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Target Setting

Base targets on bottom-up estimates

How to develop a target-setting process.

Use a bottom-up approach to budgeting. Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period, starting from a ‘zero base’ with every area of the business having justify its needs and costs. This process generates a budget, without reference to whether it is higher or lower than the previous period. This can generate sustainable savings by resetting your cost base, freeing up capital to reinvest for growth, but as global consulting firm Boston Consulting Group (BCG) says, it can be perceived as aggressive. BCG’s nine steps for implementing zero-based budgeting include setting a vision and communicating with employees throughout the process.

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