Rethinking Budget Cuts

The nice thing about a recession is that it reminds you how amazing capitalism can be.  Even though most of us are hurting pretty badly —budgets being cut, loans being called, sales dropping — there are companies out there doing well.  Thriving even.

Why bring up the lucky few when talking about budget cuts that are hitting most of us?  As a reminder that opportunity always exists even when the economy seems to be completely against you.

Even a Budget Cut can be an opportunity.

Truth is, there is no need for marketing, business development, product innovation, customer relationships or anything else if your organization runs out of cash.  In today’s economy, the length of your runway (how long before cash runs out)  matters more than practically any other program you have. So, if cuts need to be made, make them quick, take care of people as best you can and then sit down and rethink everything you’ve just done.

UPDATE: Interesting post about the differences between successful vs. unsuccessful downsizing The Tricky Truth About Downsizing by Freek Vermulin over at harvardbusiness.org.   Indicates that your long term investments in HR might be a key issue in retaining the survivors of a downsized company – and therefore a key indicator of the downsizing succeeding.  Truth is if when you downsize you lose your most promising employees then your ability to change business models, improve customer relationships are further hampered. Sprint went through what felt like a continual series of downsizings in the 90s, I’m wondering now if that set them up for their continued decline today.

Tagged , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.