How to Write a Business Case | Shane Kluiter | Skillshare
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How to Write a Business Case

teacher avatar Shane Kluiter, Knowledge is Power

Watch this class and thousands more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

    • 1.

      Business Case Development Intro

      1:31

    • 2.

      What is a business case and why you should create one

      5:02

    • 3.

      The Parts of a business case and Overview

      4:35

    • 4.

      Business Goals and project outline

      9:48

    • 5.

      Timeline, plan, benefits, and risks

      6:40

    • 6.

      Economic costs, recommendations, summary

      4:19

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About This Class

Business cases are useful for complex decisions in businesses. The methodology of a business case forces you to look at a project or plans benefits and draw backs.

Business Cases are a great way to choose between different options that you have at a business. Examining the short term and long term ramifications of a decision and the measurements behind those decisions allows business owners and executives to make effective decisions. At scale companies need to be able to effectively outline why they are making specific decisions.

By outlining a Case for a business decision you look at both the benefits and the risks associated with the decision. Sometimes the risks will out weigh the benefits but without outlining them your team may miss the drawbacks of your decision.

After completing this course you will be equipped to write your own Business Case and examine decisions within your organization.

In this course we will go over the different parts of a business case:

  • Overview
  • Business Strategy and Goals
  • Project Outline
  • Timeline and Plan
  • Benefits
  • Risks
  • Economic Costs
  • Recommendations
  • Summary

