Basically, the theory that 20 percent of your business will take up 80 percent of your attention. For example, the poorest performing 20 percent of your work force will require 80 percent of all the attention you pay to improving your workforce. Or the one product line that's not working out will require 80 percent of your attention, robbing your attention from the four product lines that are succeeding.

In any significant business situation, before you make a decision, you should go through a rigorous and analytical process to determine the impact of your action. The business case is designed to give you the opportunity to look at the variables involved in that business decision so that you can make the most valid decision based on your risk/reward profile. Creating a business case is an art not a science. The only thing you know in advance about the business case is that it will not turn out exactly as you anticipated it.  

In any business setting, you have two kinds of costs. Fixed costs are usually investments that are the same whether you are producing the minimum possible or the maximum possible. Variable costs are scaled to your production: the more you produce, the more you pay for those costs.

In the traditional definition, a factory is a fixed cost. You will pay the same for it whether you are at maximum production on three shifts per day, or if you are at minimum production. Variable costs are such things as the cost of raw materials or packaging. You pay more for these items as you increase production, and less as you decrease.

In general, for this topic, the goal is to move as many of your company's costs into the variable cost category where you can scale them as you need them to deal with changes in the marketplace.