What budgeting technique do you use? Because it is important?


Whether you are currently running a business or intend to run a business project, it is very important to know what budgeting technique you should use more. Within the current business environment, the budget technique used is closely linked to the development and survival of a company, a project or to project a business idea in a time horizon.
Do you know how important it is to know which budgeting technique to use? Simple: The answer lies in that technique will be responsible for providing enough money to operate and stay in the market. As you will know, a business entity that is already in the market, or an entrepreneur who wants to run a business idea, will have to make their sales, revenue, production, profits budgets on the credible basis of specific techniques, fortunately today Very good methods, which have been successfully applied by governments, companies and individuals.
Zero Base Budget
The Zero Base Budget (PBC) is the technique that supports the principle that for the next period the amount of each item is zero. While a valid approach is taken for granted, another affirms that nothing exists and everything must be justified from scratch, analyzing the cost - benefit relation of each activity. This budget is mainly intended to "save" since its novelty lies in the fact of redesigning the budget from one year to another from top to bottom, eliminating all possible expenses. It is done without taking into account the experiences.
This budget is useful in view of the excessive and continuous increase of prices, updating requirements, change, and continuous increase of costs at all levels, basically.
The emergence of the PBC was a reaction to the public sector procedure - essentially quantitative and almost non-qualitative - that not only does not contribute to a critical analysis of each item, but also through a kind of inertia, generally encourages an increase in expenditures.
PBC is very ineffective because it requires every manager to start from scratch every year, as if his activity had never existed and to discover a new way of working and to evaluate it by relating its cost to profit. In a genuine budget, the games of the previous year are always subject to modifications or their elimination, and must be carefully analyzed and evaluated in order to their destinations. It should be noted, however, that the common budget does not imply that previous expenditures are simply ratified and often increased. On the contrary, it requires competence for the periodic review of all the actions and the evaluation of the management and activities of each responsible for the definition of the items that compose it.
Until Pieter Finn came to change this in his company called Texas Instruments (TI)
Each year he prepares his budgets like crazy as if last year had never existed, every budget had to be thought from ZERO and thus justified his Insanity:
"It is not acceptable to use last year's expenditures as a benchmark for budgeted costs this year, only to have to justify increasing that expense."
Decision Package is the document that identifies and describes a specific activity in such a way that management can:
Evaluate and prioritize it in relation to other activities competing for the same or similar limited resources and decide whether to approve or disapprove it.
The complete description of each activity, function or operation that the Administration needs to evaluate and compare it with similar ones includes:
  1. Goals and objectives
  2. Consequences of not approving the activity
  3. Performance measurement
  4. Other possible action resources
  5. Costs and benefits
How to divide:

  1. Mutual elimination ; Are those that present different alternatives to perform the same activity, choosing the best, excluding the remaining packages
  2. Of increment, are those that present different levels of activity or cost? 

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