Preparing a bullet proof business case for a new business venture takes time and is a critical step in the process of achieving success. The purpose of the business case is to outline for the reader what the overall opportunity is and what the expected return on investment will be. The business case should identify, not only, the opportunity but also the risks that are involved with the project.
As a previous senior executive for a couple of large companies I’ve seen my share of both good and bad business cases. The bad ones are easy to spot because they are built around a flawed business idea and therefore get shot down pretty quickly. But a few great ideas don’t make it out of the boardroom because the presenter or manager making the pitch has failed to make three key points during the presentation or in the business case.
Every business case should have these 3 fundamental elements:
1. What is the financial benefit?
2. How does this project/idea support the strategic focus of the company?
3. How does it improve our competitive position or what is the sustainable competitive point of difference for this initiative?
Unless you address these 3 questions you haven’t prepared a solid business case that will stand up to scrutiny or detailed questions by your board or management team. A solid business will address all three and present a compelling story for each. A weak business case will obviously not. Some business cases will try to argue a “strategic” benefit for the company which usually means it’s a money loser for several years and will likely die a long slow death.
Many managers also fail to link their initiative to the strategic priorities of the company so what may look like a financially viable or attractive idea would commit a company to a direction they have not prioritized. As a result, the company ends up in a new market or business that drains resources away from its core business where it has strength.
Saying “no” to a business case requires just as much strategic thought as saying ‘yes’. The key difference being that one will get you to your stated objectives a lot faster.
COMPETITIVE|STRATEGIC|FINANCIAL = Business Success