Does your dream product / project have a good business case?

Many jump into projects just because they are interested in it, neglecting the business case of the product. Yes, we have google, a great product where the product happened first without any business case, and then business cases were built around it. They were even tempted to sell it for USD 1 million, fortunately there were no takers. That is an exception. It is always good to work out the business case of your product first before investing into it.

What are the typical contents of a business case?

  • First and foremost is the initial investment required, which includes;
    • Working capital
    • Equipment costs
    • Infrastructure costs
    • Company registration costs
    • Marketing costs
  • Cash inflows – Remember, your product is not going to generate revenue from day one. It is going to take time. So, the next logical step is to think through the cash flows your product will generate month after month. It is easy. Take an sheet of paper (or an excel sheet) and write down how much revenue your product is going to make month after month.
  • Cash outflows – What are the recurring costs like rentals, salaries (do not forget to include your salary), license fees, marketing costs, taxes etc.
  • After having known both the cash inflows and outflows, you are ready to analyse the profit month after month.
  • Payback period – Then it becomes easier to calculate the number of months or years required to pull out the initial investment out. If my initial investment is 1000, and if my monthly profit is 100, then it will take approximately 10 months to take out the initial investment. We call this as the payback period.

With this much data, your product idea can be tested first for viability. Otherwise, it is going to loose it’s steam once the realities get revealed. By that time, one would have made losses which is very unpleasant.

I am not trying to discourage. The biggest opportunity with scrum is it’s ability to detect problems early, so that the damage can be controlled. Starting with the business case of your product idea is a worthwhile exercise.

And if there is a good business case, still this exercise will reveal the amount of commitment and effort required to make the product a success story. This realization will help us to gear up and get going.

Wish you good luck.

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