3 Questions to Ask When Your Budget Has Been Cut

Budget folder with calculatorIn this unprecedented time, one thing is for sure; business will never be the same again, and with respect to your department budget, this will more than likely be the case!

It’s unlikely that the company will increase the overall budget available.

It is more likely that you will be competing for the same pot as everyone else looking to protect their budget. So you must build a strong case and be prepared to fight your corner.

If your manager has no real budgeting authority then it may be difficult to pin them down on this topic. Remember if your company budgets top-down then no matter how much involvement you or your manager have in the budgeting cycle, you will still end up being given a figure and it may be less than you were hoping for.

What to do?

Firstly, put your budget cut into perspective.

How does it compare to other departments? Are your cuts deeper or the same as others? Or are getting off fairly lightly in the overall scheme of things?

So ask yourself:

“How does the cut I’m being asked to take compare with cuts elsewhere in the business?”

If it’s less than others, thank the boss! If it’s deeper, find out why the differential has been made.

Secondly, if you’re able to carry out an analysis between your budget and your required revenues to carry out a great job, you should be in a position to justify a higher budget figure. Ask yourself whether your boss would be more impressed with revenue gain than cost-cutting. If so, ask:

“If I could show you that increasing our budget would generate more revenue than the budget cut, would you approve it?”

This also proves your value to the company, as all senior managers would welcome a critical and creative thinker when it comes to investment in their business.

Thirdly, even after proving your worth and legitimising a better budget figure, you still may be forced to accept a change in what you are able to work with. In this case, you need to be open with your team members and ascertain where their help might prove worthwhile.

In meetings with your team, generate some ideas on where they see value could be enhanced in the business by savings or improvements. Often, team members close to the ground can come up with ideas you hadn’t thought of. Ask:

“What can we all do to save or make money in the department?”

If this is done in the right spirit, with people understanding the reasons for it, motivation won’t suffer, and all input will be assessed and valued.

After you’ve analysed the situation, you have to decide how much effort you want to spend in defending your budget. It’s important that you fully understand the chances of success before you start this; the most sensible approach may be to accept that you will not get the funds you need to carry out all that you had planned this year.

Redirecting your efforts into reviewing what you can do rather than what you will not be able to do might be a far more sensible approach.

Thanks again,


Sean McPheat

Managing Director

MTD Training   

LeaderDNA button

Updated on: 21 May, 2010

Related Articles

Arrow down

Search For More arrow