Use a Zero Based Budget to Control Wholesaler Costs

Expense Reduction | February 9

Over the next few posts, we’ll share ideas that you can use right away in your beer business to control costs.

5 Best Practices to Control Wholesaler Costs

  1. Use Zero Based Budget Mindset (ZBB)
  2. Create a Financial Road Map
  3. Set Regular Financial Reviews
  4. Review Vendor/Supplier Spending
  5. Use Purchase Orders

Let’s start with #1 on the list…

#1 Use a Zero Based Budget Mindset

Sometimes, when building a budget, we take last year’s numbers, make a few changes, and call it a new plan.

In the budget business, this is known as SALY. Same as last year. It’s quick, easy, and usually wrong.

A Zero Based Budget Mindset challenges you to think differently.

ZBB requires that you justify the existence of every cost on your income statement. Instead of justifying whether to cut a cost.

To get started with a ZBB approach, ask your team these two clarifying questions:

  1. Will the customer notice if we cut this cost?
  2. Does this spend make us a better company?

If the answer is no, you have your answer to cut the cost.

In the next post we’ll cover How to Create a Financial Road Map for your beer business (and what to do with that road map once it’s done).

P.S. For more beer business finance cost cutting ideas and strategies, join our Beer Business Finance Association. We are a network of beer industry professionals who work together to build more profitable businesses.