What’s stopping local Belgian companies initiating ZBB projects? Some may say it’s because the average company in our country is simply too small. Others may say that it’s a useless exercise because of our labor costs. Let’s challenge these common beliefs!
First, let’s get back to basics: What does Zero Based Budgeting (ZBB) consist of?
ZBB is a budgeting process in which all costs must be justified from a blank sheet. ZBB starts from a ‘zero base’ meaning that every function is analyzed in terms of its activities and needs. Budgets are then drawn up based on what is required for the upcoming period, regardless of the previous figures.
What results can you expect from such exercise?
Savings of at least of 5% of the total spend (direct & indirect) within the first year. ZBB will also fuel growth by removing waste and freeing up capital that are to be allocated to more lucrative activities.
What is the ZBB potential in the Belgian market?
Taking into account the minimum setup cost, and assuming a return on investment of at least 10 times that cost, 950 organizations could potentially benefit from ZBB according to data from the National Bank of Belgium.
Although we see big companies move first in the ZBB journey, the three golden rules definitely work for all :
- Create full cost visibility at a consistent level of detail across the different parts of your organization
- Create clear cost accountability with cost category owners delivering according to the ZBB plan and drive a culture change to embed this in your company’s DNA
- And most importantly, closely link spending reductions to your strategic growth plans.
To conclude: Whoever thinks Zero Based Budgeting is only for big multinationals is wrong.
Learn more about how does the zero-based budgeting process work with our latest report Getting ahead by cutting back.
Interested in a private meeting to discuss how to ZBB could benefit your business? Contact us
