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How To Develop A Business Case For A Project

what is a business case

When starting a new project you might be required to develop a ‘business case’ for it. A business case helps to justify the project to managers and shareholders and show that you understand its nuances. However, before you can think about developing a business case, you need to fully understand the project and process. 

Throughout this article we will provide a comprehensive explanation of what a business case is and what should be included in one if you are tasked with creating it. Read on for tips that will help you to draw up a strong business case.

What Is A Business Case?

A business case is a document that outlines the core reasons for a project or process with a robust demonstration of the costs and benefits involved. Typical business cases include a justification, benefit and risk analysis, along with an estimate of all the costs to the company.

Business cases should be clear and easy to understand for the company decision makers.

When Do You Need A Business Case?

Sometimes a business case is required to justify a project and obtain permissions to go ahead. Often, a business case is required for new marketing campaigns, since company owners need to understand the costs and benefits involved for investing in one.

In this case, your business case should include the costs, benefits, and risks of a marketing project. Another reason you might require a business case is if you are applying for a business loan.

Business loans tend to be substantial and the lender and business must be sure that it’s good value for money and will be invested in the right way. In this situation, the business case will require a strong financial statement that shows where and how you intend to invest.

What Should Be Included In A Business Case?

We now understand what a business case is so what should we put in the document? Below you can find a list of essential elements all business cases include regardless of the project.

1. Executive Summary

Right at the top of the business case is the Executive Summary which provides an overview of the project’s costs, benefits, and risks; write it last once you understand the entire project.

2. Problem Statement

In this part of the business case you need to outline the target problem the project will solve. An example could be a decline in sales which requires investment in a marketing campaign.

3. Objectives

In the objective section you detail what you intend to achieve with the project. In our example of a marketing campaign, you might wish to increase sales by 10%: use specific objectives.

4. Analysis Of Alternatives

In the section entitled Analysis of Alternatives, it’s important to show suitable alternatives to your proposition–this shows you have investigated all options and are not going with the most obvious choice. Perhaps you have considered some alternative marketing channels.

5. Proposed Solution

The Proposed Solution is the option you have selected to resolve the problem statement. In the marketing campaign example, you might propose a combination of paid and organic ads.

6. Benefits

In the Benefits section, you want to show what benefits the company can expect from the project. In a marketing campaign, for instance, your actions might lead to a 10% increase in sales making up for the drop-off and sustaining the bottom line during a downturn.

7. Costs

There are few projects which don’t have costs built so in this section you must detail a breakdown of the costs and provide an accurate representation of what you expect to spend. Marketing campaigns typically require creative professionals and an advertising budget.

8. Risks

It’s sensible to go into a project with your eyes open, which is why you need to think about all the risks involved. The more risks you can avert the stronger the project will be overall, so make sure to brainstorm with your team and eliminate most of the project’s risk.

9. Implementation Plan

In the Implementation plan you set out how you expect to implement your proposed solution. If you want to increase sales by 10% in a given period, you might need to hire a creative agency, invest in some freelancers, and purchase advertising space both online and offline.

10. Evaluation Criteria

In the section entitled Evaluation Criteria, you can outline all of the data used to assess whether the project has been successful or not. Perhaps you will look at the sales figures before and after the project, for instance, or use tracking tools throughout implementation.

5 Steps To Developing A Business Case

So far we have covered what a business case is and what you must include in one before presenting it to decision makers. Now, we have 5 steps to follow to create an effective business case that’s sure to win over your managers and ensure the success of the project.

1. Define The Problem

One of the first stages in writing a business case is defining the problem; chances are you have an idea of the problem already, but dig a little deeper to find out if there are any associated issues. Understand the problem and stakes in the foundation of a business case.

In defining the problem it helps to carry out a little research, think about your competitors as well and try to show how the problem contributes to your profits and general brand profile.

2. Set Objectives

In the objectives section, you have the chance to outline the targets for the project, but it’s important to be as specific as possible here. One excellent strategy is to use SMART goals, an acronym which stands for Specific, Measurable, Achievable, Relevant, and Time-bound. SMART goals help you stay on track when it comes to delivering the goals of the project.

3. Conduct A Cost-Benefit Analysis

A cost-benefit analysis is the next thing you must tackle in your business cases–this details how much the project will cost in reference to the outcomes and it must show the profitable benefits of running the campaign.

In the cost-benefit analysis, it’s important to be realistic and not to fabricate results to get your project through; ultimately, that kind of approach fails.

