Overheads – under control

We know you’d rather be working on securing more leads and opportunities to grow. But keeping an eye on costs and tweaking as needed may free up cash flow to give you extra headroom for the exciting stuff.

Break down your expenses and analyse them critically. Some are essentials but others can just creep up over time till they’re dragging back overall performance.

Overheads are what it costs to keep your doors open. You can segment overheads in different ways, depending on what kind of business you have. If your business is divided into different departments, you can allocate overheads more accurately.

For instance, a manufacturing business might look at overheads in terms of manufacturing and administrative overheads. Manufacturing overheads are general costs associated with keeping production going. They include depreciation of factory equipment, quality control, rent, general repairs and maintenance, and utilities specifically associated with factory operation. Administrative costs are not linked to development or production, and include front office administration and sales, office supplies, and power.

Could the business introduce more efficient approaches to repairs and maintenance and achieve the same outcome for lower costs? Could alternative suppliers provide a quality service at lower cost? Are office supplies being stockpiled from habit rather than need? Could stocks be trimmed?

With systems in place for tracking and analysing costs, you’re better placed to forecast your budget, spot and fix blowouts earlier, and decide whether you need to adjust pricing to maintain or grow your profit margin. 

Get in touch with us for ways to keep track and analyse your overheads.

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