Operating Budgets In Tough Economic Times – To Be or Not To Be A Cost Center

Most businesses these days are facing economic uncertainty. Financial prudence, always important, is especially so in difficult times like these. Businesses that are market driven need to read those conditions and react quickly and forcefully – there is no question about that. However, a rush to act can lead to a mistaken strategy which will have its own consequences.

One strategy I have seen contemporaries opt for when the budgets get tight is to convert to a cost center business model. I much prefer indirect charging methodologies because they have one huge advantage – they let me make value choices.

When operating as a cost center the facilities organization is limited in its ability to create enhanced value. You can do only what customers pay you to do, and they are likely to ask you to do less, thereby stranding resources you depend upon. Life is tough, and sometimes tougher.

I much prefer a model that gives me control of my budget and allows me to make strategic decisions. In fact, I believe tough budget times offer business leaders one of their premier opportunities to make a difference. This is an opportunity to be a thought leader, to suggest paths and strategies that others have not thought of, to demonstrate your strategic value to your internal customers by presenting creative solutions and options to help them solve THEIR problems. You can only do this, of course, if you actually understand their business. But assuming you do, having control of your budget allows you to create value for them and for your own organization. Yes, budget control numbers will shrink even in non-cost center environments. The difference is that you get to decide how to allocate your resources.

One of your most important contributions to the enterprise is in knowing your customer’s business, looking over the horizon, and creating options that protect and help them before being asked. In other words, by being proactive, responsible, and leading through assumed entitlement.

It’s much easier to do, and a lot more fun, when you hold the money.