Business Case for a Major Decision

What it is

A Business Case for a Major Decision helps you decide, with confidence, whether to go ahead with a big step such as new equipment, a second site, a major contract, a key hire or buying another business. We compare your options side by side, show what each will cost and return year by year, test what happens if things go worse than planned, and give you a clear recommendation you can take to your partners, board or bank.

How we do it

We start by setting out the decision and the realistic options, including doing nothing, so every choice is judged on the same basis.

For each option we work out the costs, the extra sales or savings, the effect on cash, and how long it takes to pay for itself, year by year.

We test what happens if sales are lower, costs are higher or it takes longer than planned, set out the main risks and how to manage them, and give you a clear recommendation with a one-page summary.

Is this for you?

Clients usually call us for this when:

• You are weighing up a big purchase, such as a machine, vehicles or a building.
• You are thinking about a second site, a new product line or a major contract.
• You are considering buying another business.
• You are about to make a key hire and want to know it will pay off.
• Your partners, board, bank or investors want to see the thinking before they commit.

What you receive, and what each gives you

• Options comparison: each realistic option, including doing nothing, set out on the same basisEvery realistic option, including doing nothing, laid out side by side on the same basis, so the comparison is fair.
• Business case model, unlocked: costs, returns, cash and payback for each option, year by yearA spreadsheet showing the costs, returns, cash effect and payback of each option, year by year, fully open and yours to keep.
• What-if testing: what happens if sales are lower, costs are higher or it takes longerWhat happens if sales are lower, costs are higher or it takes longer, so you know how much room for error there is.
• Risks and how to manage themThe main risks set out clearly, with how to manage each one.
• Recommendation report with a one-page summary, and a 60-minute session with the owners or boardA recommendation report with a one-page summary, and a 60-minute session with the owners or board to talk it through.

What changes for you

• A big decision made on evidence, not gut feel.
• A clear picture of what could go wrong before you commit.
• A document that answers the questions your partners, board or bank will ask.
• Less risk of an expensive mistake.

The questions it answers

• Should we go ahead, and which option is best?
• How long will it take to pay for itself?
• What happens if it goes worse than planned?

Words we use, explained

Payback

How long it takes for the extra profit or savings to cover what you spent.

What-if testing

Changing one key number, such as sales 15% lower, to see whether the decision still makes sense.

What we’ll need from you

A one-page checklist comes with the engagement letter, with a private page to upload everything. The main items:

• A short description of the decision and the options being considered
• Quotes, proposals or price estimates for each option
• Profit and loss and balance sheet for the last 2 financial years
• Current year to date results and any budget
• Expected sales, savings or other benefits from each option, and how you arrived at them
• Any lease, contract or finance terms already offered
• Timing: when the decision is needed and when each option could start

Not included

• Technical, engineering or legal checks on what you are buying.
• Valuing a business you are buying.
• Choosing or recommending a lender or loan (that stays with you and your bank or broker).
• Carrying out the decision.
• The figures rely on your information and quotes, so they are not a guarantee of results.

The technical detail

Each realistic option, including doing nothing, compared on the same basis: costs, returns, cash and payback year by year, what-if testing, the main risks and a recommendation for the owners, board or bank. Pairs with the Finance Ready Pack when the decision needs funding.

Often paired with

Finance Ready Pack: Once you have decided to go ahead, the Finance Ready Pack prepares everything the bank needs to fund it, built from the same numbers.

13-Week Cash Flow Forecast: A big step can stretch cash in the first months. A 13-week cash flow forecast shows the weeks ahead so the business isn't caught short while the investment beds in.

Common questions