WHAT IS A BUSINESS CASE?
A business case is a bundle of facts and figures that supports major decisions made in business projects. A business case provides justification and arguments for potential expenditures before they are committed. The conventional wisdom is that resources consumed in any project must be toward providing solution to problems that already exist or to allow the company exploit a new investment opportunity.
Business case can be seen as those evidences that are presented in the law court in a bid to try and prove to the jury that an argument has compelling merit.
A project can easily hit deadlock if a business case is not clearly outlined. It could be likened to a business plan. The only difference between a business case and a business plan is that while a business plan is a business blue print at the corporate level, a business case is based on individual project.
A business case needs to be revised whenever there is a change to the business need of a company that a project is set out to achieve. This is where most managers and business owners get it all wrong. They see business case as a destination rather than a means to an end.
Features and Elements of a Business case
Contributor to Mission of a company: For a business case to be worth the paper that it is written on, it must be very closely aligned with the mission and vision of an organization. This is the most important aspect of a business case that all decision makers first take a look at, You will be rest assured that you have grabbed the undivided attention of the key decision maker if you strike it hot here.
Coherent economic analysis: A business case document that does not appropriate economic content will simply not appeal to anyone let alone busy executives. This is where the prepare evaluates the economic variables that will be at play if the proposed project goes ahead.
Must be strategic: Dysfunctional decisions will be encouraged if management does not make it a major criteria that all business cases must be strategic in nature.
Complete Financial Implications: The monetary implication of the project must be clearly and completely highlighted in a business case document. A well written business case should have a self-contained mini financial statement that can easily be perused by the decision maker.
Must have an Executive summary and Preface: This is to make it easy for busy executives to peruse.
Assumption table be clearly articulated: All projections and forecasts contain in a business case are mere wishful thinking if the assumptions upon which they are based are faulty. It is very important that the assumptions used to prepare the document are clearly stated on the document.
IMPORTANCE OF A BUSINESS CASE
One of the golden rules of project management is to have a formidable business case in place. The reasons behind this are discussed in this section of the article. Below are the importance and benefits of having a functional and scalable business case in place.
SIX USES AND BENEFITS OF HAVING A BUSINESS CASE
- PROVIDE INSIGHT: business cases are the foundation upon which we build our business valuation and business analysis through either the process of capital budgeting or investment appraisal. A business case provides useful insight into what should be expected in any potential business development.
- SAVES ENERGY AND RESOURCES: vital resources are not wasted on any project that proves infeasible during the feasibility study phase of initial evaluation of a business idea. A business case that is well developed acts as a microscope through which business process owners see what would ordinarily not be exposed by a traditional business plan.
- IMPROVES MANAGERIAL EFFICIENCY: efficiency is generally improved when activities are pre-planned before implementation.
- ASSISTS IN RAISING FUNDS: you won’t have it any easier raising finance when you have a well spelt out business guide that acts as a parameter to measure the progress of the project being undertaken.
- AIDS PLANNING AND CONTROL: planning as a managerial tool will not be smooth without having yardsticks to follow. A comprehensive business case is an essential planning tool that has proved indispensable over time in management accounting.
- ACTS AS AN EVALUATION TOOL FOR A BUSINESS IDEA: in order for a business plan that would be executed without much problem to be developed, a concise business case has to be in place.
We have discussed what a business case and its importance and benefits in running a vibrant business. Part of the function of new era management is to have a clearly set out business case as part of any business model that it develops. If you are working in an organization where the management seem not to have a firm understanding of what a business case is, talk more of appreciating its importance in stirring the affairs of a business, it will be unusually difficult to implement projects.