What is the startup business case?
Starting a company or creating a product without a genuine purpose or market demand is not a viable business approach. The "Tech Graveyard" is a testament to countless innovative ideas that failed to make an impact. Without a solid business case that addresses a real need for change, and the best market fit, the fate of such ventures is destined for failure. It's important to remember that over 90% of startups falter within the initial 3+ years.
A business case lays the groundwork for its establishment. It carefully evaluates various options, assessing their advantages, costs, and risks, while providing a compelling justification for the business's existence.
A well-crafted business case captures both the quantifiable and non-quantifiable aspects of the business opportunity. Business cases can range from formal and structured to informal and concise. In a formal business case, you might find background information, anticipated business benefits, considered options with explanations for their rejection or consideration, projected project costs, gap analysis, expected risks, and more.
To consider the five key elements of a business case:
1. The reason for its existence - A compelling case for change.
2. Why should the market care?
3. What difference does it make?
4. The Economic Incentive - Return on investment, evaluated through investment appraisal of options.
5. How would we measure success? - Key Performance Indicators (KPIs).
A business case seamlessly combines investment appraisal with evidence of how the investment will lead to the realization of benefits. During the concept phase of a company's life cycle, a well-crafted business case becomes essential in demonstrating the value of the work ahead.