Meet Your Teacher

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Shane Kluiter

Knowledge is Power

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Level: All Levels

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Transcripts

1. Business Case Development Intro: Hi, my name is Shane. In this course, we'll learn about business case development. What is a business case? Business case brings together the benefits, disadvantages, costs, and risks of the current situation and the future vision so that executive management can decide if a project should go ahead. Business cases used to decide if we're going to take on a project. It's a decision-making process and a writing form for establishing clear communication, clear evaluation of a decision. It's good for communicating from one department to another, possibly an approval process. To say, this is a decision we would like to make. This is the outcomes that we perceive to see from it. This is also the risks associated. Similar to a business plan that you take into account, the risks associated, the ideal outcome. This is pertaining primarily to a business decision that we want to take a look at and see, does it make sense for our company to be doing this on a case-by-case basis. Does this decision makes sense? 2. What is a business case and why you should create one: What is a business case? Business case brings together the benefits, disadvantages, costs, and risks of the current situation and the future vision that executive management can decide if a project should go ahead. Business cases used to decide if we're going to take on a project and accompany. If I have a idea, say I'm going to add a new location, I'm going to bring in new equipment. I'm going to do a merger or an acquisition and I want to establish, now, does this make sense? I might do a business case. We'd be to justify why I'm going to do something and make sure it's being analyzed appropriately. In doing so, it provides clear communication. All levels of management to say this is why this specific team wants to undertake this project. The benefits to the business, the risks associated, the cost associated, and what we should expect to see from undertaken to make sure that it aligns with the overall business goals. I create a business case. There's a good reason to create a business case is to justify why something should be done and to examine the financial ramifications of doing so. Say I'm going to take a look at upgrading equipment in my factory. I have a factory that is using press machines and we made parts for various suppliers. We press parts and then we ship them out, have them plated, they get sent back and then we send them off to a car manufacturer. We made one part that gets attached to a seat. We get to make another part that gets attached to a wheel. Well, a few different parts. Primarily, we work with two different two different car manufacturers make main two different parts. Main revenue is on two parts. We might take a look at this and say, alright, doesn't make sense for us to upgrade the equipment from making all of our parts. Whereas it makes sense to only upgrade equipment for our works on these two parts we make that generated this revenue. We want to look at things around that. So if these two parts might only be generating revenue for the next three years, it does it still make sense to buy equipment? The equipment might be getting rundown now and on. At a glance, it might make sense to upgrade the equipment, but if say our contract is up at the end of the year for these parts and we don't know that we're going to get this contract. Again. It might not make sense to update this equipment because the updating this equipment could mean whilst being locked into having specialized equipment. Now, for the foreseeable future that we may not need as abundance as we have. Because if that contract doesn't get approved, maybe that untracked justifies it. But if we don't examine a situation, we might not realize that at a glance we see we have a piece of equipment that really needs to be replaced probably within the next 18 months because it continually as his problems. Taking a step back, looking at the whole situation really gives us a better view of note, does this project makes sense to do? Maybe we want to add more locations. Taking a look at the ramifications of that, do we have do we have again, do we have the business to justify that? Do we have the labor to justify that? Do we have need for that additional space? How long is it gonna take us to recoup the cost of that space where all the risks associated. Those are things we're going to need to know. Maybe what I want to look at evaluating a merger with another company that's in the same space or similar, what are we going to gain? What are we actually going to lose by going that route? Very important to take a look at all of these things when we are making important business decisions, especially it's very expensive ones. Now, upgrading a piece of equipment sounds like a very simple thing to do and accompany. But when you look at equipment that sometime could cost millions of dollars, It's not a simple thing to do. It's not a simple course of action to take for a company. It's something that needs to be thought through and timed appropriately. Inmate was the appropriate amount of thoughtfulness and blend it. 3. The Parts of a business case and Overview: The parts are business case. We have an overview which is similar to a summary. What's inside of this business case? We had the strategy and goals. What are we trying to achieve? What's the strategy? Project outlines, simple outline of what we're, what we're going to accomplish and how that's going to look. Goes along with the timeline and the plan. How are we planning this out? It gets simple for someone to understand at a glance. This is what we're trying to do. This is how it should plan out timeline wise. The benefits of doing this. Essentially, why should we do this? Well, the risks. Why shouldn't we do this morning to look at why you shouldn't do things, especially when it's going to be expensive for a business to do. The economic costs. Now, what