Before you – and your company – invest a large amount developing a new product or service it is best to create a cohesive business case. From a Product Management perspective, a business case has two key components: external market factors and internal product factors.
External factors in a business case
- Looking outside the company to the problem a customer has
- Seeking the potential opportunity to profitably address the customer’s problem
- Completing a deep analysis of the market and the competition
Internal factors in a business case
- How much it will cost to develop the product
- What internal capabilities does the company bring to the party which will make you more successful than anyone else
Recognizing the Importance of a Business Case
The business case is critical in order to get company buy-in. Without it, your company won’t give you the funding to get the product out the door. To make your business case easy to comprehend, divide it up by the following three components:
- The story: The why of the problem you’re looking to solve. Why is solving it so important for a particular customer set or sets? Tell this part as clearly and as simply as possible. Forget fancy words and don’t go on and on.
- The numbers: The evidence that supports your story. It’s nice that you want to solve a problem for somebody. In the numbers portion, you bring the proof — for example, you have this many potential customers, and with a certain amount of budget an expected level of profitability. Again, simplify. You may have a huge spreadsheet of numbers as background material, but focus clearly on the ones that are most important to support your story.
- The downside: These are the risks and tradeoffs that the company need to be aware of. Here’s a tip from human psychology: If you admit to the weak parts of your business case, the people who hear you will trust you more. Be realistic; tell your audience about the potential downsides, and you’ll actually be better off.
Outlining Your Business Case
Your business case has many components. Here is an outline of the main headings. Any business case template should include most of these items without diving into the weeds on product details.
Document Section – Description:
- Executive summary – This piece is written last but placed first in the document. It summarizes the entire business case.
- Problem and opportunity – What is the problem, and how can your company take best advantage of solving it?
- Market landscape – What is happening in the market as a whole which makes you believe solving this problem is the best use of company time and resources?
- Competitive landscape – What is happening with competition in your chosen market that makes you believe solving this problem will allow your company to compete and win?
- Financial and impact analysis – How much money and other resources does completing the project take?
- Risk analysis – What particular risks do you see, and how can you mitigate them?
- Assumptions – Are you making key underlying assumptions about the market, economy, and/or internal situation?
- Open issues – Does anything (such as a key person, a key relationship, or an unknown technological advance) remain up in the air?
- Conclusions and recommendations – What is the bottom line? Why should the company say yes?
Do you have everything you need?
This graphic shows how the business case is constructed so that each part builds to the ultimate big question: Yes or No.
Getting Buy-in for Your Business Case
When the writing is done and you have polished the writing to clarify each part of your business case story, make sure everyone who had input has reviewed it and provided feedback. Your likely next step is to create a short, focused, and compelling presentation to tell your story to your executives to get the funding. The presentation should include everything in your executive summary of the business case. The executives make many decisions every day, so you don’t want to make it hard for them to figure out what’s going on. The clearer your story as told by the business case is, the more likely your business case – and project funding – is to be approved.
Preparing Your Presentation for Your Business Case
Speaking in front of leadership teams defending your product plan is not something Product Managers do every day. Prepare. Practice. Have someone quiz you on any prospective question that might be thrown at you. And finally, plan for one last question:
“What if we do nothing?” It’s harder than you think to answer this one on the fly, so practice your answer.