The debate going on right now in the U.S. Congress on the budget reminds me of some of the budget battles I’ve gone through in some of the companies I’ve worked for and with.  It brings to mind that old saying “Don’t cut off your nose to spite your face.”

There were a few truisms that stood out:

  1. The best companies, in other words the ones that are winning and holding onto their turf don’t  slash their marketing budgets when the going got tough.  There may be some cuts, but no slashing.  Once you determine what’s needed to support your business – do a thorough assessment before you slash, otherwise you may be cutting sales!
  2. The best companies know when to “throw in the towel” and don’t bother throwing good money after bad.  Sometimes, even “pet” projects need to be cut.  The key to knowing what to cut is having specific goals, and measuring versus achievement of those goals.  Find out which programs aren’t working hard enough.  Do an ROI analysis.  If you can’t do a precise ROI, try your best to determine how customers are finding their way to your business.  Market Research is a great tool for this.  And when you’re done with this analysis, take the next step.  Fund what works; trim what doesn’t.  It sounds simple, but it’s really not the way things get done in many places.  What about your place of business?
  3. Short term thinking equals short term results.  I think about the whole issue of education, and how far behind the U.S. is falling, yet, state after state is making drastic cuts in education.  This is clearly short term thinking.  When you are in a period of rapid change.  You can’t neglect knowledge management.  Well, actually you can, but the results will speak for themselves.
  4. The winners take care of and leverage their assets.  Whether it’s human assets, brand assets, equipment assets.  When you neglect something it reflects the neglect.  When you don’t leverage an asset, you waste it.  Is there a person on your staff who has skills you aren’t taking advantage of?  Is there a brand that can be leveraged across multiple platforms?  Be sure you are asking these questions when you are trying to stretch the budget.
  5. Look at the area where you are spending the biggest portion of your dollars first.  Cuts there will be smaller on a percentage basis and you may be able to better tolerate them.  With the U.S., it’s our defense budget.  But often, the entire defense budget is off-limits – Congress won’t even look at it.  Don’t let anything be off limits.  Look at the total picture when it comes to determining where to cut.
  6. And lastly, the poorest performers, well they did the opposite of the five points listed above.