are we losing economically for doing this? What are we gaining economically for doing this? Recommendations. This is recommendations from the proposal. Or do you recommend doing this case? Do you recommend not doing that? Imagine you recommend certain things. Within this case. Maybe this is a project that should only be done if certain things are met. So we should buy equipment only if we renew the contract with XYZ car manufacturer for a period of three years. That would justify buying the equipment. Of course, we have a summary which wraps everything up. Overview. We're going to create an executive summary. An executive summary should provide following brief snapshot of the problem that you're intending to address. An overview of possible solutions to achieve and the cost. Performance benefits. Include contributors and people that will have been consulted, reflect internal support, and provide the decision-maker with further competence and your business case. What that means is centrally inside this overview, we want to be able to say, we recommend in this case. And these are the people that we have backing us up. If we're looking at the equipment we were gonna get because we did renew that agreement. So we talked to the maintenance team and the maintenance manager said, Yeah, this machine constantly needs to be repaired and it's going to cost us X amount of money to keep repairing it. We talked to engineering that keeps having to build a new It keeps having to engineer new parts to special fit inside of it because it's maybe a specialized machine. Well, we keep having to engineer new part for it that you're apart, mixed a little bit extra time causes more money. Now we add up. In a customer's application point, we keep having to add on all these costs, all these costs, all its costs. So we bring in all these experts. We bring in. If we bring in someone from finance, we say, Hey, there's someone from finance. Vp of Finance has yes. Cost-wise, it makes sense for us to go ahead and get new equipment because this piece of equipment is going to depreciate in a way that makes more sense financially for us to have on the books than this old peaceful. If we repair this old piece of equipment, it's really not going to help us. On the books. This new piece of equipment loads more. And the new piece of equipment is also going to last longer. And we financially are gonna have revenue coming in to basically guaranteed based on our contracts. So yeah, it's pretty safe to TBI. Very important to have basically references internal support. Because these are the people that are going to back you up on the decisions here and say, Yeah, this is why this makes sense to do or this doesn't make sense to do. Backup your business case. 4. Business Goals and project outline: Isn't a strategy and goals. Be aware of your organization's overall strategy angles. If your proposal is counter-intuitive, these goals, gaining approval or funds can be very, very difficult. Keeping in line with the organization's strategy shows a clear path to how your project can help the business achieve its targets. What I mean by that is when we're thinking about trying to get a project approved and trying to create a reason for why we need to do something. You should do it. Interests. Align that with what the company is already doing. The idea shouldn't come out of left field. You shouldn't be accompany that sell sporting goods. And then you come in with the idea to have a business case for suddenly selling carbs. Those two things are not complimentary. Don't make sense. The business strategy probably doesn't make sense, the goals do not align. It's important to have an understanding of whether or not your bills and business case requires a philosophy shift inside the company where coming organization is structured and operate. Your business case is going to require structural change. You're going to need to account for a more broader ripple effect inside the business case. Account for that inside your strategy, inside your goals, and really account for that with the people that you're referencing saying this should work. Take into account a broader view and what that looks like an ripple effect outside of a short-term and the expense of the project. It adds to the credibility and the substance within your proposal because as well as system. With understanding what changes are needed, it shows what the long-term ramifications of this change should be. We bring in a new piece of equipment. This new piece of equipment then needs less maintenance on it. Because we need less maintenance on it. The maintenance team is working less overtime because right now they're working around five hours overtime a week and got five hours overtime could be eating up just on this one machine. So now every other week they're only working two hours overtime. So we're saving X amount of money just on that. And we have a machine that was more reliable so we don't have downtime on the machine. Two things start to the stack. Things started to spiral. Things started to have a ripple effect throughout the organization. As you have changes, you need to make sure that you're putting those in and you're adding them up. Because that ripple effect really adds a lot of validity to why you should do something. Because it's not so much that changed the piece of equipment because the new ones obviously going to be better change the piece of equipment because it's wasting so many people's time. It's causing us to have overtime. It's breaking down. It's slowing down productivity. It's not reliable. Lot of reasons change it out. Those reasons give you back a lot of different things. One of those things is time. Time manufacturing on the floor. Times the maintenance team working on other machines. Getting less overtime. Overtime is expensive. Heap focused on goals, keep focused on the business strategy. Project outline. This is going to be a concise and informative outline that is based on reliable data that you can use to add weight to business case. Here's your fundamentals that will help the reviewer gain better understanding of your proposal. You want to be able to clearly state, wire proposing