PPM Is Critical Right from the Startup
When an entrepreneur is setting up a business, they often start with the question “What is my budget?” In actuality, a budget will work best when it’s one of the last steps of developing the business strategy.
To make a budget, you have to know what you need. It takes a strategy to know what you need. To develop a strategy, you need a vision, and a vision requires a mission. That’s why a new business owner has to start with the company’s mission and work their way down from there.
Even when you get to the strategy level of the process, the budget will be one of the end results, rather than an early input. This works exactly like a portfolio management process. You need to set a scope, determine what resources and materials are necessary for each within that scope requirements, then from there you can prioritize those requirements.
Once you have a list that you can sort by priority level, you can finally play around with trial and error drawing lines in the sand at certain priority levels. If you limit yourself to x amount, what will your organization have to work with? Will it be able to compete with those resources? If you have a more aggressive portfolio approach, will the risk be worth the potential reward?
This provides a scientific framework for knowing what your budget should be, rather than shooting for an arbitrary number.