Seven secrets of a strong business case

Seven secrets of a strong business case

picture of Brian Martin

Brian Martin

Head of Strategy & Planning at eir Business


A friend of mine was travelling on a bus in England during his student days, returning from a trip to the European continent. He and his mates had run out of money and hadn’t eaten for two days. All they had were their tickets to get home and they were starving. He was sitting in his seat, fantasising about food, when out of nowhere, a £20 note dropped in his lap. He thought he was hallucinating at first. He looked around the bus guiltily, but nobody was paying the slightest attention. It clearly hadn’t come from anyone in his immediate vicinity, it had just dropped from on-high. To this day he has no idea where it came from.

Unfortunately, unlike my friend’s situation, normally in life we don’t get something for nothing, especially when it comes to convincing others to invest in our ideas.
Investment and returns.
Risk and Reward.
Sow and reap.
These are all pairs of words that highlight the same thing – you put something in to get something back. Good things don’t normally just appear out of the ether. A decision needs to be made to invest in something and that something has the potential to deliver some form of a return. So it has always been and always will be, in my opinion. In personal life, it can be investment in friendships, in hobbies, in your career or in your house. In business, it can be infrastructure, or new product development.

Good business cases share key elements

I have written, contributed to, presented, reviewed and seen many business cases. It strikes me that there are certain common attributes associated with a good business case that are worth thinking about. I always ask candidate product managers in interviews what they think these factors are. Their answer always gives me a good insight into how they think and what sort of business head they have on.
Different stakeholders look for entirely different things from a business investment proposal, but below is my take on the seven elements you really need to make a good business case:

1. Model your assumptions

“Everything Should Be Made as Simple as Possible, But Not Simpler” – Einstein. Build as simple a model as possible that outlines the assumptions – unit volumes, prices, costs, revenues, whatever is relevant. Use variables that can be used to experiment with the assumptions and immediately see the impact on the case. For example, what if demand is 50% of your baseline assumption? Or double? Will prices erode over time? Make credible assumptions and back them up in the model.

Ideally you want a business case that is built upon conservative assumptions but robust in the face of this type of sensitivity analysis.

One other tip – I find it best start work on a case by building the financial model first as it helps drive out the volume, cost and price assumptions. Once I have a workable financial model, only then do I start writing the case. Whilst it doesn’t exactly “write itself” from there, I do find it makes it an awful lot easier.

2. Quantify the benefits

“Because it’s cool” won’t secure the capital investment. Neither will “it’s a no-brainer.” The benefits need to be quantified in financial terms. Financially-minded people will be allocating the investment spend, so make sure you also speak to the baseline financial benefits. These usually relate to increased revenues, increased profits or reduced costs. Even mandatory or compliance investments usually have some underlying financial argument, at very least the cost component and possibly revenue or cost risk implications. Get clear in your head which type of case it is and make the arguments. Use standard metrics such as:

Net Present Value (NPV): the value of the returns over the case period expressed in today’s money
Payback period: The length of time post-investment for the original investment to get paid back.
Internal Rate of Return (IRR): The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project’s internal rate of return, the more desirable it is to undertake the project.
As you quantify benefits, I usually find there is a three-way tension between the following:

• presenting a case that is conservative in its assumptions (appeals to the risk-averse)
• showing ambition (appeals to the commercially aggressive-oriented) and
• your own fears of stepping afterwards into your now-deliver-it shoes.

Navigate this path with care; the ultimate position you adopt will depend on your own risk-orientation and your confidence in the case. I find personally that adopting a mind-set of genuinely trying to do the right thing for your business is always the right place to come from.

3. Align it with strategy

Presumably your organisation has a strategy. If you don’t know what it is, find out. Highlight how your proposal aligns with the overall strategy and advances the aims of your organisation.

4. Ground it in the market

Have you tested the concept with employees? With sales? With customers? The more you have tested your concept with your target market, whether it’s an internal project or a market-facing one, the more confident you will be in your pitch and the more credible you will come across. Provide this evidence in the case.

5. Tell a story

A good business case tells a story that can be grasped without deep subject-matter expertise. You are usually pitching to a senior audience – the capital expenditure committee or CFO of your organisation, or possibly sceptical investors. If they can’t understand what you are proposing, then they are unlikely to invest. It is human nature to enjoy stories, so tell one and make it interesting. A story has a narrative, a before and after, or a do / don’t do. Paint that picture in the minds of your audience.

6. Make it human

Tell how the investment helps real people – customers or employees; give real examples and use cases. Show the investment in action so that your audience can identify with what it is you are proposing. Don’t bury it in technical jargon. It takes effort to describe the proposal in those more human terms, but it pays off.

7. Remember nothing is certain

No risk, no reward. Some of your audience may demand certainty of returns, but ultimately you are making a set of assumptions about future events, so you cannot provide complete certainty and you shouldn’t have to. To get a guaranteed return on investment, put the cash on deposit in a bank with a fixed rate of return. (Hint – your case should outperform a bank account!) Remember you are in the role of an entrepreneur, taking a stand for your business and making the case why the company should invest in your proposal. You will probably be challenged about the veracity of your position and your motives may be questioned. Keep in your mind that it’s so much easier to keep your head down and not to raise it above the parapet. You are doing it because you believe in your vision and take pride in your initiative. Ultimately all you can do is faithfully present your case – your business will thank you for it.

Entrepreneurs do this all the time, and so can you. For ‘business case,’ also read ‘business plan.’ You are proposing that your organisation invest in your proposal, that it give you money to spend to produce something. Why bother? Pitching an idea is a fundamental business process, yet doesn’t get a lot of attention, for some reason that I can’t quite understand, apart from within the start-up arena.

If you’re making a business case, you’re starting something: so stand up proudly and make your case. Perhaps you can sit back and good things will fall into your lap. But for most of us, manna from heaven is scarce and prayer is not a strategy, so use these tips to make your business case fly.

Brian Martin is Head of Strategy and Planning at eir Business and responsible for development of its information security portfolio. For more information about eir’s suite of expanded security services, contact If you would like to read more blog posts about security issues visit the eir Business blog.