4. Develop The Solution

Developing a solution means coming up with a plan to overcome the problem set out at the start of your business case. The solution will help you achieve your objectives and stay within the cost-benefit framework you have outlined in the previous section. Solutions might involve adapting your marketing plan, buying a new product line, or investing in advertising.

5. Create A Business Plan

Business plans are not just for startups, you need one within the business for any campaign proposition, so in this section you must show a detailed breakdown of the proposal which includes all the objectives, solutions, and resources required to make it as successful as possible.

Remember, it’s crucial that you are realistic and avoid inflating your end results.

If you follow the steps outlined above you will have a strong business case for your project.

Business Case Example

Now that we’ve covered the theory, it’s time to observe the practice. Although it isn’t taken from the real world, the following example gives you an excellent insight into what a proper business case should look like. Here, a new eco filling station is launched in a village store.

1. Executive Summary

Our village store has been struggling to compete with mainstream supermarkets in the area, which is why we are proposing the addition of an eco filling station. The station allows customers to refill their containers with staples foods such as rice, pasts, and detergent, improving our brand image and reputation as an eco store: not all supermarkets have one.

2. Problem Statement

In recent years, new budget supermarkets have opened in the area and it’s impossible for us to compete with them on price; for this reason, we must find a valuable USP that will attract local customers to our store. Our USP should increase profits and position us competitively.

3. Objectives

The objectives of the project are as follows:

  • Improve the profile of the store
  • Increase local traffic
  • Increase our sales figures
  • Fulfil social and environmental obligations

4. Analysis Of Alternatives

Some alternative to the eco filler idea include:

  • A loyalty card scheme
  • Discounts on cash payments
  • Opening hour changes
  • Host In-store events

5. Proposed Solution

We have considered all the options above and believe the best strategy is an eco filler store. Due to eco trends and our local approach, we think customers will appreciate the chance to buy cheaper staples with no single use plastics. We’re confident it will increase our footfall.

6. Benefits

We expect the project to benefit use in these ways:

  • Reducing single use plastics
  • Reducing prices for customers
  • Step into the eco-conscious market
  • Improve the local profile of the store
  • Increase footfall traffic
  • Increase our profits.

7. Costs

We estimate the cost of this project to be in the region of £2,000, the money includes setting up the station, marketing the station, and training our staff to use it in the initial three months.

8. Risks

Below, there are a number of risks we have identified for the project.

  • Customers may not use the station as expected
  • Eco-friendly stock might be difficult to procure
  • The station may not be as profitable as expected

While there are risks of the project ultimately failing, we have several ways to mitigate them.

9. Implementation Plan

Launching the new eco-filling station is expected to take three months and involves new training for staff members. There is also a marketing campaign to promote the new service.

10. Evaluation Criteria

The success of the eco filler stations will be measured by:

  • Customer numbers using the station
  • Overall sales figures for the store
  • Footfall traffic in the store

What Is The Difference Between A Business Plan And Business Case?

The business plan is a document which outlines the goals and objectives of the business overall, and how you plan to achieve them. Business plans operate on a macro level and cover everything from finance and marketing to daily operations and product development.

On the other hand, a business case document operates on a micro level and deals with specific projects and campaigns. In many ways, it is the same as a business plan, but it is more specific to a campaign. Business cases cover the costs, benefits, risks, and rewards.

How Do You Pitch A Business Case?

If you’ve been invited to present a business case to decision makers, you might be wondering where to begin. First, it’s a good idea to think carefully about your business case and develop one that’s comprehensive and realistic. Next, hand out the business case to the relevant audience ahead of time, so they are clued into the project as you present it.

In any business case you will want to cover the problem the company faces, the proposed solution to the problem, the benefits of solving the problem, the costs associated with the project, as well as the risks and rewards. Ensure your business case is easy to understand.

Where possible, include as much primary and secondary research as you can, this shows that you’ve done your homework and creates the best possible foundation for your project. Having strong research is also an excellent way to convince investors of the project’s value.

In Summary

Business cases are required in several situations, but the most common is when you must convince managers, shareholders, or investors of the value of a campaign or project, then a business case is the best route to success.

Before you begin writing your business case it’s important to understand each element of the document, especially the justification for it. Make sure you have a comprehensive understanding of the problem, the benefits and the risks involved.

When your business case is complete you should have a document that is clear, concise, and simple to follow. The problem and solution might not be straightforward, so it’s important to plan carefully and present your ideas professionally.

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