They cut your budget - so what?

There was a notice on the fence of a small church graveyard: “It is to everyone’s interest that cost-cutting measures should be initiated during these difficult times.

As the maintenance of the churchyard is becoming increasingly costly, it would be appreciated if those who are willing would clip the grass around their own graves.”

Many of my clients had a wonderful year. They had exceeded targets, attained growth, and even developed new products in the pipeline. They are excited with the prospect of 2012. God had blessed me with a wonderful year as well, and this year promises to be even better.

But then again, some businesses did not do as well last year, so belt-tightening measures are now in place this year.

This is the reality of business: It is seasonal, and it is cyclical.

Cost-cutting measures are usually taken when times are tough, but actually cost-cutting measures should always be in place even when times are good. This is called fiscal prudence.

So budgets are cut. No more traveling business class. Or stays in five-star hotels. Or traveling for that matter since video conferencing can just be done. And then, of course, certain programs are also cut.

I thoroughly understand this. I have been an entrepreneur all my life, still am today.

When the figures go down radically, the only solution seems to be to cut costs. And this is done in five ways: (This is especially true for huge business organizations.)

Across the board reduction in budgets by 10 to 20%

Elimination of a product range

Closure of the business in a geographical area

Elimination or outsourcing of a support service

Reduction in discretionary budgets such as marketing, research and development, training and travel

The short-term results from cost-cutting are good. Immediate effects can be seen; in most cases, margins increase. So “spill and fill” becomes a norm. “Privileges” and “old” costly practices are stripped away from employees. Structures become flatter and flatter. Individual responsibilities become broader and broader. Geographic control and control of processes become broader for leaders. These are all good for the short term, but not for the long haul.

Nobody shrinks its way into greatness. A business should not just focus on cost reduction – it needs to focus on revenue generation as well. And that needs a lot of think time.

But for the meantime, extreme cost-reduction measures may be the reality you will have to face. The question now is, how do you cope?

The worst thing to do is to feel totally hopeless now that they have cut your budget. When training budget is greatly reduced, does this mean you stop training? That’s absurd! You find your own resources and continue with your personal, non-stop education and training programs. Just because the company will no longer sponsor you in seminars doesn’t mean you can stay idle, flop, and pass on the blame to the company that is “no longer making you grow.” Growth is your own responsibility, not your company’s.

This is one of those precious times when you need to make some personal sacrifices, help out the business organization, and continue learning on your own. Leaders, at this point, will have a great opportunity to set examples of sacrifice and service, and in doing so, inspire the rest of the organization to follow suit.

Trying times are not the times you stop trying. In every difficult situation, you can look at what you’ve lost and be hateful, or you can look at what you have left and be grateful.

Contentment with godliness is great gain.

So your budget has been cut. So what?

(Attend “Winning Disciplines for Success” on Feb. 24, 2012 at the SMX Convention Center. Learn best practices on business, creative, physical, intellectual, emotional and spiritual disciplines from the industry’s best – Butch Jimenez, Dyan Castillejo, Jeric Soriano, Paul Soriano and Francis Kong. For further inquiries, contact Inspire Leadership Consultancy Inc. at 632-6872614 or 09178511115.)