A business case is a document presented to company stakeholders that outlines the reasons for pursuing a project or business decision. It’s developed during a project’s initial phase and examines how and why a company should address a specific business problem or opportunity.
Presenting a business case requires more than a good idea and a can-do attitude. It needs effective professional writing that convinces the people on the other side of a conference desk that your proposal is a good one.
We’ll explain what a business case is and why it’s necessary. We’ll also provide tips on how to write your next business case and explain how it differs from a business plan.
What is a business case?
A business case is a document written to convince company stakeholders that a project will benefit their organization in the long run. The document identifies a business problem or opportunity, a proposed solution and alternatives, the cost, the project stakeholders, and the risks and benefits of pursuing the solution.
In other words, it addresses the who, what, why, and how of specific business issues.
This document explains why using a company’s time or resources to address a specific issue is a sound idea. Good writing can help you communicate the importance of addressing an issue and get your idea approved. For that reason, avoid using jargon, as the people reviewing your business case may not be experienced in its subject.
When a project idea is identified and evaluated, a stakeholder writes a business case, which they submit to an executive, the board of directors, or company shareholders for approval.
Once it’s approved, the project moves into the planning phase. The business case will be useful during this phase because you will have identified the strategies and the time and cost needed to bring the project to fruition. Beginning a project-planning phase without a business case can lead to confusion or delays further down the line.
When to use a business case?
You should use a business case whenever you need to justify using money, time, people, or other resources for a project. For example, if a media company wanted to expand its online footprint, it would write a business case explaining how that would benefit the company and how much it would cost. The business case would also provide alternatives to the project, detail the risks, and outline a strategy to bring the project to fulfillment.
You should also use a business case to create a project roadmap by identifying key stakeholders, budgets, and timelines.
Some companies may require a business case before approving major decisions, such as upgrading computers or moving offices.
Once you’ve submitted a business case, stakeholders will review the document before approving it. If they’re unconvinced a project is worthwhile, they may revise or reject the business case.
What should a business case include?
There are four key elements to include in a business case: executive summary, finance, project definition, and project organization.
1 Executive summary
Your executive summary is your business case’s what and why. This concise overview identifies the business problem or opportunity, proposes a solution, and explains why it would benefit the company.
Although it’s the first thing stakeholders read, it should be the last thing you write because you’ll first need to scope out the project.
The finance section is where you’ll talk about money.
This section contains information on how much the project costs, how to pay for it, the impacts on cash flow, and the expected return on investment (ROI). A business case’s financial section is largely read by people who approve funding, but it may also be of concern to shareholders or others with a financial interest in the company.
3 Project definition
Project definition takes up the bulk of a business case. It outlines why a project is necessary—its objectives, risks, benefits, and key stakeholders—and provides a project blueprint. In other words, it provides more information on the project’s what, why, who, and how.
A solid business case provides background information on the project and its necessity. For example, a business case for starting an influencer program at a media company would discuss social media’s rise in popularity and how influencers can benefit companies.
Key stakeholders can be people on the team or those outside the company with experience or resources that can help the project. This section should examine whether there’s a need for interdepartmental collaboration and whether there are any limitations or roadblocks, such as ongoing projects.
Lastly, you should discuss various options for addressing this problem. Aim for three to five alternatives and address the implications of not pursuing the project.
4 Project organization
Project organization describes the project governance or the chain of command for the people implementing a project. This includes delegating responsibilities to people at all levels, structuring different levels of decision-making, and developing a progress report system to keep the company updated on the project.
Business case vs. business plan
A business case and a business plan cover many of the same topics, but there is a significant difference between the two. A business case is about a singular project or business issue, whereas a business plan concerns all parts of a company over a longer period.
For example, a publishing company may develop a business case to discuss acquiring a new publication within a year. The same company may create a business plan to examine options to increase overall revenue over five years.
Business case example
Find out if your company has premade business case templates. Either way, use this business case example as a guide to getting your next project approved.
Here, we’re trying to persuade a sports equipment company to produce pickleball equipment. Keep in mind that an actual business case will likely require much more information than we present here.
The global pickleball market is expected to be valued at $155.4 billion by 2033, and individual buyers are expected to account for more than half the demand for pickleball equipment, according to industry experts.
Our company doesn’t produce pickleball equipment, though we produce similar goods and have a reputable name in the sports equipment industry. By producing and selling pickleball equipment, we can establish our place in the growing market and expand our business portfolio. An estimated $20 million per year can be earned through this venture.
The expected costs of this project are estimated at $1 million.
Research and development: $250,000
Manufacturing and training: $500,000
We anticipate breaking even in our first six months of production and reaching an estimated annual revenue of $20 million within five years. The project would source money from a reserve fund used by the company to finance new ventures.
The project seeks to gain a foothold in the global pickleball market by producing and selling pickleball equipment. Our company has produced sports equipment for 100 years and is well positioned to become a major player in this growing industry, which is expected to be valued at $155.4 billion by 2033.
Key players are the Research and Development, Marketing, Finance, and Manufacturing teams. Research and Development would be tasked with creating a reliable product within a price point determined by Finance. That process should take one to three months. Marketing will then bring the product to public interest groups for one month to gauge public interest.
Research and Development will then make the final changes, and Manufacturing will start production a month later. We expect products to reach shelves six months after final approval.
Outsource production: quicker production timeline and lower costs, though equipment would be less reliable and more likely to be returned, lowering our profit margins.
Stay out of the pickleball market: lose out on estimated $20 million annual revenue.
Seek other pickleball opportunities, including sponsorships: not our area of expertise.
Regarding decision-making responsibilities and roles, departments should follow the company’s standard project governance. Associate managers will provide daily updates to their department supervisors. Each department supervisor will provide weekly updates to the board of directors and CEO.
Business case FAQs
What is a business case?
A business case is a document used to persuade company stakeholders to pursue a project. It identifies a business problem, or opportunity, and a solution. It then maps out how much the project would cost, how to accomplish it, and how it would benefit the company.
What should a business case include?
A business case should include four key components:
- An executive summary that explains the project, why it should be approved, and its benefits
- A finance section that outlines how much the project would cost, the expected return on investment, and any revenue projections
- A project definition that lays out the scope of the project
- An organized system to oversee the project’s implementation
When should you use a business case?
Use a business case whenever you’re trying to persuade company stakeholders to approve the use of goods or resources for a certain project or expense.
How is a business case different from a business plan?
A business case refers to one aspect of a company or a particular project. A business plan covers the entire company over a longer period.