How to write business rules in 7 simple steps
By: Leanne Armstrong
Although they can mean different things to different companies, business rules are basically statements that describe how specific workplace actions should be performed. In most cases, these rules are designed to provide staff with specific decision-making conditions, criteria, and exceptions. There are many advantages to knowing how to write business rules effectively, including being able to:
- Achieve a better understanding of different internal processes
- Enhance data performance
- Shorten project delivery times
- Stay compliant
- Increase organizational agility
A quick look at why business efforts sometimes fail (think project management, for example) should make it clear where you could benefit from laying out ground rules around specific activities – and why documenting these directives will make them far more effective.
In this guide to writing business rules, we’ll be exploring some different types of workplace rules, where they might be applied, and a process for developing them in 7 simple steps.
Why learn how to write business rules?
Laying out a business strategy is essential for focusing your operations from a high-level perspective. Writing business rules, however, is what allows you to translate that focus into detailed instructions.
Here’s an example.
Say you went car lease shopping and found the perfect electric sports-utility vehicle. If the dealership’s success strategy included working only with customers who could prove they were solvent, they might have a written business rule in place requiring you to meet several stringent financial conditions before they’d consider approving your lease application.
To guide what teams or individuals may or may not do in a particular scenario, internal business rules set expectations for how work is conducted. External business rules, meanwhile, determine how an organization will meet government or other outside regulatory requirements.
In practice, you probably already have a number of rules built into your workplace.
By learning how to write business rules into formal documentation however, you and your team will be better positioned to:
- Accomplish goals and meet deadlines more consistently
- Streamline onboarding or training efforts
- Save time and money by engaging in cohesive business practices more often
Putting together a business rules handbook or library – complete with procedural templates, examples, and guidelines – can improve process clarity and provide better direction in all your day-to-day business activities.
Developing business rules in 7 steps
As you develop and document your business rules, it may help to think of them as “standard operating procedures”.
Some of these procedures may be fairly complex (like reporting company financials to shareholders, for example). Others might be simple enough to describe in a single sentence (like a credit card issuer’s policy that “all customer applications must be completed in writing”).
Either way, there are a number of avenues for rooting out and establishing the business instructions you want or need to record.
You might, for example, try developing business rules around:
- What you’ve discovered about the best ways to initiate your company projects (think requirements gathering, for example)
- A demonstrated need to complete certain tasks as part of designing or launching a product
- The best practice takeaways you’ve gleaned from working with company or outside subject matter experts
- Any common processes or practices across your business that can be standardized for greater efficiency
When you sit down to transcribe findings like these into formal business rules, you and your team will find them far more valuable if you follow these 7 simple steps for writing them out.
- Step #1: Choose a documentation system that makes the most sense for your business (this may mean using spreadsheets or versatile, drag-and-drop mapping software like MindManager)
- Step #2: Create a rule naming or labeling system that’s both meaningful to the user and that makes for easy reference.
- Step #3: Lay out a clear, plain-language description of each rule that also highlights its purpose.
- Step #4: Include an example of your rule in action as it pertains to your business (for best results, you may want to use a flowchart diagram or visual map to lay out your rule graphically).
- Step #5: Note the source (person, department, or stakeholder) of each rule for easier follow-up and clarification.
- Step #6: For maximum practicality, consider digitally linking each new rule to other related rules, workflows, or processes.
- Step #7: Be sure to attach a history of any changes (including dates and sources) to the rule you’ve created.
You’ll do a better job keeping your business rules up to date if you assign ownership of each regulation to a specific team member. Just remember however, that any time you revise an established rule, it will impact at least one and sometimes multiple workflow processes. So take special care with any wording you change.
You should also make it a rule (pun intended!) to keep your library clean and useful by regularly purging it of regulations that no longer apply to the way your business operates.
Where will you need to know how to write business rules?
While workflow and policy directives can take many forms, most business rules distill down to one of two main types: decisions and calculations.
Because business rule documentation a) leads the way through important “if-this, then-that” decisions and b) provides the means for evaluating data and other information, you’ll find that writing out rules comes in especially handy when you need to:
- Follow or map a defined business process. You’ll frequently need written business rules around procedures where certain conditions must be met, such as prototype testing, evaluating a new service provider, or approving staff vacation requests, for example.
- Plot a course of action based on outcomes or formulaic results. Many business rules are tied to distinct measurements, such as using established metrics to qualify sales leads, or adopting a strict formula to determine whether a new customer is credit-worthy.
Now that you have an idea of where you’re most likely to use business rules, let’s take a look at some examples of the rule-writing process.
Business rules documentation examples
In these business rules documentation examples, we’ve based the development process for both a decision-type rule and a calculation-type rule on the simple steps outlined above.
Uncomplicated as these examples are, it’s important to remember that getting the wording for your business rules just right is often crucial. As you can imagine, the difference between a rule that states “Customer must have an email address” vs “Customer must have a valid email address” could have far-reaching consequences for your business.
Business Rule Example #1: Company purchase order approvals
Knowing how important it is to stick to your annual and departmental budgets (and having run into cash flow problems in the past), you want to write a business rule governing who will be responsible for approving company purchase orders based on dollar value.
Drawing and populating a simple decision table, you label and describe your new rule.
Rule PO101/purchase orders – Purpose: To preserve budget and cash flow integrity
- Individual purchase orders of less than $200 will be approved by appropriate department head
- Individual purchase orders of more than $200 will be approved by the head of accounting
Visual Example: Placing an order for printer paper or other office supplies
- Does the order total less than $200? Generate a PO and have it signed off by your manager.
- Does the order total more than $200? Generate a PO and have it signed off by the accounting manager.
Rule initiated by J Smith, Company Controller – January 15, 2021
Business Rule Example #2: Moving forward with the development of a new product
You’ve cultivated a pretty good idea of how much money your business should be willing to put into developing a new product vs how much revenue you can expect in return. Now you want to write a business rule based on a simple screening calculation.
Working with a standard ROI formula, you label and describe your new rule.
Rule PD101/product development – Purpose: To mitigate product development risk
“As part of the initial market research process, the product development team shall calculate the expected ROI from any new product by inserting realistic and documented data into the following formula: Product Lifetime Sales ÷ Product Development Cost x 100.”
Visual Example: Building a better mousetrap
- Does the formulaic result show an expected ROI of less than 20%? Reject the product idea.
- Does the formulaic result show an expected ROI of 20-25%? Revisit product features and costs.
- Does the formulaic result show an expected ROI of more than 25%? Move on to the next step in the product development process.
Rule initiated by S Jones, Product Development Manager – June 15, 2021
One of the best ways to ensure your team understands how to write business rules – both from a structure and an accessibility perspective – is to arm them with a practical, user-friendly rule-writing tool.
With a platform like MindManager, you can use a variety of diagram templates to lay out and manage business rule documentation so it’s not only clear, but easy to update.