A business case is usually approved and prioritized mostly based on its economics. You'll need a sense for how much investment you require, the timing of that investment, and the ongoing costs of your idea. You'll also need to explain the positive financial impacts and how they accrue over time. This section will also include key metrics like ROI (Return on Investment) and IRR (Internal Rate of Return).
- A business case is usually approved and prioritized based mostly on its economics. You'll need a sense for how much investment you require, the timing of that investment, and the ongoing cost of your idea. You'll also need to explain the positive financial impacts and how they accrue over time. This section will include key metrics like ROI, which is return on investment, IRR, internal rate of return on your investment, and NPV, the net present value of your idea.
This section can include key metrics like market share, customer growth, and other metrics that are core drivers of the financials of your business case. Depending on your organization, there may be compulsory metrics to include. Many organizations also have standard calculation methods and standard assumptions to use. Things like your NPV time horizon and discount rate may be specified for you, because the organization wants to ensure that they're comparing everyone's business cases and those financial results based on the same set of assumptions.
Typically, the finance organization maintains these metrics and methods. Go to them for guidance before you submit a business case. Look at the exercise files for this case for examples of the investment case sections. I wrote a business case one time and I was new to the organization. And right when I was getting ready to go for approval, I was told I didn't have the right information. Now, I was pretty surprised, because I had been pretty rigorous with the financial section. And they said, well, you're using the wrong wacc.
And I said, what's a wacc? They said, well, it's the weighted average cost of capital. You need to go to finance and get that number and plug it into the business case when you do this specific calculation. It took me an extra couple of days to find the right person in finance to get that specific number and to revise my numbers for my business case. You can be sure, after that, every single time I had a business case I was taking forward for approval, I stopped by finance first. When you're writing the economic section of your business case, make sure you're involving the right people, specifically from finance, before you go to take your business case forward.
- Structuring a business case
- Capturing administrative information
- Crafting your idea
- Articulating an idea's benefits
- Making the investment case
- Defining resource needs
- Assessing risks and opportunities
- Creating milestones and measuring results