Why zero-based budgeting (ZBB) matters to a first-time founder
ZBB makes founders explain what each cost will achieve instead of treating last year’s spending as an entitlement. It can uncover forgotten subscriptions, duplicated tools and activities that no longer support strategy. Done too often or in excessive detail, however, it consumes management time and can encourage short-term cuts that damage capability.
Examples of zero-based budgeting (ZBB)
A startup spent ¥12 million on marketing last year. For the new budget, it does not simply add 5%. The team rebuilds the plan campaign by campaign, approves ¥8 million tied to measurable acquisition tests and removes ¥2.5 million of unused sponsorships, while reserving ¥1.5 million for experiments.
Common misunderstanding
Starting from zero does not mean the company plans to spend nothing or ignores contractual commitments. It means every cost needs a current reason. ZBB also differs from ordinary cost cutting: the aim is to direct resources towards priorities, not automatically reduce every department by the same percentage.
When to use it
Use ZBB when cash is tight, strategy has changed or recurring costs have accumulated without clear ownership. Apply it first to discretionary or fast-changing areas rather than rebuilding every statutory, payroll and infrastructure cost monthly. Set decision criteria, include implementation risks and revisit savings that could undermine service, compliance or staff wellbeing.