh the pros and cons.
The Proposed Solution is where you lay out the detailed plan for your project or product. You’ll describe what it is, who it’s for, and how you plan to make it happen.
The Benefits section outlines the positive outcomes of your project or product, including increased revenue, improved customer satisfaction, and reduced costs.
On the flip side, the Drawbacks and Risks section explores the potential downsides of your project or product, such as increased costs, decreased productivity, and the potential for project delays.
The Implementation Plan is your roadmap for making your project or product a reality. You’ll outline the timeline, resource requirements, and key milestones.
The Budget and Financial Analysis is all about the money. How much will your project or product cost and how much will you make? This section provides a detailed plan for the financial aspect of your project or product.
Finally, the Conclusion wraps up the key points of your Business Case and provides a recommendation for whether or not to move forward with your project or product.
Last but not least, the References section lists the sources you used in your Business Case, including articles, reports, and other relevant materials.
In conclusion, a Business Case is a comprehensive document that helps you make informed decisions about your projects and products. It includes all the important information you need to convince potential investors and stakeholders, prioritize initiatives, plan and implement projects, and evaluate their financial feasibility.”
What format does a case have?
“Your Business Case doesn’t have to be a boring report, it can be whatever works best for you and your audience! Here are some common ways to deliver a Business Case:
Written Report: A long, detailed document that covers everything about your project or product. This is a good option if you want to show all the details and convince people to invest or support your idea.
Power Point Presentation: A slideshow that shows what your project or product is all about. This is a good option if you want to present your idea to decision-makers or keep your team updated.
Excel File: A spreadsheet that shows the financial side of your project or product. This is a good option if you want to show how much money you’ll make or spend and the potential return on investment.
It’s up to you and your organization to decide which format is best. You can go with a written report, a slideshow, or a spreadsheet, or a combination of all three. The important thing is to choose a format that helps you effectively communicate your ideas and make the right decisions.”
The financial plan in a business case
“When it comes to making big decisions for your business, it’s important to know the financial side of things. That’s where a Budget and Financial Analysis comes in! Here’s what you need to know:
Introduction: This is just a quick overview of why you’re doing the Budget and Financial Analysis and what you hope to get out of it.
Project Costs: A breakdown of how much your project will cost. This includes things like materials, labor, and equipment, as well as overhead and indirect labor, and a cushion for unexpected expenses.
Revenue Projections: How much money you expect to make from your project. This includes sales projections and how much you’ll charge for your product or service.
Cash Flow Projections: A plan for when you’ll spend and when you’ll make money. It’s important to know when costs will be incurred and when revenue will be received.
Break-Even Analysis: When your costs and revenue will be equal. This is the point when your project will start making money.
Return on Investment (ROI): How much money you can expect to make from your project. This includes the payback period (how long it will take to make your money back), the internal rate of return (how much you’ll make compared to your investment), and the net present value (how much your project is worth today).
Sensitivity Analysis: What happens if things don’t go as planned? This section looks at how changes in key assumptions, such as sales volume or cost estimates, will affect your project’s financial viability.
Conclusion: A quick wrap-up of what you learned from the Budget and Financial Analysis and what you recommend for the future.
These are the key parts of a Budget and Financial Analysis in a Business Case. The specifics will depend on your project or product and your organization’s goals. It’s important to make sure the analysis is accurate, complete, and supported by data and assumptions.”
Here you find my article about the overall structure of a financial statment, many elements are also included in the financial plan of a business case.
General tips for the creation
“If you want to create a rock-solid Business Case, here are some things to keep in mind:
- Start with a clear understanding of the problem or opportunity: Before you dive into the Business Case, make sure you know what you’re trying to solve or what opportunity you’re trying to seize. This will help you stay focused and make sure your Business Case is relevant.
- Be thorough: Your Business Case should cover everything you need to know about your project or product. This includes a detailed description of the problem or opportunity, your solution, and the potential benefits, drawbacks, and risks.
- Use data and facts: Use numbers, research, and other evidence to support your Business Case. This will help build trust and make sure your Business Case is well-supported.
- Consider other options: Think about other ways to solve the problem or seize the opportunity, including doing nothing or outsourcing. This will help you make sure your solution is the best option.
- Be simple and easy to understand: Use clear language and helpful visuals to explain your Business Case. This will help decision-makers and stakeholders understand what you’re proposing.
- Get feedback and make changes: Get opinions from stakeholders and decision-makers and make changes if needed. This will help make sure your Business Case is accurate and up-to-date.
- Stay on top of things: Keep reviewing and updating your Business Case to make sure everything is on track and the benefits, drawbacks, and risks are still accurate.
By following these tips, you can create a Business Case that covers everything you need to know about your project or product and supports decision-making.”
Get support
An external consultant (Surprise -> me), can improve your business case, especially the financial plan. They bring expertise and objectivity, offer a more detailed analysis, have access to specialized tools and resources, and improve accuracy. Hiring one can boost confidence in your business case and support decision-making.
Furthermore you can find on my blog more articles and template for the creation of business cases, especially tips about the creation of financial plans.
Here is a list of websites with useful resources on the creation of business cases:
Project Management Institute (PMI): pmi.org
Harvard Business Review: hbr.org
The Balance Small Business: thebalancesmb.com
Bundesverband der Deutschen Industrie (BDI): bdi.eu
Statista: statista.com
The World Bank: worldbank.org
Eurostat: eurostat.ec.europa.eu
These websites offer a range of resources and tools for business case creation, including templates, best practices, and useful statistical data.