Zero-Based Budgeting (ZBB)

Zero-based budgeting rebuilds every line from zero each cycle, requiring a justification for each dollar, instead of starting from last year’s number and adjusting by a percentage. Done well, it forces owners to defend spend that incremental budgeting would just roll forward unquestioned.

The catch is that ZBB is only as rigorous as the actuals each justification gets compared against: run against unreconciled category spend, it produces more elaborate, better-organized guessing, not more accurate ones. See how budget season turns a chosen budgeting method into a working process.