Zero-Based Budgeting

A budgeting approach where all expenses must be justified from scratch for each budgeting period, regardless of previous spending levels.

Zero-Based Budgeting (ZBB) is a strategic budgeting approach that requires small business owners to build their budget from scratch, starting with a zero base and justifying each expense. With ZBB, businesses evaluate their needs and costs annually, prioritizing expenditures based on value and aligning budget allocations with specific business goals. This method encourages cost control, promotes efficiency, and allows businesses to allocate resources more effectively, ultimately driving financial discipline and strategic decision-making.