Treat Your Budget Like an Asset

Your budget is an asset - It is such a simple phrase, and I can imagine that it would be rather difficult to find a person that would argue the opposite. At least with their words, yet so many managers argue the point with their actions. We have all known the manager who comes into a situation and seeks to show their worth by cutting costs.

So if your budget is such an asset, why are you throwing it out the window?

Cutting costs is an extremely short-term solution that only serves to give you short-term recognition from those that write the checks. In the long run you are left with no money to get results, and no experience for getting results if you can get the budget back.


An efficient organization will base a budget off careful planning regarding what each department needs to operate at its best. If that budget doesn't get used that sends the message that your department doesn't really need the funds that it has been given, and your funds go down for the coming year. However, your department should be looking for opportunities to outperform last years' efforts. How are you going to do that? Do the same as the year before with less? Where else are you going to make cuts? Resources can only be stretched so far, so eventually your department will be doing less with less.

At the same time the world is moving on. New innovations are taking place, your competitors are getting better at finding customers, creating new products, moving into new markets, or just finding ways to take better care of your customers than you are. And what have you accomplished? Where were you? You were too busy figuring out how to do the same old thing with less money.

Now when things really get hot and you need to find the next big thing you have to start with convincing your superiors that you need more money to just start testing what your competitors already know what will and will not work, and how to get the most out of it.

Does that mean that when you end up with extra funds you should give bonuses to all your employees, buy a new ping-pong table for the break room, or even take everyone out for a steak dinner? No, you should invest in testing and developing for the future. A smart executive will be more pleased to know that you are planning for the future of the organization as a whole than that you decided to just save them a few dollars.

This does not mean there is never a situation where costs should be cut. There are times when immediate needs take precedence. But if you find yourself cutting costs for the sake of looking good just stop, and go do something proactive immediately.