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Where I work, the manager summoned together each department and ask for list from ANYONE who had ideas on how to reduce spending (they could be anonymous.) The budget was reworked, money reallocated, money and resources found. There were no layoffs for this fiscal year and reserves were kept intact. The key is to keep each employee involved and focused on what CAN be done and how THEY can contribute. Keep morale up by recognizing the strengths each person brings and help them overcome the weakness they have (by training, assistance, responsibility).
Find inexpensive ways to cheer people, and to present the company as stable and reliable. Pizza parties, presentations on how the company is doing (yes even numbers) will give employees the sense of ownership, balloons to recognize birthday or even a card signed by the General Manager might motivate people to see they are valued and lower the rummors or even the risk of losing personnel.