Five Steps to Develop a Solid Business Case with Examples

Step 1: Confirm the Opportunity

Describe the situation and the business opportunity that your proposal will impact. This will include the background to the project, the investment logic and the high-level business requirements.

We develop the strategic logic for the business case. Then, we define how the project supports the organization’s strategic objectives. It’s much easier to justify the business case if you can show how it helps achieve one or more strategic objectives. Then, we get the sign-off from our business case project sponsor.

Step 2: Analyze and Select the Short-listed Options

Identify the alternative approaches and select three or four options to analyze. Gather information about each alternative, analyze the options and develop the shortlisted options.

We develop a long list of alternative solutions before selecting our short lists of options.

The longlist should include a wide range of reasonable options and a detailed evidence-­based assessment to determine a shorter list of these options.

Step 3: Evaluate the Options

Evaluate how the options will deliver the business objectives, quantify the benefits of each potential solution, and then select the preferred option, taking into account the strategic, financial and societal value created and the risks.

Quantifying the business benefits is central to strategic planning, financial, cost-benefit, and business case analysis. So first, we develop the financial projections. This includes the detailed revenue and operational cost model and financial model. Next, we create the cash flow statement for our discounted cash flow projections (or DCF) analysis. Finally, we confirm the hurdle rates are the minimum acceptable internal rates of return for investments, which is an essential metric for investors, private equity firms and management teams to evaluate potential opportunities.

Step 4: Develop the Implementation Strategy

Create the implementation plan for the preferred option, detailing how to achieve the business objectives, the resources needed, the project team, who will be accountable for each milestone, and how to mitigate the project risks.

In these steps, you confirm the total project cost. In addition to estimating the total project cost, we break down the project costs for each milestone.

This step helps you quantify the CAPEX costs and the ongoing costs.

Step 5: Develop the Recommendations and Get the Approval from Decision-Makers

The objective is to get approval from the board, executive team, external stakeholders or investors for the business case.

Confirm the recommended option. Create the business case documents and present the business case recommendation to the board, executive team or investors for approval to proceed.

It’s writing the business case, a pervasive document recommending your organization’s best course of action.

How you frame the business case recommendations is essential. The proper business case structure helps the decision-makers understand what needs to be done and why. It also provides information about how much time and money will be required to complete the project.

It answers the questions the board, executive team, external stakeholders, and investors will ask. What are the risks? What are the upsides? What is the cost of doing nothing? What is the financial impact of this investment?