Preparing a business case

Why is a business case document important?

A business case is usually an argument to convince decision makers to approve a business action.

It can be used to get approval for a project, obtain resources for a project, or document the scope of the project and justify the funding.

A business case paper may be produced as part of the preparation for a project. A project brief will describe what the project should achieve, a project plan explains how it will be achieved and the business case sets out the reasons the project needs to be undertaken.

In simple instances the argument may be verbal rather than documented. For example if it is a suggestion from an employee. For example “why don’t we offer two sizes of coffee, a large and a small? “.

But if the issue is more complex it is usual to write a business case document, which examines the risks and benefits associated with taking the action, and also of not taking it. The conclusion will be a strong argument for implementation of the action under discussion.

Often the business case for a project is not clear, and will benefit from a detailed explanation of the facts, and a consideration of short, medium and long term implications.

So a well-argued business case document can be essential to ensure decision makers consider the appropriate factors and have access to the information they need to make an informed decision.

Of course it is possible that the decision makers, who are usually senior to the business case proposer, are privy to other information or considerations the proposer is not aware of.

What should be included?

A well-constructed and well researched business case will explore all possible approaches to a problem, and so enable business owners or managers to select the best option for the company.

It is good practice to use SMART arguments

Specific- Measurable- Achievable- Realistic – Time bound.

Example- We anticipate a 10% year on year increase in turnover, to be achieved by April 2017.

Specific- Measurable- Achievable- Realistic – Time bound.

The case should consider short, medium and long term arguments. Some projects will initially show a worsening of results before becoming profitable, such as a project that requires some investment in equipment, personnel or training. Results will then improve in the medium and longer term. This improvement may be either financial, or may be in terms of less tangible benefits, such as improved staff morale, which often translates into financial improvements to the company profitability.

Conversely some projects can be a “quick win “, but produce less beneficial effects in the longer run. An example might be a money saving idea effective in the short term but that is not sustainable in the long term.