How COOs should approach budgets and cuts

Executive overview

Most companies treat budgets as fixed until pain forces a change. Reviewing spend and headcount quarterly — not annually — keeps a business lean by default.

Zero-based budgeting forces every team to justify their projects, people, and resources from scratch each quarter.

Zero-based budgeting in practice

• Each quarter, teams list active projects and the people, money, and time needed to complete them.
• Leadership applies a traffic-light decision to every project: green (go this quarter), yellow (good idea, not now), red (killed, off the plan).
• Budget is rebuilt quarterly and feeds into the annual plan — not the other way around.
• Teams must argue for resources; the default answer is no.

Finding cuts across the business

• Review the general ledger, credit card statements, and employee cost statements regularly.
• Examine every functional area — not just those that report to you — for opportunities to optimise, automate, or stop.
• Renegotiate supplier contracts as a routine activity, not a crisis response.
• Cutting the bottom 10% of performers and not replacing them often has no impact on output — and frees up management time.