the project. Make sure the business needs are addressed, include a clear analysis of the problem. This is because if reviewers failed to understand the problem fully, they won't understand why resolving it's truly necessary. Which in turn can limit of successive your case might get rejected. So I have that piece of equipment. I say, Hey, the piece of equipment sold, we need to replace it. And that's essentially my case then. Well, just because it's old doesn't mean it needs to be replaced. I could have an old car and as long as it's getting me from a to b, it essentially a, serving its purpose of the business. It doesn't have to look good, it just has to get me from a to b. I haven't said, well, the equipment is slowing us down. The equipment is costing us overtime. The equipment is breaking down. Those things need to be in there. And the ripple effect has to be shown. Because otherwise, this reviewer isn't going to understand why the business case is necessary. We need to provide data that shows urgency to the problem. Numerical data that shows what we're going to gain. Data like in our case of the machinery, we're gonna get. Like the hours. We're gonna say, we're gonna say production hours from downtime, having to repair the machine, we're going to save maintenance hours overtime because they're not going to have to work on the machine as much. And maybe this new machine is faster. So we're gonna be able to produce parts faster. Because we can produce parts faster. Maybe we can actually take on more contracts with the same number of staff. Gonna be interesting. We want to define what areas of the business are gonna be affected. So what areas are gonna be affected? Maybe it's just production lines 12 get effected. That's it. Maybe it's all everybody that works in plant number one. But everybody that gets effected needs to be counted for. Lead, include options. Options to resolve the problem, and relate two remaining sections to put the proposal. For these, we're going to create a few more sections. It's outlined that are going to say, Hey, here's what else we could do. If you're interrupting the status quo. You want to have especially an easier option that's more aligned with something the company would actually normally do. You might even have an option that's basically option one. We do nothing. Option two, we do this. We want to have the impact of including the current situation. So if option one is do nothing, keep the current machine. We want to include the impact of that. We have labor, our problems still, we have the production problems still we have production delays. Unreliable. We want to address this problem and make sure that the problems being faced in a very real way with options that are presented. Very rarely do problems at one solution. We need to include details with alternative timelines if options have different schedules. So maybe option one could be done in two months. Option three could be done in four months. Just include a couple of different schedules to ensure that the decision-makers understand that these different options can all be done in the same time. There's going to be some change with each option. Referencing industry standards and guidelines that your project aligns wounds can also have a positive effect. In this part. Because we're outlining the project. And we're saying option one does this industry standard. Option one does XYZ. Industry standard is XYZ minus two. Option two equals XYZ minus three. Industry standard is XYZ minus two. So we would be doing above industry standard. We'd be doing better than industry standard if we went with option to. Those types of things, make sense. We were referencing and saying, Look, we're better than the rest, than industry standard. If we do this or we're meeting industry standard by doing these things. But certain options might be outside of industry standard. And we need to make sure that those are clearly outlined. Want to utilize visual tools. So if we have charts or graphs that makes sense to add in, we want to add those in. I want to make sure it's very clear, very easy to understand. 5. Timeline, plan, benefits, and risks: For our timeline and plant, a detailed timeline strategic plan should cover how you will achieve the desired outcome. Include key milestones with significant deliverables at each milestone. But significant deliverables. I don't mean something arrived at the facility. There's an achievable goal, something substantial. The project has hit a point where it's had some measure of small success. You can say that the project has moved in through stage one, which we're breaking it through stages, should outline what resources will be required. You should have a clear indication of the required roles, responsibilities for this project. When outlined how the project will be monitored and we'll key performance indicators or KPIs, will be implemented to ensure targets will be achieved at the various stages. Want to go over whether we plan to have a impact on existing organizational events, which something like causing a shutdown, structural change. It could be like an IT issue or you implement a new IT system, we have to shut down the IT support for two hours. No, anything like that needs to be outlined here when these timelines would happen. So we're gonna put it in this new piece of machinery. There's gonna be downtime. Maybe this new piece of machinery requires us. We shut down on Thursday and we have a crew that works Friday to Friday to Sunday to set this up. That's stuff that needs to be put in there for it because we're going to have overtime from the crew working that weekend, but it's only going to be that weekend. We're going to lose manufacturing time from having it set up Thursday, Friday, but it'll be running, it should be running Monday. Want to make a detailed timeline and plant. We know what we're getting into. If it's being defined as detailed savings in terms of revenue and productivity, the result with achieving greater efficiency. An effective representation of benefits will include measurable financial benefits. Social impact. Detailed information about how this data is going to change the way