The Learning Post: insights from UK Aid Direct and UK Aid Match

Business cases and targets: successful sustainable wealth creation interventions

Episode Summary

Continuing our series on successful sustainable wealth creation interventions in projects, this episode focuses on the components required to build a good business case and the importance of realistic targets.

Episode Transcription

Ben Anderson (00:10):

Welcome to the Learning Post a podcast dedicated to sharing insights from the UK Aid Match and UK Aid Direct funds. My name is Ben Anderson, and I'm the Communication Specialist for the UK Aid Match and your host for this episode.

 

Ben Anderson (00:23):

This is a third episode in our series on Sustainable Wealth Creation in Project with Rick Magill, an expert in this field. If you haven't already, it is recommended that you listen to our other episodes which introduce the basic concepts of sustainable wealth creation, and also how to undertake effective market research.

 

Ben Anderson (00:41):

In this podcast, we discuss how to go about building a good business case and the importance of realistic targets. In our previous podcast, we went over team composition and market research. Now we are moving on to building a business case. Rick, what do you think you need to do to ensure that a business case is rock solid?

 

Rick Magill (01:04):

Well, a business case is an essentially a simple document and it's just to build confidence that the numbers stack up and the business idea that's being put forward has a reasonable chance of success. Now, what does that mean in practice? Well, it may be for small business that it demonstrates that this could turn a profit and provide an ongoing, reliable source of enough income for the person running it, the family or the community. It may be in another instance for a social enterprise, for example, that the business case is not to make a profit it's just to break even, and have a little bit of money left over for reinvestment or mechanical breakdowns or whatever it might be, so it's not about profit. But whatever the financial intent of the organisation is that the numbers stack up.

 

Rick Magill (01:57):

At the most basic level, it is to ensure that the money coming in is going to be greater than the money going out. That you can cover your costs and have some leftover. There's plenty of examples out there, a quick Google search will find guidance on how to do a business case. My suggestion would be that simple is better, don't go for something that's overly complex in a business school fashion, just something nice and clear and simple that will do the job. And again, this type of financial analysis is really easy if you have included local entrepreneurs on the team because they will be able to provide practical advice and assumptions about how much things could sell for and how many you might be able to sell and so forth.

 

Ben Anderson (02:45):

I imagine a key part of a business case would be setting realistic targets which you can measure your success against, are you able to provide some advice on how to set realistic targets?

 

Rick Magill (02:55):

Well, it's important to get the balance right between having targets that are ambitious and stretching, but also realistic and achievable, especially in those local communities. And given that projects have a finite lifespan, usually one to three years on UK Aid Match, it's important that the targets can be achieved within the time available. We see a lot of projects that are about helping large numbers of people to set up small businesses and you know I can think of one where, when we looked at the total number of people that were going to set up businesses after completing a training course, and then we divided it by the amount of time that they had to set up all those businesses. It turned out that 40 people would need to set up a business each and every working day through the duration of the project, which clearly wasn't realistic.

 

Rick Magill (03:56):

But it was only when we broke the figures down over time that it demonstrated that the numbers that originally had been put forward were over ambitious. Simple way to test this is to just draw a graph of what you're trying to achieve over time and have a debate with your team about whether the steepness of that graph is doable. And you can break the figures down by quarter, by month, by week or by day, whatever's appropriate for that particular project. And just have a sensible debate about whether it can be really achieved in time, and if not to put forward some targets that are, as I say, ambitious but achievable. And that point about having ambitious but realistic targets applies to any project, not just these sustainable wealth creation projects that we've targeted in this podcast, it really does apply to anything about understanding the scale and pace of what you're trying to achieve, and just having a sense check on that.

 

Ben Anderson (04:56):

If you enjoyed this podcast, make sure to subscribe and please do check out our previous episodes which cover a wide series of subjects. Thanks for listening.