Win with “Zero-Based EVERYTHING”

Throw away the benchmarks. Adopt “zero-based everything” to survive the AI platform shift

Today’s newsletter is brought to you by Brex, the modern spend platform.

Make every dollar count

CFOs must balance spend control and growth while navigating shifting markets, rising costs, and global complexity. That’s why every dollar needs to work harder and smarter for the business. Brex’s modern spend platform helps CFOs do just that, integrating financial services and software to power efficient growth for 30,000+ businesses. See for yourself.

---

Everything is Changing

SaaS isn’t dead but it is changing FAST. Will your company survive?

No one has seen the magnitude and speed of change in tech that we are experiencing today. Almost every week there is some groundbreaking release in AI that changes what we thought was possible.

Yes, there are A LOT of uncertainties about the future of software (and with life in general). The uncertainty doesn’t even go that far out….it is hard to predict what software will look like in just a few months.

But only those that can adapt quickly and execute will win. There will be many companies that get killed along the way.

What is Zero-Based Everything?

The core concepts of “zero-based everything”:

• Starting from zero: Every budget, process, decision, and resource allocation is reassessed from scratch (zero), rather than relying on past practices or historical budgets.

• No assumptions: Eliminate assumptions based on previous years or established patterns. We must re-evaluate every activity, process, expense, etc and confirm they still make sense.

Forget all the financial benchmarks you have ever seen. They are useless now.

By the time you read benchmarks today they are already outdated. Zero-based everything means you just need to use your brain and figure out what you need today. It’s MUCH harder than before…

I love benchmark data, but I think they do more harm than good in A LOT of cases. Blindly following benchmarks has never been more dangerous.

Difference with Zero-Based Budgeting

After peak ZIRP madness, most companies got the message that they needed to get efficient.

I pushed the concept of “zero-based budgeting” in this newsletter to help companies eliminate waste and become efficient.

What is zero-based budgeting?

A budgeting approach that requires building a budget from scratch each fiscal period, starting from zero rather than using previous budgets as a baseline.

Zero-based budgeting has been hugely beneficial to the companies that have adopted it in their annual planning cycles. I have talked to many CEOs that have said they discovered lots of waste as a result of going through the exercise.

Zero-based budgeting takes A LOT more time than traditional budgeting in order to do it right, but it is usually worth it.

BUT my “zero-based budgeting” advice isn’t enough today.

You cannot survive this AI platform shift by simply being more efficient. Zero-based budgeting is a start, but an incomplete view.

Zero-Based Everything

“Zero-based everything” goes beyond just the financial aspect and also encompasses operations, strategy, processes, culture, etc.

While the direct (or indirect) outcome is probably also higher financial efficiency, zero-based everything is focused on more than just finance in order to get to that outcome.

Below are a few examples of categories that you can apply the zero-based everything approach:

1. Expenses (zero-based budgeting)

   1. If we had to rebuild our entire tech stack, what would we buy today?

   2. Review ROI on all spend and re-evaluate needs.

   3. Reevaluate chosen vendors, prices, needs, etc

   4. Are there new tools that solve my current needs better?

   5. Does it now make sense to build internally?

2. Headcount Needs

   1. What headcount do we actually need today based on current needs and technology?

   2. Can AI replace headcount and/or does it change our current hiring needs yet?

   3. Does our org structure still make sense? Can we shrink management layers?

3. Operational

   1. Companies need to rethink all their processes. Repeating the same legacy processes will get a lot of companies killed in 2025.

   2. Review workflow efficiency for every team.

   3. What processes can be changed given the changes at the company or new technology (AI tools)?

   4. Eliminate processes that don’t add value.

4. Strategic

   1. Should you change GTM strategy as a result of technology / market changes?

   2. Review how you price your product

   3. Review capital allocation strategy

5. Product Market Fit (PMF)

   1. Don’t assume you still have strong PMF.

   2. How will you strengthen or regain PMF with AI?

   3. Do we need to pivot our product?

Final Thoughts

People NEED to rethink more than just their budget allocation in 2025.

“Zero-based thinking” might be required to survive.

The companies that are quick to adapt and execute will win during the current AI platform shift. Speed is more important now than ever before.

---

Footnotes:

• Get help building a smart AI strategy from Brex, today's sponsor

• Need Fractional CFO support? Reply to this email with what you need.

• Check out OnlyExperts to find offshore accounting resources. They have some amazing talent for 20% the cost of a U.S. hire