When a business makes their budget, they typically use either an incremental budget or a zero based budget. Incremental budgets are used by the government (theirs is called a baseline budget) and are not very effective at controlling costs. Zero based budgets, on the other hand, encourage businesses and managers to closely review business plans and forecasts each year and arrive at a budget that meets those goals. If you're interested in learning more about the advantages of zero based budgeting, we recently posted an article on our budgeting blog.
http://www.budgetways.com/zero-based-budgeting.html
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