Business Plan vs Business Case

confused-meme-3What is the difference between a business case and business plan and what are they used for? I does get a bit confusing some times, although it shouldn’t!

A Business Case is an examination of a potential market opportunity at the product level. Market opportunity is defined as a “lucrative, lasting, and sizeable market problem.”

In lay terms, a business case is an assessment done at the product level that culminates in a Go/No-Go decision on whether a company should attempt to solve a market problem by producing a product that will (presently or possibly eventually) compete with other products in the market. For example, should our company build a new mobile phone named SuperPhone that will compete with other mobile phones in the mobile handset for consumers market? This type of question beckons performing a business case.

A Business Plan is an examination of a potential business opportunity at the company level. Business opportunity is defined as a “void in the industry that can be entrepreneurially filled by creating a company that will provide products to the target market.”

Therefore, a business plan is an assessment done at the company level that culminates in a Go/No-Go decision on whether we should create a company that will (presently or possibly eventually) compete with other companies in a particular industry. For example, should we create a new airline company called LuxFly that would compete with other airlines in the commercial travel industry? This type of question beckons performing a business plan.

Business plans are primarily used for business opportunity assessment but they can also be supplemented with additional information and be used as a marketing tool to raise capital, for investment in the company, or as an executive management tool to strategically guide and run the company.

Dr Samer Kantakji, adds in buy saying that “The business case and the business plan both look into the future and complement each other, but they answer different questions.

Use the business case to answer “What happens if…?” questions like these:

  • What will we need as a capital budget next year if we decide to buy the service vehicles instead of leasing them?
  • What are the financial consequences if we choose the IBM proposal? If we choose HP Proposal?
  • 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?

Sources: Gabriel Steinhardt,Dr Samer Kantakji

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