Zero Base Budget for Better Profits

Increase your profits with new planning. Zero-based budgeting, that is building your budget from the bottom up based on the demand drivers of your business is a gold standard for planning. If you aren’t doing it maybe it’s time to start with a single department.

You perpetuate problems when you start your budget from what you did the last period.

Zero-base. When is the last time you zero-base budgeted your entire company?  How about a single department?

Zero-based budgeting, that is building your budget from the bottom up based on the demand drivers of your business is a gold standard for planning. If you aren’t doing it maybe it’s time to start with a single department.

I raise this issue now because many of you should be thinking about the quarterly or annual planning cycle and this is none too soon to think about improving it.

The opportunity is to rethink your entire business (or department) from the ground up in the context of the forecast conditions. You are hopefully smarter, faster; more capable than you were the last time you planned so you can build those efficiencies into the new plan and reap the rewards on the bottom line. Yes, you have to trust that top management (maybe that’s you) will back you up and support you when you take risks.

The easiest thing to do is to stick with the status quo and just add inflation onto last year’s budget. The quickest way to budget yourself out of business and your competition in is to do just that.

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