What is business case? Why should it get created? Does anyone do the business for lose? No, Does any business get started without knowing the profit margins and revenue? No. So, to build a profitable business we need a preliminary analysis. The outcome of preliminary analysis is business case.

Business case is a set of elements which supports necessity of a product to be developed. It contains the pro and cons of the product implementation. Business case is the high level primary document which helps to make a decision to proceed further. Business case should determine the commercial advantages and disadvantages of the product, the way of development, cost to develop, risk involved in it, approximate time to develop the product.

Business case is a high level document which gives clarity on why to develop? And how to develop? At whats cost it can be developed? And how much time it takes to develop. It is a standard document which can be prepared for building a product, executing a project, or integrating a feature. Product managers should prepare it as an initial document to present it to the stakeholders and decision makers. So, how to build an effective business case? What are the components of the document?

Problem statement

Problem statement is the statement which describes a problem in details with it’s impact. The problem which is being solved should be curated with all possible reasons. It should contain the root cause of the problem, number of people who are getting affected? the gap between current state and desired state, and impact of the problem on people and money. Essentially, it should let us know what the problem is? Why should it get solved? How should it get solved? And where should it get solved?

Solution

A problem can be solved in numerous ways, business case should describe one of the effective solutions. It could be technical or functional solution, the high level solution should be described. For instance, if it is being solved with technology, the business case should have the details of the architecture, technology stack and the implementation of major functionality. Solution is just like heart of the document. It gives an idea that how effectively the problem is being fixed.

Risk and mitigation

Identifying risks are imperative for any business, identifying them at the initial stages gives more advantage to minimize them. Risks could be from any level, from any stage, and from any department. It depends on the nature of the product. Risks could be from environmental, compliance, resources, marketing, pricing, cost involved, governance and political risks. Describing them in the business case will let the stakeholders to mitigate them.

ROI (Return on investment)

Return on investment should be determined in the business case. Number of channels that are contributing to revenue, business associations that are contributing to the revenue. Projections should be prepared with the revenue breakup by monthly and yearly. Essentially, for any business return on investment, profitability and the break even point are important to plan the financials and plan for sustenance.

Cost to develop

Primary analysis of any business has to derive the cost to construct. It may not be accurate but a rough estimation is needed to make decisions and kick of the development. Cost estimation helps in capacity planning. Stakeholders will make a decision to start if it is in their budget otherwise, they raise the funds to construct the product.

Time to develop

Timelines is one more element which decides the budget and revenue. How? The budget keep getting increased when the time duration is increased without generating revenue.So, time duration is the deciding factor and it impacts on product availability in the market, budget, revenue generation, marketing plan, market share, competition, and pricing. So, time to market is one of the deciding factors in product success. Eventually, time for development should be in the business case to decide about the business.

Resources needed

Resources and it’s availability and their cost to project is one more element which can not be ignored to start any project. They could be human resource, infrastructure, raw materiel, or electricity. If there is a gap between resource need and availability, the projects costs more, or lack of resources may stop the project. Essentially, business case should contain the resources needed.

Take Away

1. Preparing business case is initial analysis which helps to determine important elements of the product.
2. Why to develop the product? And how to develop the product are the questions which drive the business case.
3. Business case is a high level document which helps to make decision to kick of a product.
4. The outcome of the business case is to decide how viable and how profitable is the product to build.

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