Keeping Overhead Costs to Minimum Explained
Subject: Management Paper 1
Overhead costs are those expenses that do not vary alongside your production level. A
term that's synonymous with overhead cost is sunk cost. the worth of the item or service is
sunk regardless of whether you generate any income or not. you'd wish to buy electricity and
basic telephone service and these costs don't go up as you bill more hours.
Because these overhead costs are spent right from day one, it's knowing plan to
minimize your totals.
Overhead Cost Minimization:
Work from home. this is often the sole largest because of save on overhead costs.
there is no need at the start to spend your money renting commercial office space.
Set up a separate personal MasterCard account. you are doing not need the overhead
cost of an annual fee for a business MasterCard. In most cases, you'll just get another
personal, non-fee MasterCard.
Market through networking. Not only is networking the foremost effective means of
selling it is also the foremost cost effective. Keep your overhead costs low by attending as
many networking events as you’ll.
Target your spam the utmost amount as possible. you are doing not want to pay to
refill someone else's recycling container.
Stay away from product sales. don't put your cash into products. This represents an
overhead cost whether you sell the item or not. Sure, you'll miss out on some sales margin
revenue but the overhead costs and thus the aggravation are generally not worthwhile.
