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Jul 17th

It’s common sense for every business, of whatever size, to keep a tight rein on fixed costs. In a small business, you’re that much closer to the truth that every pound you make above what you need to cover your costs goes to profits. But expensive habits like taxis can quickly become part of the organisational culture.

By Beatrice Hollyer, Management Today Entrepreneur Weekly

Beatrice Hollyer of Stanton Marris says it’s just common sense to rein in your spending – downturn or not.
Since the austerity budget of earlier this year cut government departments’ budgets by an average of 25%, the climate of cost cutting which began with the recession has left few businesses unscathed. I heard about a training programme called ‘Lunch and Learn’ which has been re-branded ‘Lunchbox and Learn’ – these days, you bring your own lunch.

It’s common sense for every business, of whatever size, to keep a tight rein on fixed costs. In a small business, you’re that much closer to the truth that every pound you make above what you need to cover your costs goes to profits. And keeping fixed costs down means you have the flexibility to smooth over any bumps in performance month by month.

But news spreads fast about what it’s okay to spend money on, and expensive habits like taxis quickly become part of the organisational culture. You only have to remember how MPs encouraged each other to make the most of their now-notorious expenses system. It’s human nature – if everyone is doing it, then I can’t be singled out to take the blame.

So what can you do to make yours a habitually low-spend organisational culture?

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This article is filed under: organisation, organisation design, organisational culture, organisational performance

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