John O' Gorman

The Beermat Business Case

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Being able to build the business case for your solution is an important sales skill. However the traditional approach to developing the business case fails more often than it succeeds.

To address this problem sellers need to start the business case conversation much earlier. They need to adopt ‘beermat’ business case principles because they can’t wait till all the data is available, or the proposal is being prepared.


Got All The Sales Tools You Need?

OK so you have a complete sales kit, including:

  • Product samples
  • Customer testimonials
  • Glossy brochures
  • Case studies.

You even have before and after pictures! But, what are you missing? Numbers, or more to the point a simple means of sketching out some key aspects of the business case from the intial customer contact. That is not a typical ROI calculator however – it is too early for that!

At the earlier stages of the sale it is generally easier to get the buyer to react to a simple generic model than to share all the required information, or input to a detailed ROI calculator. This is where the idea of beermat business case comes in.

The Business Case On A Beermat

The Beermat Entrepreneur was a popular book a number of years ago. It was a simple, yet clever idea – that you should be able to communicate your business idea in so clear and concise a manner as to fit on the back of a beermat!

Yes an entrepreneur needs a detailed business plan (just as the salesperson is going to need to prepare a proposal/tender), but the essentials of the proposition should be so clear as to be communicated on a space no bigger than a beermat. This principle is no more relevant than in respect of the business case.

The business case is traditionally seen as complex and perhaps even intimidating. It is also seen as requiring a lot of information and analysis. However, these views don’t help in building or communicating a business case.

Are you delaying before bringing up the issue of the business case?

The seller cannot, or should not wait till there is enough data to prepare a full proposal or detailed spreadsheet. Even if all the information needed is available, there is no point writing a detailed business case, until its key principles have been agreed. A good business case should be easily communicated and developed on the fly. It should follow beer-mat principles.

Why The Business Case Can’t Wait

Typically developing the business case is done late in the sales cycle, perhaps even at the proposal stage. It often results in the buyer being presented with a ‘fait accompli’ business case to which he, or she has had little real input. That limits its power to win the sale because:

a. You can’t present somebody with a compelling business case. It is not going to be compelling unless they are engaged, unless they are involved in its creation. Even if the buyer embraces a business case you give them, chances are they won’t be able to defend it if required. So, rather than giving somebody your business case, help then to build their own. That requires a lot more time and patience, but it is the only way it will work.

b. You will probably have had to make a lot of assumptions in order to prepare a detailed business case. The risk is that any one of these might be easily rejected by the buyer. When it comes to the early stage business case it is better to be approximately right than exactly wrong. That means keeping the business case simple to start with.

c. The business case is a shot in the dark unless there has been a dialogue between buyer and seller. It can be easy for the seller to overlook aspects of the business case that may be politically sensitive, or perhaps even ‘a no go area’. For example, a managed service in respect of IT support might boast the benefits of reducing IT overheads, however with up to 30% of those overheads accounted for by IT staff salaries cutting staff numbers may be problematic. Unless a dialogue has taken place around the business case such sensitivities may not be obvious.

The advice for sellers is: don’t wait till all the numbers come in, or until the buyer is ready to open up and disclose all the information. If you leave the cost benefit analysis till the end then it is too late. If you wait to present the customer with a complete business case, with lots of calculations and formulas, the likelihood is that it won’t be believed.

The Business Case Conversation

The challenge is to engage in the business case conversation right from the very outset of the sale. You can’t wait to talk about numbers until you have all the data that you need. You cannot wait till the customer is ready to open up and share his, or her numbers with you. You certainly cannot wait to the point of submitting a proposal!

The earlier you can engage with the buyer around the business case, the quicker you can move the conversation off price and onto value and the more effectively you can out-flank the competition. The quicker you can get to the business case the greater your chances of success.

How many business case related questions are in your pre-qualification checklist, or needs analysis?

It Is Never Too Early To Talk Business Case

The business case is not just a document, or a spreadsheet. It has to be a dialogue. Yes, that is a challenge where access to senior executives and to information is limited, however it can be overcome by applying the following principles:

  • Get in early with the business case and in particular with the numbers. Plant the seeds of the business case right from the very initial conversation. Indeed don’t talk about a benefit or feature of your solution, without referring to its impact on key business, or project metrics that are likely to interest the buyer.
  • Start with a hypothesis of value, with scenarios and assumptions. Keep it clear, focus on only one or two key metrics, or variables. Hold off on the detail and the spreadsheets until later.
  • Make the mode of calculation clear and spell out the assumptions. Above all state that it is only a quick calculation and it would need a lot more work. Where possible back it up with some verifiable data, as well as some anecdotal customer stories.
  • Don’t assume there is a strong business case, before it is proven. This is at the core of being a trustworthy adviser and it requires replacing your benefit statements with benefit questions. Ask the buyer open questions such as; ‘do you think there is a compelling business case at this time?’, or ‘what would make a compelling business case for this solution?’
  • Hold off on the ROI calculator. It is a great tool, but at the early stages of the sale it is often the wrong tool. That is because it can bias, perhaps even sidetrack the conversation. It often makes assumptions and takes the initiative away from the buyer. So slow down before you take out the ROI calculator.

