After deciding on the budgeting method, the organization must figure out who will involve in making significant decisions. There are different budget involvement strategies for executives:
- Imposed Budgeting – It is a top-down budgeting approach where executives set a budget to meet a specific goal.
- Negotiated Budgeting – This approach better suits a small business or a startup where executives, team leads, managers, VPs, and other decision-makers are involved in the organization’s day-to-day operations. This approach is both a top-down and bottom-up budgeting process. Executives will lay out goals that their company must meet, and the responsibility is shared among the other decision-makers.
- Participative Budgeting – This is a bottom-up approach where the executives lay out goals and targets to managers.
- What is zero-based budgeting?
Zero-based budgeting is a specific way of allocating expenses so that your team understands where every dollar is being spent. Unlike traditional budgeting, which starts with last year’s spending and makes small adjustments, zero-based budgeting begins at $0. This ensures that all expenses are justified and that your team isn’t defaulting to the status quo. Understanding where your team’s money is being spent is critical to making informed decisions about the future of your business.
