How to Write a Business Case

Business case

What is a Business Case?

A business case is an analysis of why an organization should or should not do a certain activity. It is an investigation of whether or not an organization should invest in a project or activity. The business case shows the different costs and benefits associated with a project. In other words, a business calculates the value (financial and non-financial) that a project can bring to an organization.

A business case answers the question: “Is this project worth investing our time, money and resources?

The Purpose of a Business Case

Before investing in a project, it is essential to have a substantiated idea of its value. It is not the best idea to throw money at every project opportunity, based on a ‘feeling’ or ‘’ trend’. That way, you are going to run out of money fast.

There are several reasons as to why writing a solid business case is of great importance:

  • Getting the buy-in from senior management for a project or investment. A business case provides the necessary proof to get the support from the people in charge.
  • It makes sure time, money and resources are not wasted on projects that do not have positive return on investment
  • Based on the costs and benefits ratio, as well as the time needed to reach the benefits, a business case sets priorities to the projects with the most benefits.

What Should Be Included in a Business Case?

A business case can be created in a variety of formats, each has its own advantages and drawbacks. However, each business case should at least include the following components:

  • A description of the project:
    • A problem statement: what exactly are we trying to solve?
    • How is the project in line with the strategy (mission & the vision) of the organization?
  • A description of the different scenario’s/alternatives that could be a solution to the problem.
    In many cases, there will be more than one possible solution to a problem. Has our customer demand increased and are we unable to manufacture enough products? Perhaps we could expand our local factory. Or we buy a manufacturer somewhere else. Alternatively, we outsource a part of the manufacturing process. Or we increase prices to lower demand. As you can see, more often than not, there are multiple alternatives to solve a problem.
  • An analysis, in which the different solutions are investigated:
    1. An overview of the benefits (financial and non-financial). Examples of financial benefits could be more cost efficiency or a sales increase. Examples of non-financial benefits are increased customer loyalty of employee satisfaction (which, in the long term, could also lead to increased financial performance)
    2. An overview of the costs (financial and non-financial). A project usually requires a certain investment in time, money and resources. The possible alternatives will require different costs.
    3. The expected timelines and return on investment in relation to time. Each alternative will have different timelines. The fastest alternative is not necessarily the best, and the slowest alternative is not necessarily the worst. This also depends on the costs, benefits and risks.
    4. The risks associated with the project and the different alternatives. Would you pick an alternative that has a high risk / high reward, or a project that has a low risk / low reward? This will vary from project to project.
  • A recommendation, based on the analysis that has been made in the previous step.
    Which alternative is the best option? Based on the costs, benefits, timelines and risks associated with the different alternatives, a recommendation can be made for the best solution to a particular business problem.
  • A high level implementation plan for the recommended option. A solid business case is essential, but only forms the start of a project. After management approves a project, the implementation can start. In the business case, it is important to add a project plan including the objectives, more details about the scope, milestones & budget.

Tips and Tricks for Writing a Great Business Case

  • Use a structured format.
    Whether it is an Excel template, a PowerPoint or a simple Word document: make sure you structure the document, make it easy to follow for readers who are not experts on the subject.
  • Make sure the benefits & costs analysis is founded by data / numbers.
    Decisions should not be made based on a ‘gut feeling’. Instead, make decisions fact-based. Numbers form the proof that starting a project / investment will pay off in the long run. It also helps to get support from people within the organization, since there are objective measurements that show it is a smart decision to start a certain project. Be specific in your numbers: in which department or category will the most benefits of cost savings be achieved?
  • As business case is not a fixed, static document.
    During a project, the estimated costs & benefits can and will change. It is important to review and adapt a business case regularly.
  • Presentation is key.
    Present your business case to stakeholders in an understandable manner, without using too much jargon. A thorough, in-depth is needed for a business case, but be aware to not put too much details in your presentation. What you could do, is create a larger document with in depth information, and one document/presentation with an overview that makes it easy to understand for stakeholders what the business case is about. Instead of showing large amounts of data, present graphs or charts.
  • When working on a business case, talk to people who actually know what the problem is. People who work with the problem on a daily basis. These people are usually staff people. It is smart to hear their side of the story, since management’s perception of the problem is not always the actual problem.P

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