Last updated on Jul 2, 2024
- All
- Operating Budgets
Powered by AI and the LinkedIn community
1
Zero-based budgeting
2
Incremental budgeting
Be the first to add your personal experience
3
Rolling budgeting
Be the first to add your personal experience
4
Budgeting tools
Be the first to add your personal experience
Budgeting is an essential skill for any business owner or manager, as it helps you plan, monitor, and control your financial resources and performance. An operating budget is a detailed projection of your income and expenses for a specific period, usually a year or a quarter. It shows how you intend to use your resources to achieve your strategic goals and objectives. In this article, we will explore some of the most common budgeting techniques and tools that you can use to create and manage your operating budget effectively.
Top experts in this article
Selected by the community from 3 contributions. Learn more
Earn a Community Top Voice badge
Add to collaborative articles to get recognized for your expertise on your profile. Learn more
-
3
-
1
1 Zero-based budgeting
One of the most popular and controversial budgeting techniques is zero-based budgeting (ZBB). ZBB is a method of creating a budget from scratch, without using any historical data or assumptions. Instead, you have to justify every expense and revenue item based on its relevance and value for the current period. ZBB can help you eliminate waste, optimize resource allocation, and align your budget with your strategic priorities. However, it can also be time-consuming, complex, and challenging to implement, especially for large and diverse organizations.
Help others by sharing more (125 characters min.)
-
- Report contribution
Thanks for letting us know! You'll no longer see this contribution
O OBZ oferece diversos benefícios para o orçamento operacional, incluindo: Maior visibilidade dos gastos, alocação eficiente de recursos, mudança de mentalidade, eliminação de desperdícios e melhoria na tomada de decisão. Já seus desafios acredito que alguns sejam: Tempo e recursos, resistência à mudança, necessidade de treinamento e foco no curto prazo.
Translated
LikeLike
Celebrate
Support
Love
Insightful
Funny
3
-
- Report contribution
Thanks for letting us know! You'll no longer see this contribution
🔔 Exploring Bottoms-Up Forecasting: A Game Changer for Financial Planning 📊Bottoms-Up Forecasting starts with detailed historical data, building forecasts from the ground up. The benefits are clear:Historical Insight & Forecast Synergy: Combining past data with future projections creates a realistic and reliable outlook.Departmental Accountability: Involving each department ensures accuracy and ownership.Simplified Monthly Updates: Easily compare actuals against forecasts to pinpoint growth drivers and areas of opportunity.Bottoms-Up Forecasting not only strengthens our planning but also makes tracking progress straightforward and effective.#BusinessStrategy #FinancialPlanning #GrowthOpportunities
LikeLike
Celebrate
Support
Love
Insightful
Funny
1
- Andres Lluch Corporate Accountant | IFRS Reporting, GAAP Accounting, Capital Assets
- Report contribution
Thanks for letting us know! You'll no longer see this contribution
In my 10+ years diving into the finance and accounting realms, I've leaned heavily on ZBB during transformative phases for businesses. Once, for a tech startup poised for scaling, we stripped our budget down to zero and rebuilt it piece by piece. Beyond just cost savings, ZBB fostered a culture of accountability and innovation. Teams became more creative, seeking out new, cost-effective ways to achieve goals. The real magic of ZBB isn't just in trimming fat; it's in sparking a mindset shift that aligns spending with strategy, making every dollar work smarter. This approach isn't without its headaches—preparing for intense debates and justifications is part of the game—but the payoff in organizational agility and efficiency can be massive.
LikeLike
Celebrate
Support
Love
Insightful
Funny
2 Incremental budgeting
Another common budgeting technique is incremental budgeting, which is the opposite of ZBB. Incremental budgeting is a method of creating a budget based on the previous period's budget, with some adjustments for inflation, growth, or other factors. Incremental budgeting is simple, easy, and consistent, as it allows you to maintain the status quo and avoid drastic changes. However, it can also be inefficient, rigid, and outdated, as it does not account for changing needs, opportunities, or threats.
Help others by sharing more (125 characters min.)
3 Rolling budgeting
A third budgeting technique that you can use is rolling budgeting, which is a hybrid of ZBB and incremental budgeting. Rolling budgeting is a method of creating a budget that is constantly updated and extended for a fixed period, usually a year or a quarter. For example, if you have a rolling 12-month budget, you will update your budget every month and add a new month at the end. Rolling budgeting can help you keep your budget realistic, flexible, and responsive to changing conditions. However, it can also be demanding, repetitive, and confusing, as it requires frequent revisions and adjustments.
Help others by sharing more (125 characters min.)
4 Budgeting tools
When selecting a budgeting tool, you should consider cost, features, ease of use, and security. Cost can range from free or low-cost to requiring a subscription or license fee. Features can range from basic data entry and calculation to advanced forecasting and scenario analysis. Ease of use can range from easy to learn and use to requiring training and support. Security can range from having high standards of data protection and backup to exposing your data to risks or errors.
Help others by sharing more (125 characters min.)
Operating Budgets
Operating Budgets
+ Follow
Rate this article
We created this article with the help of AI. What do you think of it?
It’s great It’s not so great
Thanks for your feedback
Your feedback is private. Like or react to bring the conversation to your network.
Tell us more
Tell us why you didn’t like this article.
If you think something in this article goes against our Professional Community Policies, please let us know.
We appreciate you letting us know. Though we’re unable to respond directly, your feedback helps us improve this experience for everyone.
If you think this goes against our Professional Community Policies, please let us know.
More articles on Operating Budgets
No more previous content
- How do you account for seasonality and uncertainty in your revenue projection template in Excel? 1 contribution
- How can you use technology and tools to facilitate participatory budgeting and collaboration? 3 contributions
- What are the advantages and disadvantages of using the percentage of sales method for operating budgets?
- How do you incorporate non-financial measures and indicators into your operating budget evaluation?
- How do you measure and improve the efficiency and effectiveness of your operating budget in hospitality? 1 contribution
No more next content
More relevant reading
- Practice Management How can you choose the best budget forecasting method for your PM needs?
- Financial Management How can you use budgeting and forecasting to reduce costs?
- Operating Budgets How can scenario planning and sensitivity analysis improve budget resilience and flexibility?