Business plans and business cases are often confused, and they do overlap. Both set out a proposal, both contain financial projections, and both are written to persuade someone to commit resources. The difference is scope, and the reader.
A business plan describes a whole business: what it does, who it serves, how it will make money, and whether it is viable. It is usually written for a new business or one planning significant growth, and often for someone outside the business such as a lender, investor or visa endorsing body.
A business case argues for a single decision inside an organisation that already exists: a new product, a new system, a new site, a restructure. It is usually written for people inside the organisation, such as a board, a management team or a budget holder, and its job is to show that the decision is worth making compared with the alternatives.
What goes into a business plan
A business plan covers the whole of the business. The main sections are usually:
- an executive summary
- the business and its offer
- the market, customers and competitors
- marketing and sales
- operations and the people running the business
- financial projections: cash flow, profit and loss, balance sheet, break-even
- the funding required and how it will be used
There is more detail in the 8 key elements of a successful business plan, and a SWOT analysis is often included too.
What goes into a business case
A business case is narrower and more comparative. It typically sets out:
- the problem or opportunity, and why it needs action now
- the options, including doing nothing
- the costs and benefits of each option, often over several years
- the risks of each option and how they would be managed
- a recommendation, and what is needed to deliver it
The cost-benefit comparison is the heart of it. A business case that presents only the preferred option, with no alternatives, is not really a business case; it is a request.
In the public sector, business cases usually follow HM Treasury’s Five Case Model, which examines the strategic, economic, commercial, financial and management case for a proposal. Larger private organisations often have their own templates.
The differences side by side
| Business plan | Business case | |
|---|---|---|
| Covers | The whole business | One decision or project |
| Typical situation | Starting up, raising finance, growing | Choosing between options in an existing organisation |
| Usual reader | Lenders, investors, endorsing bodies, the owner | Boards, managers, budget holders |
| Central question | Is this business viable? | Is this decision worth making, and which option is best? |
| Financial focus | Cash flow, profit, break-even, funding | Costs and benefits of each option, return on investment |
| Includes alternatives? | Rarely | Always, including doing nothing |
Which one do you need?
If you are starting a business, buying one, or asking a lender or investor to fund one, you need a business plan.
If you are already running a business and need approval, internally or from a funder, for a specific investment, such as a second site, a new piece of equipment or a new product line, a business case is often the better format. For a small owner-managed business, the two can blur: an expansion plan presented to a bank is effectively a business case wrapped in an updated business plan, and the bank will want to see both the project and the business behind it.
Getting help with the numbers
The financial projections are the hardest part of both. SquarePlan’s software builds cash flow, profit and loss and break-even forecasts from your own figures, and our business plan writing service prepares business plans from £499.