Performing a Zero Based Budgeting exercise could be the key to surviving a troubled economy
In uncertain economic conditions, a change in your budgeting methods could hold your family or business afloat during these challenging times. Drilling into your financial activities will identify current and future financial stresses, allowing you to take proactive action. No matter what industry your company is in, the need for a detailed budget and strategic plan is required to weather this volatile economy.
Zero Based Budgeting is a best-in-class technique for strategic budget creation. Global companies such as Kraft Heinz Co., Mondelez International Inc., and Unilever PLC have all used Zero Based Budgeting to not only survive economic uncertainty but thrive in the periods that follow. Done effectively, Zero Based Budgeting can give you a detailed view of how to successfully make decisions today to better prepare your company for tomorrow. Whether it’s your business or family, it’s important to reflect on where money is being spent and why.
The Zero Based Budgeting process starts by thoroughly diving through your business processes and identifying all line item revenues and expenses that occur during the time period. This detailed approach allows for identification of changes and variances that you wouldn’t catch in a traditional budgeting process that only makes adjustments based off the prior period. This process will surface areas for savings or opportunities for revenue that may not have been previously identified. With the left-over savings, it’s important to reinvest in your business to take advantage of new opportunities or be prepared for any unplanned downturns.
With this incredibly detailed method of budgeting, every single dollar that comes into your business has purpose. While Zero Based Budgeting is a time intensive practice, it may be the difference between your company thriving or dying during periods of uncertainty. AMEND has continually served our clients of all industries by understanding their business needs and walking side-by-side with them as a partner through their most difficult times.
At AMEND, we believe companies that are prepared with a strategic plan will combat an economic downturn best and are the ones that will be stronger in the future. That proactive nature starts by understanding your current state, and by quickly learning how the things you can’t control impact your business. AMEND is recommending using Zero Based Budgeting and best practices in strategic planning to all our clients and community. We believe it is the first step in combating the difficult times we are facing.
To learn more about how AMEND continues to drives results in our community through data-driven decisions, please see our case studies. Be on the lookout for our “How To” series, where some of our analytics experts will break down simple ways to build models to better prepare your business.