5 Things To Consider When Your Budget Gets Cut

Estimated reading time: 4 minutes

Budgets get cut. It’s a fact of business. And not just when sales are down. Sometimes the organization might decide to reallocate resources to take advantage of an opportunity that will ultimately yield them more later. Mr. Bartender and I faced this situation recently. The company we use for computer backups is moving from a monthly subscription to an annual subscription. They’re offering big discounts to sign up now. We hadn’t originally budgeted for this, but the discounts are substantial. So, we’re going to reallocate resources to take advantage of the deal, which will ultimately save us a lot. 

So, when you’re facing budget constraints, what can you do to ensure quality? Here are five things to consider:

1. Are there places in the budget where the resources are abundant? Sometimes organizations intentionally put extra funding in budget lines (aka “sandbagging the budget”). We’re not going to debate this concept today, but if your organization does this, it could be a perfect time to go looking for the excess funds. And even if your organization doesn’t actually sandbag the budget, it’s possible they can postpone doing something and move those funds to another area. 

1. Where are you facing the constraints? Let’s say you’re working on a training project and budgeted to hire a consultant to help with instructional design. Now that the budget has been reduced, maybe you can’t hire a consultant to do the design, but you can do the work in-house. Or maybe you can hire the consultant, but only for the assessment and you’ll have to do the rest. The point being, if you know where the constraints are, you might be able to think of ways to still get the work done within budget. 

1. Is taking more time an option? This is kinda related to the last item about constraints. Sometimes when budgets are cut, the organization also changes the timeline for the project. And having more time can make up for losing financial resources. Using the example above with the training project, let’s say the company cuts the budget but says that instead of launching the training program in Q2, you can launch it in Q4. The extra time allows you to do the work in-house. 

1. Can you alter the plan? Sometimes when budget dollars are cut, the overall goals of an activity are cut as well. An organization might have planned to do a full-day classroom training on a topic and now with budget cuts, the plan is a half-day classroom training with two individual coaching sessions. The training is still going to happen, but the plan is going to change. Sometimes being flexible can save the organization money and still deliver quality. 

1. What do employees think? I intentionally saved this one for last but not because it’s the last thing to consider.  Rather, I wanted to end with a possible place to start. Employees are smart. They often know where the organization can save money … and where they might be able to generate revenue.  Before resigning yourself that a project or activity is cancelled due to budget cuts, think about challenging employees to come up with a solution. 

I know I’ve told this story before but it’s worth repeating. I once worked at a company that was facing a $1M shortfall. Instead of immediately cutting things out of the budget, they went to employees, told them the situation, and proposed an idea: What can we do that will either save the company money or generate more revenue? And if it works … we’ll give you a cut of the profit / savings. Employees came up with fantastic ideas. Not only did the company find the $1M shortfall … but several million more. 

The best companies are faced with moments when they have to cut budgets and reallocate resources. Yes, these moments are frustrating. They can also be opportunities to challenge our creativity and find new ways to get things done.

Image captured by Sharlyn Lauby while exploring the streets of Gainesville, FL

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