Learn how to develop the structure of, and write a good business case. Understand what the components of a business case are including the benefits, costs, financial analysis, risks, and more.
Have you been asked to develop a business case and you’re not sure where to start my name is Edward Shehab and I’m going to help you do this in minutes stay tuned…. all right so a business case is the document that we prepare to make a case a justification for why the organization needs to invest in a specific project or product it is supposed to make a case financially there’s always a chance that you can develop a business case without putting all the financial data in it but most of the time your management is looking for financial information and the two core pieces of a business case will be the benefits and the costs associated with going ahead with a specific project or product but there are other things that we need to include in a business case let’s go through them one by one so the core components of a business case are the following number one you need to have an executive summary that’s the first thing that shows up in a business case however it is the last thing that you want to prepare it includes a summary of all of the numbers that you would have come up with including the benefits and the cost the return on the investment the net present value that payback period the ROI and so on so let’s discuss that later other than the introduction which is the executive summary you want to put things such as what is the business opportunity that you’re about to work on if it’s not an opportunity what is the problem that we’re trying to fix and state that clearly and put some history or relevance to it state in the last few years what has happened and how it has affected the organization from there go to the next section and talk about the alternatives that you have considered for this one solution did you consider two other alternatives did you consider leaving things as they are if you have at least three alternatives to look at that makes it easier for you to make a case to your management consider the different alternatives that benefits the cost the feasibility of each you may want to backup your business case with a feasibility study to show that one of the alternatives is more feasible than the other ones all right after you list out all the alternatives and the one that you want to you want to go with the one that you want to suggest then you want to list out the benefits that you’re going to get and when you list the benefits from this one solution that you’re trying to propose you want to list the tangible and the intangible benefits the tangible benefits these are the ones that they can touch and feel like money and the intangible benefits could be customer happiness or it could be brand recognition these are things that are very hard to measure but we do consider them benefits to the organization after you list out the benefits you want to list out the cost and there are a few costs that you want to list out number one the capital expenditure capital cost these are the cost that the organization would have to spend upfront in order to put this product together and then you’ve got the operational cost which happens over time year after year these are called overhead and these are for employees office insurance support and so on these happen after you’ve already set up your product the first time around and take the numbers from the benefits and the cost and do your financial analysis analyze the cash flow in and cash flow out and using this financial analysis you’d be able to calculate return on investment which we can’t cover in this short video return an investment payback period the net present value of the investment these are three major financial metrics that the organization would look at along with this you want to list on the next section what assumptions you have made have you assumed that the current trend remains as is have you assumed that the customers will increase over a period of time did you factor in for example a certain inflation rate what are the assumptions that you’ve made in developing this business case after this list out the constraints that you’re aware of are there any restrictions or limitations that you know of that you have considered in developing this one business case some of the constraints could be a certain currency needs to be used or for example the work needs to be done at a certain point in time or that the target market is only a specific segment of the economy if you want what you could add to this is the market analysis that was done and in the market analysis you could talk about past or maybe pastel political economy economical social technical environmental and legal aspects of the environment in which this business case or product is going to be released into also look at the organizational considerations what about the organization have you considered in developing this business case maybe some products are more adaptable or easier to integrate inside the organization these things can make a case for why one solution is better than the other solution aside from this you want to analyze the risks associated with what you’re proposing because if things don’t go as planned then it’s a very good chance that benefits wouldn’t rack up as expected so we usually call this risk management or we call it sensitivity analysis sensitivity looks at a slight variation in the factors that could result in a business case not making as much gains as expected so for example what if the number of customers decreased a lot of it what if we lost a segment of the market what if we couldn’t operate in a specific territory how does that hit our numbers if that can easily turn your numbers into negative then you don’t have a strong case you want to show that even if these factors are affected a little bit the case that you have will not be as sensitive to them and it will still be meaningful now once you’ve described all this you want to describe the project part of it the implementation how is it going to happen who is the team that is going to work on this give a sense of certain timelines a roadmap milestones that the organization can look forward to so that they can imagine this going forward and finally at the very end put your recommendation a very assertive and firm recommendation of when and what like when should the product be released so that you don’t miss the benefits and how critical is this to be done now at the end of this once you’ve done all of this you may want to that’s probably that’s when you actually go and fill out that executive summary that I said should be written last but should be shown first on your business case well that’s all regarding the business case I hope you enjoyed this video and I hope I’ve been helpful with providing these guidelines if you’d like to know more leave me a comment below if you liked the video please subscribe share and like the video turn your notifications on if you’d like to see more videos from me and until the next video have a wonderful day
