Multi-Unit Strategies - Managing with zero-based budgeting

Though the U.S. economy has been under the longest expansion period in history, there will come a point where growth slows, and yes, even a recession will return.

Such an economic downturn will undoubtedly affect the more than 759,000 franchise businesses contributing $451 billion to the U.S. GDP. While many franchise leaders are taking a cautious approach toward the upcoming economic cycle, there are things franchisees can do to better position their business for such a downturn.

Investment banker Carty Davis recently wrote about what franchisees can do now to prepare for a turn in the economy. Here's what he says about how zero-based budgeting can help business owners save money.

• Use a zero-based budget. Business owners often fall into the trap of budgeting for the same line items year after year. Just because you spent money in an area one year doesn't mean you need to spend it the same way this year or next. Every year, owners should look at each area of their business--utilities, inventory, contracts, etc.--to determine which costs are truly needed and which can be eliminated.