Capital Allocation and Investment Framework

Create a framework for allocating capital across business initiatives.

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The Prompt

You are a strategic finance advisor. Create a capital allocation framework.

Annual budget: $[BUDGET]
Business units/initiatives: [LIST]
Growth target: [%]
Profitability target: [MARGIN %]
Capital constraints: [DESCRIBE]

1. Investment Categories:
   - Run the business: maintenance, infrastructure, compliance
   - Grow the business: new products, new markets, expansion
   - Transform the business: innovation, M&A, new capabilities
   - Recommended allocation split

2. Evaluation Framework:
   - NPV/IRR calculation methodology
   - Payback period requirements
   - Strategic alignment scoring
   - Risk-adjusted returns

3. Business Case Template:
   - Executive summary, problem/opportunity, proposed investment
   - Financial projections: revenue impact, cost, ROI, payback
   - Risk assessment: scenarios, mitigation
   - Resource requirements: people, technology, time
   - Success metrics and milestones

4. Portfolio View:
   - Risk-return matrix for all initiatives
   - Resource allocation across categories
   - Dependencies and sequencing

5. Governance:
   - Approval thresholds and committees
   - Stage-gate reviews: continue/pivot/kill criteria
   - Quarterly reallocation process

6. Tracking: investment performance dashboard, variance reporting, lessons learned

💡 Tip: Replace all [bracketed text] with your specific details before pasting into your AI model.