the company performs. When we talk about measurable benefits. When we're talking about return on investment, what we're going to spend this much money, we're going to spend a million dollars, but it's gonna give us the ability to generate $20 million. So we have to spend a million, degenerate 20 million. That's a good investment, that's a good trade. Anyone would make that investment if it could be proven. You're doing in this case is proving that it makes sense to bend that million, to make that 20 million over the next 20 years of this machine. What we want to do is ensure that we very clearly outlined all the impacts that we're going to have. The benefits. The benefits are very clearly understood because this is where you really get to shine with this. Say, this is a 100% why we should do it. This is why you should be excited to do this stuff, to take a look at risks. Recall to cover all risks. Decision-makers need to know about associated with this project. Whenever we're coming up with a project that will come up with an idea, the risks are the least fun part to take a look at. It's because we want to think that the rubber project we're doing, it's gonna be all sunshine and roses. It's going to go great. But realistically there are risks associated. There is a downside to everything. And we have to make sure that we are taking those risks into association. So risks associated with the problem and likelihood of those occurring. It easy to define terms low, medium or high chance of those current. Considering the example we've been using. So we're binds piece of equipment. You know, what is the risk associated of us losing an extra day of downtime? It is a low chance of risk that we would lose an extra day of downtime based on us giving ourselves Sunday as a buffer. So we do we plan for Thursday, Friday, Saturday, Sunday to work out the kinks, the setup of the machine. If there's any major problems on Thursday, Friday, Saturday, we should be able to work those out by Sunday. Monday, we shouldn't lose that productivity. Low-risk consideration of threats and opportunities really is going to be very important because it can inhibit or maximize the return from the project. If we take a look at this and we realize the risks do not outweigh the benefits. Obviously, we shouldn't miss. Maybe what is deemed as a small risk to us once it goes up to upper management. And they take a look. Key decision-makers take a look. Key decision-makers might see this and think of other projects we're doing and how this project could amplify risks associated to other projects. And it might make less sense to do this project because of that. Ix, risks and options linked to them needs to be presented. If this risk happens, there might need to be an option presented. Back to the example of a piece of equipment we're buying, we will lose that Monday of productivity. What do we do with that staff? Do we tell them You don't work that day and we now lose that they lose that right? They lose that income. Do we decide we pay them? Do we decide that there's other stuff for them to do around the shop? What do we do? You would I have something plant? 6. Economic costs, recommendations, summary: We want to take a look at the economic costs were a comprehensive proposal. It is imperative. Sure. All costs are detailed. Clearly. Want to be very concise with how we're detailing this. So we want to create quantitative costs. The CapEx gonna be categorized few of the following. So I'm going to look at reliability, security, efficiency, performance improvement. A safety. Non-quantifiable costs, such as credibility and reputation, should be ideally acknowledged in terms of how they impact the quantifiable costs and benefits. So say I have credibility. That is that could be impacted by something. Well, that should be quantified in terms of how it could be. Cost and reliability, security, how does that hurt me economically? Safety, how does it hurt me economically? We're putting in this machine would have somebody gets hurt. It has that economically hurt me? How does this new machine you're getting turned on? What safety procedures do I need to now put in place because of those to make sure I don't have an economic costs associated with this new machine. I have a performance improvement. What economic benefits do I get from that performance improvement? What I unit again, efficiency. Is there a cost to actually gaining that efficiency? Is there a danger associated? Want to make sure that we quantify these things? The recommendation section, we will put our final recommendation and why we've come to that conclusion. Want to highlight all the benefits and all the costs. We want to ensure that are recommended solution clearly shows the greatest ROI. We want to. We want to make this as easy to understand as possible and put it into a format that's as easy to understand as possible. We might put it into tables and grasp, make it very easy to look at and read. And really that point to the reviewer. Most of the detail. This is going to have already been covered. We want to make sure that we're not feeding more paragraphs. So this could be a very visual section of race, very kind of summarizing section. Not quite the summary, the summary comes after, but your personal recommendations. Why you recommend it? Here's the data on y and a visual recommendation of it. Finally, you have yourself. The concluding summary is your opportunity to emphasize the critical parts of your business case that you want decision-makers tomorrow. Remember, you're ending with this. This, this should be the last part they see just saw your recommendation and now they're going to see or summary. So the problem and the business need why are you putting forward your business case? Why did they just read this document? Why was this foot in front of them? Remind them the benefits and the risks of the options. Remind them the important things. What are the solutions to the problem? Return on investment? What is the overall gain going to be? What are we expecting to see from doing this? What was your final recommendation? What do you, the creator of this business case believe should be happening?