Most SMEs in Nigeria aren’t aware of this, but a business justification is one of the most important documents you will ever produce for your business or idea. It differs from a business strategy. While a good business plan outlines your ideas to give you clarity, your business justification template exists for two main reasons: to help you avoid unnecessary spending and to prove to your investors, clients or stakeholders that your idea or product is a sound investment for them to back up.
The amazing thing about a good business justification template is that it sums up your ideas, your proposal, your business strategy and your marketing plan in one document. It offers at first glance, a holistic look at your entire idea, all its moving parts and shows all the reasons why it will benefit your business as well as your stakeholders. It explains why your organisation will invest time and resources into a project. Without a rock-solid business case, your project is unlikely to get a return on investment.
A business justification template allows for easy assessment of the desirability, reasonableness and purposefulness of all the future activities involving a project. It is a great foundation to start off on because it defines the expected results of your project or business idea. It also gives direction to your team while also helping you assess the success potentials of your idea in the short and long term.
There are tons of free business justification templates available on the internet. This document can and should be updated throughout the lifespan of your business project to keep your business goals in perspective. It incorporates all the far-reaching goals of your business project and is also a reference point for whenever your business project goes through any significant change.
Your business justification will set you on the appropriate course of action. It comes in handy regardless of whether you are just starting a business, expanding into new territory, changing your company structure or if you are seeking funding from new investors.
To create a profitable business justification for your SME in Nigeria, you need to research your market or niche thoroughly. You need to identify who your successful competitors are, why they are successful, and the loopholes they fail to cover because their defaults can be your unique selling proposition. Specify why the idea should be implemented as a project, and itemise exactly what it would cost. You must present your idea as solutions to relevant current challenges in your chosen market.
The first steps towards creating a good business justification template for your chosen product is to ensure you identify the business problem. This is the loophole, your idea is meant to address, and so this step is the most fundamental of all. Projects or business products aren’t created for projects’ sake; they must exist to fulfil a need, to solve a specific business problem or create a business opportunity.
Your first job is to figure out what that problem is. The most successful businesses solve a problem for customers. It can be a global problem but solving local or relatively small problems can be just as convincing for this purpose. Describe it clearly but briefly before going on to show that you have the best solution for it. This can be a simple statement but is best articulated with some research on the competitive landscape of your industry to justify the perfect timing of your idea.
Depending on what you use your business case for and how obvious the issue is, the length of this section varies. The next thing is to identify some alternative solutions to the business problem you have already identified. For instance, if your SME is a local pharmacy and you want to expand a bit, it will help a lot if you listed out some alternative locations in the surrounding cities. To enable shareholders, lenders decide whether or not to fund you, highlight your findings and notes on each possible new site. Note the pros and cons of each alternative while forecasting their costs.
Choosing the right solution is hard, and the path to success is not paved with unfounded assumptions. The idea here is to narrow down the focus by showing that after carefully considering all the available options, your chosen idea is the best plan because it provides maximum value at the least possible cost. Be as specific as you can in three or four sentences max.
This third stage is where you will zero in on your preferred idea, product or solution. The reasons for your preferred option should be clear, logical and precise. Identify as many advantages to your plan as you can.
Now that you’ve identified your business problem or opportunity and how to reach it, you need to map out the implementation strategies for your idea or solution. There is no business decision without risk. As uncomfortable as it can be to consider possible downsides of expanding or starting a company, it’s essential to give this portion of the business justification as much attention as the advantages. Some of the risks may be unavoidable, but if you find an entirely avoidable risk while solving the problem, then your business justification template is already in great shape.
It’s not enough to show your financial backers that you’re right; you also need to show them that you have the best way to implement the processes to achieve your goals. This is why the prior research and the enumeration of possible solutions are crucial in your business justification template. It demonstrates that you have figured out a practical path to solving the core problems identified, and it is almost impossible for a good investor to ignore this.
Finally, you need to outline how far you want to take this project for the time being and how it will affect day-to-day operations. Most unsuccessful projects fail for lack of a good business justification template. If your business justification is not anchored to reality, then it’s bound to be rejected or mislead you. Take care to address needs that are in sync with the larger business objectives of your SME or the organisation whose support you seek. That way, you can deliver on your targets while rising above other SMEs in Nigeria in the estimation of your partners and investors.