When To “Charter” A Business?

Understanding Business

The term business often refers to an entity that operates for commercial, industrial, or professional reasons. The concept begins with an idea and a name, and extensive market research may be required to determine how feasible it is to turn the idea into a business.

Businesses often require business plans before operations begin. A business plan is a formal document that outlines the company’s goals and objectives and lists the strategies and plans to achieve these goals and objectives. Business plans are essential when you want to borrow capital to begin operations.

Determining the legal structure of the business is an important factor to consider, since business owners may need to secure permits and licenses and follow registration requirements to begin legal operations.

A company often defines its business by the industry in which it operates. For example, the real estate business, advertising business, or mattress production business are examples of industries. Business is a term often used to indicate transactions regarding an underlying product or service. For example, ExxonMobil conducts its business by providing oil.


What Is a Business Charter?

A business charter is a general document that specifies the purpose, location, and length of the firm as well as the classes of shares. It is created by the principal operators of the company and submitted with the state. A corporate charter or articles of incorporation are other names for a business charter.

The charter specifies the name of the company, the name and address of the registered agent, the initial directors, as well as the name and address of the person who prepared the business charter, when a business is incorporated within a certain state to the secretary of state’s office. The precise corporation the business seeks, such as a non-profit, non-stock, or stock corporation, should also be mentioned in the business charter. The business charter often includes a requirement for the corporation’s purpose.

A business charter also outlines the company’s guiding principles, objectives, and operational information. Executives of the company frequently use the business charter as a directive or mission statement while doing strategic planning and evaluations. For instance, CEOs may frequently bring up the company’s aims of prioritizing health and safety while upholding environmental responsibility while discussing workplace safety regulations, required recycling programs, and water conservation techniques.

Understanding Corporate Charters

The first step in establishing a new organization is the creation of corporate charters. A new corporation is declared to exist by a corporate charter. A corporation becomes genuine and legal after being submitted and approved. Before the business can conduct business as a corporation, the document needs to be written and filed.

If the corporate charter is not established before the business is launched, the owners run the danger of being held personally responsible for all potential losses and debts incurred by the company during the time it operated without a valid corporate charter.

A corporate charter is a document outlining a firm’s governance, structure, activities, and other important information. It establishes the organization as a corporation in the US or Canada.


Requirements of Corporate Charters

At its most basic level, the corporate charter contains the names of the people involved in the formation of the corporation, its name, its purpose, whether it is a for-profit or nonprofit organization, its location, the number of shares that are authorized to be issued, and its charter. The state secretary where the corporation is located is where corporate charters are filed. The state where the business is located typically levies a filing fee to complete the corporate charter.

Corporate charter templates are available on some official websites. When drafting and submitting corporate charters, some businesses choose to work with and retain business lawyers in order to create more official and advantageous legal business documents and surroundings.

The components of the corporate charter must meet particular requirements set forth by the state where the corporation is headquartered. Some states demand the use of “Inc.” or “Incorporated,” depending on the type of corporation. The authorized agent’s name is also included in the charter. A corporation must have a registered agent who is permitted to receive significant legal documents on the corporation’s behalf, regardless of the location.

The justifications for a corporation’s formation must be disclosed. This statement details the company’s mission, target market, and categories of goods and services it offers.

The corporation charter shall appoint a designated registered agent and shall provide forth the names and addresses of the founders, corporate executives, and first directors.

Also required from corporations designated as stock corporations is the number of authorized stock shares as well as the par value for each share.

What is a Business Case?

Our project charter vs. business case comparison can be made now that we are aware of what a project charter is.

Understanding how a project will affect the business is the goal of the business case. We refer to it as a business case because we “build a case,” consider a scenario for when the project is finished, and assess the outcomes it would provide.

Of course, not every project is worthwhile of being pursued, thus it is likely that we will need to create a number of business cases and only initiate projects and project charters for a select few of them.

Project Charter vs Business Case: The Business Case is about estimating financial performance for a project

The focus of the business case is on financial performance.

So how should a business case be set up? Although it is outside the purview of this essay, we still need to cover the fundamentals in order to comprehend project charter vs. business case.

You must make an educated guess regarding the project’s cash flows in order to develop a business case. What will it cost to complete it? When can suppliers expect to be paid? In what way will the initiative make money? Will it generate revenue on its own, enhance operations while cutting production costs, or perhaps it will increase the customer base through fresh marketing initiatives?

Following a foundational understanding, you must estimate the real sums and project them in a paper or chart.

As an illustration, let me use a project I worked on to install Cisco Telepresence gear that would enable a company’s senior management to call their secondary headquarters following a merger and acquisition.

The business argument was straightforward: senior management would have to travel extensively at the expense of the company if we did not purchase the telepresence. Instead, with Telepresence, we just need to purchase the equipment once and incur relatively low ongoing costs. How many trips will be saved before the purchase of the telepresence equipment is justified?

Project Charter vs Business Case and How They Interact

To compare project charter with business case, a caveat is essential. The business case involves more than just determining whether or not to invest in a project. Setting the financial requirements will determine whether an investment is worthwhile.

To put it another way, if the project’s business case indicates that it makes sense if its costs total $500,000, it is likely that it will not make sense if they ultimately reach $1.0 million.

In order to determine the project’s operating financial parameters, the project charter refers to the business case. Additionally, it makes important assumptions about the scope and timeframe based on the business case. For instance, it is obvious that the project must be completed before the Superbowl if the goal is to create an incredible advertisement for the game. If not, the advertisement will be useless.

The project charter does not emphasize why and how the initiative benefits the organization financially. It simply outlines the tasks that must be completed and the limitations in terms that the project manager can easily comprehend. The project will go as planned and produce the desired results if the project manager complies with the charter (unless there were estimate errors in the business case).

Project Charter vs Business Case in Summary

Here is a summary of our post on project charter vs. business case in case you were seeking for a TL;DR.

The first document to be made is the business case. It bases its assessment of a project’s financial viability on assumptions about its costs and anticipated revenue. If it does and no better alternatives are available right now, the project is pursued.

We create the project charter at this time. The person who commissions the project, sometimes with the project manager’s appointment and participation, creates this document. It provides a high-level explanation of what has to be done and the limitations in terms of cost, deadline, and scope. These limitations are crucial because they make sure the project can achieve the goals set out in the business case.

Project charter vs. business case are therefore not alternatives; rather, they are different types of documents that we employ at various stages of the project.


If you found this project charter vs business case article fascinating, you’re probably thinking about how to start and manage a project effectively. The easiest approach to do this is to have a thorough understanding of the idea of net present value. We have a fantastic essay that starts out assuming you know nothing and goes much beyond what the typical project manager knows. When developing your business case, you must obviously avoid making inaccurate projections.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top