News
Unlike direct costs (such as raw materials or project-specific expenses), overheads don’t directly generate income. Yet, they have a huge impact on profitability. Keeping overheads under control – without losing capability – is one of the most important financial management skills for any business owner.
Overheads are the fixed and variable costs required to support business operations. They can include:
• Facilities: rent, office supplies, utilities, cleaning.
• Staffing: salaries, superannuation, insurance, recruitment.
• Technology: software, subscriptions, IT support, security.
• Administration: professional fees, licences, training, and compliance.
These costs are unavoidable, but how you manage them can mean the difference between a healthy profit margin and a business under pressure.
It’s easy to underestimate the effect overheads have on your bottom line. Every dollar spent on an overhead is a dollar not contributing to net profit.
For example, if your business operates on a 20% margin, an unnecessary $10,000 in overheads means you need an extra $50,000 in revenue just to stand still. That’s why trimming overheads can create immediate, tangible improvements in profitability.
Overheads also matter from a cash flow perspective. Rising overheads eat into working capital, making it harder to cover wages, purchase stock, or invest in growth. For many businesses, especially SMEs, this is where financial stress starts to show.
Many businesses fall into the trap of allowing overheads to creep up unnoticed. Common pitfalls include:
Over time, these issues compound, eroding margins and creating inefficiencies.
1. Review Regularly
Overheads shouldn’t just be reviewed at tax time. Monthly or quarterly reviews give you visibility on what’s creeping up and where adjustments can be made.
2. Benchmark Costs
Compare your overhead ratios (like rent-to-revenue or wages-to-turnover) with industry benchmarks. This helps identify areas where you may be overspending.
3. Separate Fixed and Variable Costs
Understanding which costs are fixed and which are flexible helps you plan more effectively. For example, while rent may be locked in, utilities and casual staffing costs can often be managed more dynamically.
4. Embrace Technology
Using automation and cloud-based platforms can streamline processes, reduce admin costs, and free up resources for more value-adding activities.
5. Seek Strategic Oversight
Sometimes, overhead management requires an external perspective. That’s where professional advisory services can make a significant difference – that’s where we come in.
At Attune Advisory, we work with clients to make sure overheads are not just monitored — but strategically managed. Our services include:
• Business Advisory: We help businesses review their cost structures, identify inefficiencies, and develop strategies for leaner, more sustainable operations.
• Virtual CFO Services: For growing businesses, our Virtual CFO offering provides high-level financial leadership, including detailed overhead analysis, cash flow forecasting, and scenario planning – without the cost of a full-time CFO.
• Business Process Outsourcing (BPO): Outsourcing administrative functions can reduce payroll overheads and increase efficiency, letting you focus on what you do best.
By combining these services, we help clients track, trim, and tidy their overheads while maintaining the capability and resources needed to grow.
Overheads are a fact of business life, but they don’t have to erode your profitability. By keeping a close eye on your costs, benchmarking against industry standards, and making smart adjustments, you can ensure your overheads remain lean and sustainable.
Managing overheads isn’t just about cutting costs, it’s about aligning spending with strategy. With the right support, overhead management becomes a tool not only for survival but for long-term growth.
Want a fresh perspective on your overheads? Give the Attune Advisory team a call on 1300 866 113 or send us an email to arrange a review. You’ll be glad you did.
