Low Overhead - where you want to be
Low overhead is a key to financial success. It's the wolf at the door that you need to keep at bay in order to turn profit and keep your small business afloat in the marketplace.
Having low indirect expenses is great because it promotes the business and encourages those in charge, those leading the charge, and all the foot soldiers on the ground as well. Who wants to be associated with a poor performing organization? Not anyone who I'm familiar with.
We all want to be associated with a winner, and that is one of the key benefits of having low indirect costs. Having low overhead provides benefits such as:
- lower initial startup costs
- overall lower costs of maintaining the business
- turning a profit can be done easier and sooner
- being able to make payroll
- easier to get a business loan
- building a financial cushion for those "rainy days"
- having money to grow the business
- potential for higher owner/employee compensation
- more business costs can be paid by the customer
- improvements in efficiency are seen more directly and immediately in higher profits
If you're thinking about starting up an enterprise, then low overhead makes it easier to get into it and easier to hang on while you wait for your first revenue to come through the door. It also allows you to hang in there while revenue streams catch up with expenses and allow you to turn a profit.
The general benefit of lower indirect expenses is peace of mind. With low indirect costs, you'll be able to get you and your business affairs in a good place sooner, and it makes conducting business fun instead of a worry. It's a bit like fishing - it's always a lot more fun when you're catching fish, and it's much less worry if you're counting on the fish you're catching to feed you.
The main benefit of low overhead is that more of what you make goes into your pocket, instead of being consumed by the overhead beast. If you can reduce your overhead by $750 a month and maintain the same level of gross revenue, then that's the equivalent of another $750 in revenue that you make. It's Ben Franklin telling us that a penny saved (in overhead) is a penny earned (in revenue).
For a business owner, the idea of having a lower cost of overhead is really very simple. You need to allocate money for supplies, equipment, furniture and services that are necessary for the conduct of your business. However, when you allocate funds for unnecessary expenses, you're chipping away at the profit you sought to make by going into business in the first place.
Done with Low Overhead, take me back to Small Business Finance