Four Components Every Business Case Requires

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Last updated on
12th Jul, 2022
14th Oct, 2016
Four Components Every Business Case Requires

A business case is an assessment of all the risks involved in entering a potential market at a product level. It basically means that before a company decides to enter a market to launch a new product that would solve a problem existing in the market, it will assess all the risks involved and will weigh the pros and cons. After the successful assessment, if the pros are more than the cons and if the company can make a significant profit out of the venture, they go ahead with the launch of the product. A compelling business case should have a few crucial components that ensure that the business case is convincing to the stakeholder. You can also find the blog post on 5 whys root cause analysis to identify the problem.

The four major components are:

1. Clearly define the problem

Since the main objective of a business case is to release a product to solve a problem, clearly define the problem. Ensure that you write about a single problem in a business case and don’t focus on multiple problems. In order to define problem vividly, conduct a thorough research among the target audience. Conduct surveys among them with all the necessary questions. Since they are facing the problem, they will have a vague idea about the solution to those problems as well. Once the survey and research are done, thoroughly analyze it. Only after the analysis is done, you should define the problem in the business case. Since you have conducted thorough research and analysis, the chances of you getting it wrong are minimal.

2. Follow an order

Always ensure that you start your business case with an executive summary and end with appendices. The executive summary should be written in the end though it appears at the beginning of the document. The executive summary provides an outline of all the contents of a report. Do not explain the contents in detail here. A brief introduction will suffice. The appendices are required to explain the sources of all the solutions you have mentioned in the report. Each solution you mention in the report should have a solid source. That source and calculation should be mentioned in the appendices.

3. Possible benefits and reason

The main objective of a business case is to document the possibilities of entering a particular market and the possible pitfalls in doing so. Hence, in the business case, once you make a note of all the possible benefits/downfalls, ensure that you write the reason for each of them. This will give the stakeholder a clear picture of your work and the market conditions. In case they have a doubt about a particular benefit/downfall, you should be able to immediately validate the reason for it. Also, make sure you do not entirely favour the sponsor in the report. The business case should not be biased and should not mandatorily favour any of the parties involved.

4. The final results

In order to make a compelling business case, you need to use certain indicators in the solutions section. These indicators support your solutions and provide proof to your claims. It convinces the stakeholder that you have been thorough in your research. These indicators are:

• ROI – Return on Investment

This indicates how much profit the stakeholder can make when compared to the amount he is investing on the product/field. It is usually a percentage. ROI is one of the widely used profit indicators.

• Usage of resources and duration

This is one of the important factors the stakeholder is concerned with when he plans to enter a market. If the new business opportunity allows the stakeholder to use his resources judiciously and reduce the time required to make the product, it could increase his profits. Ensure you mention reliable sources in this calculation.

• Revenue growth indicators

This is an indication of the rate at which the business can expand. It showcases the increase and decrease in the sale of the product over a period of time. It will help the stakeholder make a wise decision about entering the market.

A business case is a document that is taken seriously by stakeholders. This document is responsible for a major decision – if a company should enter a new venture or not. Hence, it should clearly indicate all the risks involved and solutions to those risks. The business case should also list the results and sources to those results.



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