Over the years, I have come up with the following 5 critical rules in Good Life-Science Planning. Please feel free to use them, but I would appreciate a source reference if you do. I would also love to know your thoughts, applicable experience, and suggestions regarding my list!
Rule #1
Start with Corporate Goals that align with the period of planning. In my experience, majority of organizations do not start with the goals but attempt to delay goals establishment OR communication till the end of the financial planning. Lack of Goals clarity leads to unnecessarily prolonged process with needless optimization cycles that results in suboptimal resource allocation. Goals are not set in Stone, they can and should be adjusted based on resource availability, feasibility and other constrains.
Rule #2
Define ownership of the budget and process accountability ahead of planning initiation. Even for organizations with well-established org charts and leadership teams (which is not the case for most Life-Science businesses), it is not always clear who owns what in aggregate and within specific functions. I typically recommend starting at the top by defining ownership of departments (functions), programs (projects), and supporting services (lab operations, PMO, legal/HR/IT), including rules of support (centralized vs. each department plans their own)
Rule #3
Establish fiscal constraints and parameters ahead of the Budget initiation. For public companies, it would typically be EPS, but for the majority of Life-Science companies I work with, it is Cash Runway (Runout Date) and any anticipated cash infusions (planned raises, partnership payments, new/existing debt, etc.). Cash planning is a complicated but critical exercise, and I always recommend advancing the understanding of cash requirements forward to avoid a back-end scramble.
Rule #4
Connect with existing management process(es) i.e. PMO, HR/Hiring, IT, Legal/Contracts, and align with its key decision-making timeline(s). Life-Science companies are complicated businesses and what might look like a scientific chaos to outsiders is usually a delicately balanced and intertwined process of decision making. It is very important for Effective Budgeting to be integrated with existing decision-making infrastructure.
Rule #5
Establish and communicate a clear Budget timeline and Planning activities calendar. Resources are always limited in any good business but particularly so in life science. Setting expectations for the amount of time required, prearranging group meetings to ensure availability, and setting clear deadlines will ensure coordinated focus from the organization.