Use your ‘beermat’ business case to gauge how much numbers actually matter to the prospect, if the decision requires an economic justification, as well as to qualify the buyer and the likelihood of a decision.

What’s On The Beermat Business Case?

Tease the buyer with some; simple examples, key metrics and customer stories. They are the stuff of the beermat business case. But don’t present them as a universal truth, or even as a certainty. Gauge the reaction to see which ones actually have relevance to the buyer’s business.

At the early stages of the sale your business case is a hypothesis, rather than a statement of fact. So, preface any claims or benefit statements with; ‘other customers have achieved’, ‘the industry rule of thumb is…’, or ‘analysts suggest’. Here is an example:

‘Some companies have achieved between 3% and 7% reduction in downtime, how might such figures apply in your business?’

Let the buyer pick holes in the data if required. In so doing they are helping you to better understand the metrics that are most relevant to their business – the metrics to use in their business case.

Don’t Wait Until You Are Sure

Building the business case is not easy. Otherwise every seller would be doing it and doing it well. However, if the seller struggles in building the business case, then chances are the customer will struggle too. So, don’t be put off by gaps, or uncertainties and don’t wait until you are sure of everything. The business case must be a process of discovery with questions, as well as answers.

Struggling with the business case is only a problem if it happens at the closing stage of the sale. If at the end of the process the buyer is still struggling with the economic justification for the purchase, or the purchase of your solution in particular, then the decision is likely to falter.

Up to the point of closing it is ok to struggle with the business case, indeed if it is not creating a certain amount of struggle then it is probably not getting the attention it needs. So, sellers shouldn’t be shy of saying the business case requires time and attention. They should not feel under pressure to produce a business case ‘out of the hat’.

Don’t Wait Until The Customer Is Ready

Start to sketch out the beermat business case, even if the customer doesn’t appear to be interested, or ready. The business case rationale for the purchase if it is not required today, it could be essential tomorrow.

Buying decisions take place in an environment of continuous flux . A change in priorities, a competing project, a decision at HQ, or a change in key personnel can stall the project. In these situations the business case may be the only hope of survival.

Why delay in providing the buyer the most powerful and persuasive technique there is – the rational economic justification for the decision? Even if the buyer does not seem too concerned about the numbers, or the justification, the issue is likely to arise sooner or later.

The fact that decisions are increasingly being made by cross-functional teams makes it increasingly likely that somebody is going to ask about the numbers – maybe; procurement, finance, or another stakeholder. So, before your buyer goes down the hall to get the purchase order approved, help them to run the numbers. Otherwise it could scupper the sale.

The seller needs to help the buyer confidently deal with questions that may arise such as:

  • Why are we spending this?
  • Do we need to spend that much?
  • Can we hold it off till next quarter, or next year?
  • Would the money be better spent elsewhere?
  • Can we do it in-house for less?
  • Are we getting the best value for money?
  • Can we justify this expenditure if we are asked?

Procurement professionals talk about ending what they call the entitlement culture. That is where managers or projects and departments can say ‘it is my budget and I will spend it’. That means managers must be prepared to justify their spending decisions.

Warning: You Don’t Own The Business Case!

Sellers cannot leave it up to the customer to do the maths. The buyer may not have the time or the tools, information and experience required to build a credible and compelling set of numbers – one that won’t simply fall to pieces when it is exposed to questioning. However, the seller must be careful about taking control of the business case from the buyer.

Buyers are told ‘Don’t believe the sellers ROI. Build your own’. That is a principle sellers should accept. Even if the buyer is struggling with the business case, don’t be tempted to jump in and take over. The seller must help, but at the end of the day the buyer has to own the business case.

To make sure the buyer has confidently embraced the business case ask questions, such as:

  • Do you feel that the business case as it is today is sufficiently clear and compelling?
  • Are there aspects of the business case that you feel need more work?
  • Do you feel confident in all the numbers – that they will withstand external scrutiny?
  • What would the CFO think if he/she saw the business case at this time?’

Take The Beermat Test: Take any of the top 5 opportunities in your pipeline and see if you can explain the business case for the buyer in no more than a few minutes a with no more than the equivalent of a beermat.

Using Beermat Principles To Win Over Stakeholders

It is not just the seller that needs to be able to articulate the business on a beermat. The buyer needs to as well. Many purchases are justified not in round table meetings, but in hallway encounters. In the early stages at least, the buyer may not get a chance to go line by line through a spreadsheet. We regularly hear C Level executives telling their managers to put the business case on one page for them to review.

The buyer needs to be able to clearly articulate the business case whether it is just in a hallway encounter with a management colleague, or the last item on the agenda of a long meeting and everybody has lost attention. The business case needs to be capable of being communicated in tabloid headings and high level numbers. For the buyer the business case has to be so clear (and compelling) as to be capable of being communicated on a beermat!

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