What is Zero-Based Budgeting? And How to Use it for Your Video Production Studio
You're building your own video production studio (or you already built it out). Producing videos can be expensive, and managing your budget can be challenging. In my career prior to founding Ball Media Innovations, I worked in two different corporate video production studios. One of those was Burger King World Headquarters, where I managed their Worldwide Video Communications studio. Over the years, I got to experience several methods of budgeting. My personal favorite method of budgeting is called zero-based budgeting. I found it to be the most practical approach, and one that allowed us to get things done efficiently and effectively.
Before building your own video production studio, you'll want to know what type of budget to use once it's up and running. If you've already built your video production studio, and it's up and running, it's never too late to plan a change. Ultimately, in my opinion, this budgeting approach can help you manage your costs more effectively. In this article, we'll discuss what zero-based budgeting is and how you can apply it to your video production studio.
What Is Zero-Based Budgeting?
Zero-based budgeting is a budgeting approach that starts from scratch every budget cycle. Instead of using the previous year's budget as a baseline, zero-based budgeting requires you to justify every expense from the ground up. This means that you need to justify the need for every expense, regardless of whether it was included in the previous year's budget.
The goal of zero-based budgeting is to create a more efficient and cost-effective budget that is aligned with your business goals and objectives. By starting from scratch, you can identify areas where you may be overspending or underutilizing resources, and redirect those resources towards more valuable initiatives. It allows a certain flexibility that can help you allocate your business's funds with greater results.
How to Implement Zero-Based Budgeting for the Video Production Studio you're building (or already built)
Implementing zero-based budgeting for your corporate video production studio can take some thought and work. However, it can also help you better manage your costs and improve the quality of your content. Here are some steps to get started with zero-based budgeting:
1. Identify Your Business Goals and Objectives
If you've been in business for a while, this step should be second nature. The fact that you're building a video production studio, or that you've recently built it, shows you have specific goals. If not, before you can create a zero-based budget, you'll need to identify your business goals and objectives for the video production studio. This includes understanding your target audience, the types of videos you want to produce, and the overall messaging and branding you want to convey. Once you have a clear understanding of your goals and objectives, you can start to identify the resources you're going to require to get the job done.
2. Determine Your Budget Baseline
What does it mean to "determine your budget baseline"? This means calculating the minimum cost of the resources you need to achieve your business's goals. To determine your budget baseline, you'll need to determine the value of the minimum resources required to produce your videos. This can include things such as equipment, software, personnel (directors, editors, etc.), and subcontractors (crew members, actors, etc.).
3. Identify Cost Drivers
After you have determined your budget baseline, you need to identify cost drivers. Cost drivers are the activities and resources that have the biggest impact on your budget. These could include personnel costs, equipment costs, location costs, and marketing costs. By identifying your cost drivers, you can better understand where your budget is going and how you can reduce costs.
4. Prioritize Expenses
This next step means that you need to prioritize expenses. This is simply determining which expenses are essential and which can be cut or reduced. If you wish, one tool you can use during this step is a prioritization matrix. According to the Eaton School of Business, a prioritization matrix is a tool that can help you sort a diverse set of items into an order of importance. It can be used to help you prioritize expenses based on their importance and impact on your business goals and objectives.
5. Create a Detailed Budget
Once you've prioritized your expenses, you can create a detailed budget. This budget should include every expense required to achieve your business goals and objectives. It's time to get into the nitty-gritty. You'll be including a very detailed breakdown of all costs, and the expected return on investment (ROI) for each expense.
6. Monitor and Adjust Your Budget
Once your budget is in place, you need to monitor and adjust it regularly. This means tracking your expenses and comparing them to your budget to ensure you're staying on track. If you find that you're overspending in certain areas, you may need to adjust your budget and prioritize expenses differently.
Benefits of Zero-Based Budgeting For Your Video Production Studio
Now it's time to go into some of the actual benefits that come with implementing zero-based budgeting for your video production studio:
Cost Savings: Zero-based budgeting can help you identify areas where you may be overspending or underutilizing resources. This is huge. Why waste money if you don't have to? Zero-based budgeting helps you identify issues. You can then redirect money, as needed, towards more valuable initiatives.
Increased Efficiency: Zero-based budgeting requires you to justify every expense. This might not seem pleasant, but it can help you identify areas where you may be able to streamline processes or eliminate unnecessary steps. It can lead to increased efficiency and productivity. I've found that this process helps you to avoid waste, support valuable strategies, and to save your company money.
Better Alignment with Current Business Goals: Business goals can be fluid. By starting from scratch, each time you look at your video production studio's budget, you can make certain that it's aligning with the most current goals and objectives of your business. You can ensure that your resources are being used in the most effective way possible. This can help you make sure your video production studio budget is on track and working effectively for your company.
Improved Accountability: As you've read, zero-based budgeting requires you to justify every expense. This in itself can help you create a more accountable culture within your video production studio staff. By holding employees accountable for their expenses, you can encourage them to think more critically about how they are using resources and how they can contribute to the success of the business.
So, if you're building a video production studio, should you use zero-based budgeting?
My opinion - it's a good model to consider. Zero-based budgeting can be a valuable tool for managing your costs and improving the quality of your content. By starting from scratch and justifying every expense, you can create a more efficient and cost-effective budget that is aligned with your business goals and objectives. By implementing these steps, you can create a more streamlined and effective corporate video production studio.
Do you need a company to design and build your video production studio?
If so, give us a call. We can create the optimal studio for your company.