Business Case vs. Business Plan - Google Groups

بسم الله الرحمن الرحيم
السلام عليكم ورحمة الله وبركاته

Business Case vs. Business Plan:
Do You Know the Difference?

With all the focus on cost savings, competition for scarce funds, and management accountability today, many people are confused about the difference between the business case and the business plan. Even those with a strong background in analysis or business planning sometimes have to ask:

"What's the difference between a business case and a business plan?"

It's a question that many bring to our business case seminars. It's a question you may have to answer many times for your colleagues and management. People often use the terms inter-changeably or ask for one when they mean the other. Both support decision making and planning, and both project business results forward in time. They are complementary, but they different. They address different questions.

Before you set out to build a business case or build a business plan, or before you ask someone to bring you one or the other, be sure that everyone involved understands clearly what is expected. (For a complete introduction to the business case, see one of our books, The Business Case Guideor Business Case Essentials).

One is About the Action, the Other is About the Business and the Organization

The business case and the business plan both look into the future and complement each other, but they answer different questions. In a nutshell, a business case is organized around an action, while the focus of the business plan is the business and the organization.

Use the business case to answer "What happens if...?" questions like these:

• What are the financial consequences if we choose the IBM proposal? If we choose HP Proposal?
• What will we need as a capital budget next year if we decide to buy the service vehicles instead of leasing them?
• Is the investment in new phone technology justified? Is there a positive ROI?

Use the business plan to answer questions having to do with the future of the business, questions such as:

• What sales, margins, and revenues can we expect next year?
• What should we set as targets for our strategic business objectives. What are our business performance and financial position when we reach those objectives?
• How many years will it take this startup company to become profitable?

When deciding which tool you need, or when explaining the difference to someone else, consider the important differences that follow from focusing on an action as opposed to the organization:

	A Business Case....	A Business Plan...
Is organized around...	A single action or single decision and its alternatives.	An organization or the whole enterprise. The plan may cover a single product or product line or the whole organization.
Predicts...	Cash flow results and important non-financial impacts that follow from the action.	Business performance of the organization, especially in the main categories of the income statement. May include projected pro-forma income statements or balance sheets for future years.
Focuses on...	Business objectives for the action. (What the action is meant to accomplish).	Business objectives for theorganization.
Is based on ...	A cost model and a benefits rationale, designed for the case, and applied to one or more action scenarios.	The business model for theorganization (showing where and how the company makes money, similar to income statement), as well as expected trends, competitor actions, etc.
Measures...	Financial metrics such as NPV, IRR, ROI, payback period, and TCO, based on projected cash flow. Also includes important non-financial impacts.	Business performance in terms such as sales, margins, profits, and business "health" by contributions to important balance sheet categories
In a non-profit or government organization...	The scope of the case may include benefits and costs to the population served as well as the organization itself.	May focus on funding needs, budgetary requirements, and ability to operate within budget.

Take action!

Learn and practice proven 6D Business Case Framework at a Building the Business Case Seminar.  Learn more about business case design from one of our books, the Business Case Guide,  Getting Your Budget Approved, or the world's most frequently cited business case book,Business Case Essentials.

Marty Schmidt 
4 March 2013
msch...@solutionmatrixlimited.com
http://www.business-case-analysis.com

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Dr. Samer Kantakji,Islamic Business Research Center Chairman,

Global Islamic Economics Magazine Editor, 

AREES University Chairman,

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Business Case vs. Business Plan - Google Groups