Cost cutting is also pivotal in case of variances , But yes focus should not only be cost cutting. There must be 80:20 approach followed ,where 80 % of the focus is on revenue growth and 20% on cost savings initiatives. Cost savings initiatives should be practiced very carefully to avoid -ve results which might can occur specifically in service industry.

It’s time to: - Use the miscellaneous line - Cut spending to cover the unexpected expense - Move money from the emergency fund

To prepare for potential disruptions build your budget studying different scenarios. Develop sensitivity analysis, assessing the impact of disruptions in relevant areas like revenue streams, expenses, and cash flow. Evaluate the impact of sudden increases in financing costs or restrictions in sources of financing. Gather and process as much data as you can, with the right IT tools to have strong insights on the business and trends, and rapidly study alternative scenarios. Develop a deep knowledge of the business, the market, the strategy, and the geopolitical context to know where your main sources of uncertainty are.

The first step is to understand the cause of the disruption and whether it can be curtailed or it's growth can be avoided. If it was an unexpected tax bill little can be done. If it was a major sales loss you need to see if it can be back-filled. Knowing the driver for the disruption helps you understand you options.

This situation is part of the budget process. Some tips: -Cash is king. -Analyze the scenario. See the size of the problem. -Adjusts the costs to weather this storm. -Maintain constant feedback.

The budget reflects the strategy of an organization. As such, it should be adjusted only when the strategy is adjusted. What should be reevaluated are the means that will help the organization achieve the budgeted outcome. For example, if I have budgeted an increase in revenue by, say, 5% and afterwards I lost one of my major customers, then the question is "How is my strategy affected by this"? If the response is that my strategy remains the same and my end goal is still the 5% increase, then what will change budget-wise are the means in which the organization will achieve this increase. As we move along, the comparison between the actual vs budgeted results will show if the actions taken were successful or not.

Here are a few ideas for finding new ways to generate revenue: expand service offerings, cross-sell and upsell to your existing customers, or offer incentives to current customers to refer new business to you. Need to cut some expenses? Consdier reviewing for any services you are paying for that you no longer need or use, eliminating unprofitable services and/or customers and going digital. You can save a ton on printing supplies and paper when you go paperless.

You should hardly ever adjust your budget. Instead you should access any management reserves you had in the budget or sweep up any underruns to plug the hole. Sweeping up the underruns is done by adjusting the indicated finals and freezing the future spending authorizations to the indicated finals. If this will not be enough you need to begin prioritizing spending by department for the rest of the year. If this will not be enough, then start the process of lay-offs. The reason for not adjusting budgets is because the budget reflected the plan and the plan didn't change . . . your reality did.

Prepare in advance for disruptions in revenue, margin, expenses, and financing constraints, based on your scenario and sensitivity analysis. Leave buffers in certain areas of expenses and be prepared to announce budget cuts. Prepare in advance for price increases as a reaction to marginality issues. Challenge the business to explore alternative sources of revenue. Postpone non-essential investments and hirings. Analyse carefully the events that are causing the disruptions to see if their impact is temporary or permanent/long-term. Adjust your cost structure accordingly.

You always should be monitoring your performance (at least monthly). Weekly, you should be looking at headcount against plan. As opportunities arise, you should be seeking a means to recognize them and to sweep them up for redeployment. Depending upon the culture of the company this might be where the responsible department manager gets to make the redeployment decisions as a reward for their frugalness. Or it could be made at a higher level in time of crisis or identified unfunded initiatives. The key to any redeployment is to ensure that the re-deployed spending doesn't create a commitment to future recuring costs that can't be supported (e.g., hiring people that will require incentive compensation requirements that aren't budgeted.

Monitor your performance frequently (weekly, monthly, …) based on the relevant KPIs. Tracking your performance will bring to light things that you’re doing well and things that need to be adjusted, that require additional decisions. Gathering and processing the right data is crucial for the best insights when monitoring your performance. Engage the relevant stakeholders for a better interpretation of the performance, to analyse what’s going well and what needs to be changed. Continue to explore ideas on new revenue streams, efficiencies, working methods, new solutions to successfully overcome the disruptions.

Things will go awry. If they don't your learning curve will stay behind. The important lesson: no finger-pointing and politics. Document your learnings, but do not dwell on the past. Create a collaborative environment, where predictable disruptions are reduced to a minimum and extraordinary events are dealt with quickly.

Keeping a close eye on trends can definitely help you identify potential times of trouble early enough to get a plan in place. It is much easier to be proactive than reactive.

Having a good intelligence system to help you anticipate these disruptions is important and needs to be built. This can come from many sources: Field service representatives, your CRM system, reading of economic and money supply analysis, regulatory changes, Federal budgets and appropriations, Executive Orders, suppliers, interest rates, technology periodicals, etc. They all help you to think about what is likely to happen. Remember, hope is not a plan.

Learning from feedback is essential to understand if the right things are being monitored, which new ideas can be tested, what is the impact of budget cuts and adjustments on people morale, etc. Allowing diverse points of view and contributions to flow in is always enriching. Building and adjusting your budget using feedback from relevant stakeholders will lead to a more robust outcome. And having people engaged, committed with the budget process will also be essential in the implementation phase.

To navigate unexpected budget disruptions, seek external support through collaboration with industry experts, financial advisors, and peers. Engage with specialized consultants, explore government resources, and leverage business advisory services. Utilize technology solutions for real-time analytics and attend workshops focused on financial resilience. Collaborate closely with financial institutions and legal advisors to ensure comprehensive strategies. This multi-faceted approach ensures diverse perspectives and expertise, enhancing your ability to strategize effectively in the face of budget uncertainties.

In times of great uncertainty and disruption, additionally to data and insights, to look at trends, you need knowledge. Business and strategy consultants, industry experts, economists, geopolitical specialists, IT consultants, meeting with Business Roundtable Associations, Peers, etc. may bring you the additional knowledge you need. This may give you new ways look at alternative budgeting methods and tools, new ways to make your business be more resilient to disruption and grow, and search for efficiencies.

I have problems with this. Spending money when you have a cash flow problem doesn't always help with the cash flow problem. You should have the internal talent to make the decisions. If you are going to seek outside support use your Board or other advisors who've you have already paid a retainer. Borrowing money isn't always the answer either. When interest rates are low, this might be an option. However, as interest rates go up it could drive you into bankruptcy. Be careful. Try to cash flow your operations and growth in times of high or rising interest rates.

Cost cutting should never be strategy when faced with such a situation. The only way to resolve the deficit of budget is to readjusted revenue forecast. The Focus should shift to Increased revenue with existing Resources rather than stagnation

Within the last decade, and the many crisis navigated, one thing is certain for me - once the evaluation and assessment of the situation is done, and the impact on the financials is determined, one would need to look to the future, adapt their ways to the new realities, think about new possibilities and most importantly focus on solutions with an open mindset.