Understanding Participatory Budgeting in Deal Techniques - Processes and Outcomes

Luke Hohmann is a serial entrepreneur who’s done and been through several phases of business in his career! Luke is the Founder and CEO of FirstRoot, a benefit corporation devoted to creating economic equality. His last company, Conteneo, was an enterprise collaboration software company that helped large enterprises administer more than $3B using Participatory Budgeting techniques. 

If you’re looking for an internationally recognized entrepreneur in Agile Software Development, whose mission is to create financially literate children capable of transforming their communities as they become financially independent adults through creativity, communication, critical thinking, collaboration, and civics. Luke is definitely your man!

Deal Techniques

Entrepreneurs use different approaches in deal-making. These approaches pass through different processes, and they all have different outcomes. In this episode, we’ll be talking about one of the techniques used by entrepreneurs, called Participatory Budgeting.

This is an episode you don’t want to miss!

What Is Participatory Budgeting And How Does It Affect Deals?

Participatory budgeting is the process through which corporations and investors use collaborative techniques to establish budgets. In this process, the members of the group involved are the decision-makers. It helps create better motivation, boost morale, and create better work environments that end in job satisfaction.

Processes Involved In Participatory Budgeting 

Participatory budgeting involves money and how it’s spent. Like many other deal techniques, it has specific guidelines and processes that needs to be followed to enjoy sufficient success. Investors are mandated to provide and guide the members through the processes. They are also expected to provide a curriculum on personal finance and civics. 

It doesn’t matter if you’re starting or already have a multimillion business; everyone has a budget. The budget is never enough because human imagination is unbounded and human resources are limited. Learning how to navigate those choices is the most central activity.

The following are the five Ds involved!

Discovery Phase

This is the first phase. The members involved go out and talk to other people to identify the problem. Results must be compiled and recorded.

Dreaming Phase

This particular phase is for the members involved. It’s a phase for them to DREAM! Investors ask them questions like, “what would you do if you had this money?”

Design Phase

Members are taught how to develop their ideas into actual proposals. It involves teaching them design techniques and answering questions of feasibility, viability, cost, approval, etc. 

Decision Phase

This is the phase where the members decide - they vote on what to do with the available resources, and when the vote is concluded, they DO. The members actually see their ideas put into action using The Five Ds!

Are You An Entrepreneur Or An Aspiring Entrepreneur? Understand These Facts Before Jumping On That Deal

• Ask yourself if you really want to do the deal. A deal that you can’t walk away from is probably not a good deal. 
• If you’re trying to sell, hiring an external firm or investment banker doesn’t guarantee sale.
• You should negotiate deals in comfortable settings and conditions.
• Understand the transaction can be structured so that the total amount to be paid is available to enable both parties to succeed, but that doesn’t necessarily mean the money is changing hands in the deal process.
• Be clear on where you are and what you’re bringing to the table.
• Don’t skimp on your legal team- make sure your contracts are well intact. 
• Get a good lawyer - someone you trust and has experience in corporate law.
• Don’t be difficult to work with.

Are You A Business Owner Who’s Trying To Exit? Is That Sale Taking Too Long? Check This Out

• Before trying to exit your business, you need to understand it takes about a decade to get your company from start to market. Not all deals will turn out the way you want them to, and you need to understand several factors are involved.
• Take a look at your revenue structure! You’d probably not find the perfect offer if the revenue structure is too small.
• Do you have the wrong mix?! You’d probably find it difficult to make the sale if the mix is wrong. Check the service component - what sort of business are you mixing? Is it the right mix? How much of your revenue is going into your service component?

  Listen to the full episode with Luke here.

  Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

  If you want to find out how deal-ready you are, take the Deal-Ready Assessment today!