Definition: A business case is a document where a proposed action is presented and coherently supported with detailed reasoning and expected net benefits for the business. This term commonly applies to arguments and results that accompany an intended decision or project.
What Does Business Case Mean?
A business case has the intention of convincing a decision maker about the convenience of a particular course of action. The document created to present the business case can be short and simple or long and complex, depending on the relevance for the business as well as the amount of resources and changes involved. Despite the length, a solid business case should clearly articulate the proposed path, costs and risks associated and expected financial results.
It is useful to convert all anticipated benefits into particular elements of financial statements but sometimes this is a very ambitious task. The business case should present not only the proposed project but also the impact of not undertaking such project. It can be useful to analyze other feasible options and compare them with the proposal as a way to be prepared when questions and counterarguments arise.
Example
A firm operating in the food industry has three decades offering the same product lines. The product portfolio remains almost unchanged from the beginning although the market has evolved and competitors provide innovative, varied products. Financial results are positive but very modest and the historical analysis shows that profits are decreasing year after year. The Marketing Manager has several ideas to drive growth but needs to convince the traditional Directors about it.
He is sure that his arguments are solid so he prepared a business case to present an impressive project to the Board of Directors. The presentation included investment in the production line, products to be offered, marketing strategy and financial forecasts. It also showed what is expected to happen in five years if the firm remains paralyzed. After some weeks of analysis and discussions, the company approved the project and could achieve very positive growth rates.
