The Ultimate Business Case

In my career, I have already built many business cases, mostly on commercial decisions. Usually from scratch, sometimes just optimizing from what I inherited from others. I really feel building a good BC is an art of its own. You need deep understanding of the a balance sheet, but must not be an accountant. You need a good understanding of the business model, but you are not the sales manager. You need to have a good financial knowledge, but not be a banker… you get my point.

Before making a deep dive in how a good business case potentially looks like, I would like to make a few points. This is going to be a long post, so think I will chop it in half.

What’s a business case?

A BC summarizes the financials of a project of a future earnings model. It is decision material, meaning it does not have to contain all details, and not be too wordy or narrative. It’s the finances what it’s about. After a few hours in, step back and think about the right level of detail. Perhaps have a look at my post on business analysis. Although often produced by the same individuals, there is a difference between business analysis and modelling!

In a company, the format of a BC should be consistent and repeatable. It is a disaster for any EMEA-level manager having to work through 40 different formats for 40 different cases. It will take him -and you- 40 days. So make use of available formats, I will offer one later.

However consistent, once a BC is finalised and submitted, the owner should be aware his baby needs to be updated regularly, especially after receiving significant new information.

What is the most important slide of a BC? Right, the last one (chances are the attention level of your audience will go up when they know you are packing up – sad but true). So what do you need on your last slide? Your expected return, the expected decision or as I usually call it, the definition of success.  Be sure to represent it as a measurable output. That may be the profit or cashflow for the next periods, incremental volume, but sometimes the avoidance of loss or additional cost savings.

More key elements

Spend an obscene amount of time on spelling out the assumptions. Both the quantitative and qualitative ones. Take one, no twenty, steps back from your business and take 30 minutes to brainstorm with peers about what the assumption is. The bigger the assumption, the harder it is to spot it. One of my key projects of last year flunked because me and the entire crew I worked with assumed our distributor wanted the same as us… not!

The more senior the level of management, the more financially driven the decision will be. They literally don’t know the technical details, and won’t have time to listen to you. Come in prepared with good understanding of your P&L and Cash Flow, over and above today’s runrate of course. If it is not your thing, find someone to do it for you!

The second part of the post will follow shortly….

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About curiousmanager

In life there are generalists and specialists. Although your job pushes you down towards a certain specialization, I feel it's important to keep your eyes and mind open for new stimuli. And I want to share my journey through arts, literature and sciences with other knowledge workers and managers. You don't have time to read. Let me do that for you and present only the best of the best in my blog!
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2 Responses to The Ultimate Business Case

  1. Pingback: Task list of a controller – part 1 | The Curious Manager

  2. Pingback: How to manage Net Working Capital | The Curious Manager

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