Business Case – the simple why and how

Before initiating a business we are encouraged to create a business case. Did you find it a chore or a useful exercise? When did you last review it? How accurately does it reflect your business today?

Business Case – a Definition
A business case provides the background and a justification for initiating a new product or service. It evaluates the benefits, costs, risks and provides a rationale for the way forward.

Generating a Business Case
Consider preparing this in two aspects;
1 Unique Selling Proposition. An overview of the problem or market opportunity to be exploited and what specific benefit is to be achieved once your product or service is in place.
2 Detail. This is the strategic case exploring the background, the need and anticipated results. The skills and experience being applied, analysis of the target market and the competition, any regional or geographic limitations. It must also include the cash flow, budget and funding requirements required to launch and sustain the business.
 
Composing a Business Case
The Executive Summary
The executive summary must be clear and concise. Simply introducing the problem to be addressed, the solution, budget, funding, potential return, an outline time frame and who is to be involved.
 
Target market and anticipated benefit
Who is the target market, estimated market value and  the competition? What will be gained from engaging with the new business, specifically describing and quantifying the benefit to be achieved?

Finances
Estimate how much money will be needed to launch and sustain the business including predicted turnover, margin, costs and cash flow.
Costs will typically include a detailed timeline of expenses; eg salaries, travel, promotional materials, bought in services (eg website), accommodation, utility costs, taxes, employment costs (if engaging staff), capital investment, etc
How will funding be raised? Self-financed, bank loans, grants, investors, friends and family, gifted?

Risk
What are the obvious and less obvious risks of starting this business?
What is the cost associated with the impact or mitigating each risk?
Does the benefit outweigh the cost?

Evaluation
How will progress be measured? Equally importantly how often your business case will be reviewed to reflect any changes.