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Business Case Assumptions

The value of an idea that means business

At some point, your idea has to go in front of a finance team, a board, an investor.  Someone is going to ask you, how much is this idea worth?

The challenge is, of course, that the only real answer is “it depends”. But see how far that gets you. 

What it depends on varies greatly.

The dynamics of the category. Media spend and price levels. Customer moods. The weather or the time of year. All these things and more can affect how much business an idea will drive. But you need to start somewhere.

Instinctive Izzy holding a sign that reads, how much is this idea worth?

Business case assumptions

So, for the brightest of ideas on this site, we’ve started to estimate a potential value to using that idea. That value is based on the following business case assumptions :- 

  1. The idea can be linked to a source of business. Namely – more customers, more spend or innovation.
  2. There is an actionable skill behind the idea. Namely – psychology, creativity or marketing.
  3. The idea can be applied to a hypothetical business that currently has 1,000 customers, each spending $100/month. (So an annual turnover of $1.2m).
  4. That no other factors change and the impact of this idea can be measured in isolation.

Of course, your brand’s specific situation will differ to these assumptions, so you’ll need to adjust these estimates to suit your own circumstances. 

Let’s look at some examples. 

Example 1 - use behavioural science to make buying easier​

Idea : To use insights from behavioural science to make buying your product from your online store easier than buying competitor products.  Based on our standard business case assumptions, the value of this idea is :-

Instinctive Izzy holding a sign that reads, how much is this idea worth?
    1. Source of business – More customers
    2. Skill area – Psychology
    3. Commercial hypothesis :-
      1. # customers = 1,000
      2. Spend/month = $100
      3. Est. new customers = +30 (3%)
      4. Est. sales increase = +3k$ (monthly) | +$36k (annual)

Example 2 - improve sales copy to encourage upselling

Idea : To use writing skills to improve your sales copy‘s readability and encourage customers to buy a slightly more expensive product in your range. Based on our standard business case assumptions, the value of this idea is :-

Instinctive Izzy holding a sign that reads, how much is this idea worth?
    1. Source of business – More spend
    2. Skill area – Creativity 
    3. Commercial hypothesis :-
      1. # customers = 1,000
      2. Spend/month = $100
      3. Est. average increase in monthly spend  = +$3.50 (+3.5%)
      4. Est. sales increase = +3.5k$ (monthly) | +$42k (annual)

Example 3 - Breakthrough innovation to drive trial with early adopters

Idea : To deliver a breakthrough innovation that attracts more early adopters to try your brand. Based on our standard business case assumptions, the value of this idea is :-

Instinctive Izzy holding a sign that reads, how much is this idea worth?
    1. Source of business – Innovation
    2. Source of idea – Marketing
    3. Commercial hypothesis :-
      1. # customers = 1,000
      2. Spend/month = $100
      3. Est. innovation adoption per month = +40 purchases (+4%)
      4. Est. sales increase = +4k$ (monthly) | +$48k (annual)

Working with business case assumptions

To build a full business case that will persuade others to back your idea, you’ll need to refine these initial estimates.

Each business case differs by customer problem, brand strategy and category. However, for examples of the type of thinking needed, check out our articles on forecasting and our case study on an online store profit and loss.

For more specific help, check out our article on commercialisation or email us with your questions.

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