A business case is an argument used to prove the soundness or desirability of a plan, purchase, or action. It can be used to justify any type of purchase, conversion, or expansion. It is generally used to obtain funding or backing for a project or to gain buy-in from key stakeholders.
In most formal situations, a business case is presented as a document. It might be supported using charts or illustrations, or it could be placed in an easily-presentable format, such as a slideshow. On occasion, however, such a justification may be a purely verbal presentation or presented as a video.
The format of a business case traditionally consists of several identifiable parts. It usually begins with a problem statement, in which the presenter outlines a current problem and its effects on the company. This is followed by a position statement, which explains how the presenter proposes to fix the problem. This is where the primary purchase or action is introduced.
The presenter will then explain both the costs and benefits of the solution. He can also present alternate solutions that have been considered and explain why they are less desirable. The presenter concludes by summarizing his position and illustrating how the world might look upon implementation of his proposal.
For example, a presenter might be an accounts receivable manager who wants to create a new position and needs funding from the human resources budget to do so. The manager might begin by stating that collections on past due accounts are currently behind by 20 days despite the fact that the existing team is working two hours of overtime each day. He might then state that adding a new position would solve the problem. He can then explain all the benefits of a new hire, such as improving existing employee morale, reducing overtime costs, and bringing collection attempts up to date. After providing a detailed analysis that compares the costs of hiring a new employee, such as salary and benefits, to the potential cost savings, such as the cost of uncollected bills and overtime salaries, he might conclude by explaining that adding a new employee will result in a happier staff and a more efficient department.
Presentation of a business case is not exclusive to business, however. Anytime someone tries to sell another person a product, service, or idea, he will build a business case. Television commercials, for example, might ask viewers if they are tired of trying to accomplish difficult, messy kitchen tasks by hand, then present them with a new automated tool that will do the job for them. Such commercials might close by showing a contented cook relaxing with a glass of wine while the gadget does all the work.
Other examples include a teenager presenting a case for why he should be allowed to participate in an activity, a salesman pitching a new security system, or even a restaurant server promoting a special or dessert. Business plans are really just long, highly complex business cases. Once understood, it becomes clear that business cases are used every day in every aspect of life.