As a manager, you may spot opportunities to help your team, unit, or organization meet important business goals. You may feel pressure to propose a quick solution in order to seize the opportunity. But recommending an action without considering a range of alternatives is risky—and likely to be rejected by decision makers.
Instead, prepare a business case: a document or presentation in which you compare multiple alternatives and propose a single course of action that creates the most value.
Your goal when creating a business case is to help people decide whether to invest resources in your idea. If you’re making a case for a project or initiative within your organization, you already have access to what you need to present a winning case: information about key stakeholder concerns and your organization’s strategic priorities.
Business case vs. business plan
While the terms business case and business plan are often confused, they address different business questions.
- A business case answers the question: “What happens if we take this course of action?” For example, if your unit is considering expanding sales to a new market, your boss might ask, “Which of three alternative markets should we invest in to create the most value? Should we even make this investment?”
- A business plan describes how an organization or business unit intends to navigate successfully through its unique competitive environment. Business plans feature long-range projections of revenues, expenses, business strategy, and other information. Typically, managers and executives use business plans to secure financing from investors or to plan strategy execution for an organization or business.
When to create a business case
The process of building a business case is similar to solving any problem. For example, suppose you don’t have enough staff to accomplish your responsibilities, or you believe your company’s competitors use more efficient processes at lower costs. Developing a business case helps you identify potential solutions and sell the best solution to decision makers.
A business case is useful when you want to:
- Demonstrate the organizational benefit of a proposed product or service
- Prioritize projects within your group and identify which ones to eliminate
- Show the value of a product or service to a customer to make a sale
- Obtain additional resources for a new project or initiative
- Modify an existing offering
- Invest in a new capability, such as a software program or training
- Decide whether to outsource a particular function
Know your organization’s processes
Before you create a business case, learn how your organization reviews and approves initiatives. For example:
- Does your company have a formal process for evaluating business cases? In some organizations, business cases are reviewed only at specific times during the year, such as during the annual budgeting process.
- Who has the authority to approve your case? Even small projects sometimes require approval by senior leaders.
- What level of detail will stakeholders want? Many organizations require employees to fill out preset business case templates.
- Are projects approved in phases, or is an entire project approved at once? Many companies have a tollgate process in which the business case is only for the initial discovery phase. If stakeholders approve the project, they’ll ask the team to break the rest of the project into phases—such as development and testing—and return for subsequent approvals.
Check in with colleagues
If your organization doesn’t have a formal business case review process, find out what people around you have done to get approval for their initiatives through a more informal process. Meet with colleagues to learn what materials they used, whose help they enlisted, what problems they encountered, and what mistakes they made. Knowing what’s worked at your organization—and what didn’t—will boost your own initiative’s chance of success.
Identify decision makers
Often one individual or a group will decide whether or not your initiative gets approved. Find out who will be evaluating your idea. Then work with your boss to identify:
- What they stand to gain—or lose—from the opportunity
- Who or what influences them most
- Similar initiatives they have supported in the past
- How they like to receive information
- How they tend to make decisions
Knowing how decision makers behave and what they care about will help you tailor your business case to the right audience.
Once you’ve learned how business cases are approved in your organization and what decision makers value, follow six steps to build your case.
- Define the opportunity. Describe the situation and the business objectives your proposal will impact.
- Explore options. Brainstorm multiple approaches and choose three or four to analyze.
- Analyze alternatives. Examine how your options will affect the business objectives and choose one to move forward with.
- Assess risk. Evaluate how you will mitigate risks associated with your recommendation.
- Create an implementation plan. Identify, at a high level, how you will achieve your goals and who will be accountable for each milestone.
- Present your case. Create a document, a presentation, or both, to sell your recommendation to decision makers.
To build a compelling business case, you need to complete each step. However, the depth of analysis and extent of documentation necessary to support your case will vary depending on the initiative’s scope, costs, organizational impact, and risk.
Harvard ManageMentor Tools:
For more information on these steps, see HBR Guide to Building a Business Case.
Adapted from “Business Case Development ” in Harvard ManageMentor