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Jan 30
2017

Addressing Overhead

Posted by: Steve Marr

Tagged in: Untagged 

I reached a point in my business career when a terrifying thought struck me:  I had become overhead. In the past my positions focused on direct work with customers or clients that brought in revenue. However, my administrative responsibilities were focused elsewhere. When I grasped the implications of what it meant that I no longer generated income for the company, I took two major steps to maximize my situation.

 


1.  I looked for ways to increase contact with customers.

I identified several clients I would continue to work with directly. I also endeavored to keep my overhead and other expenses to a minimum.


I accomplished this by working with operational staff to make sure that maintaining some customer contact would not get in the way of good service, but would keep my finger on the pulse of some clients. Also I made a point to visit customers as much as possible by traveling to visit them and by stopping by when I was near their office location. I visited them as part of my “overhead work” and would squeeze in as many client visits as possible.


2.  I tried to use overhead expenses efficiently and keep them as low as possible.

Frequently, especially in larger companies, it takes extra work to placate executive management and focus more on form the substance.
 

A key step is to review all activities that are overhead, whatever does not directly relate to getting or serving customers. By examining each of these activities step-by-step, you will be able to determine which to keep, reduce, modify or eliminate entirely.
 

In my corporate environment I was aware that overhead was allocated to different departments. Managers were not pleased with this overhead allocation, but generally wouldn’t ask any question. They wondered what they received in return for the overhead charge. When someone reduced overhead; I tried to eliminate steps from a manager’s work. Appreciation usually followed.


King Solomon wisely observed, “As goods increase, so do those who consume them. And what benefit are they to the owners except to feast their eyes on them?” (Ecclesiastes 5:11, NIV) In any organization overhead has a way of growing.  If you question this, just look at any government agency. Make sure you retain overhead activities and costs that move the business forward; otherwise, overhead growth becomes an insidious drain on profitability while creating a tremendous waste of time and effort.


Don’t neglect identifying overhead in your business and diligently reduce where possible.


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