What should be included in my overhead? Fuel, all equipment costs, truck maintenance, labour, and advertising?
Great question. So many small business owners know what overhead is... as a definition. But most small to medium sized business owners are losing money because they haven't done the simple work of categorizing their expenses properly. It is so critical to classify your expenses accurately. Why? Because some expenses get recovered directly in your estimates (like your material costs) while others have to get recovered as overhead.
...and if you don't know exactly what your overhead costs are, then you can't possibly be sure that your prices are covering all your company costs. Unfortunately for most contractors, profit is less than it should be - because they've never taken the time to calculate exactly what their overhead costs are.
The answer to your question is not exactly straight forward, but the explanation of the answer is. Overhead expenses are not consistent from company to company. What might be overhead for me is not overhead for you, and vice versa. Confused? Don't be. The answer is simple. Here's ...
Tags: advertising, expenses, fuel, labor, labour, maintenance, overhead, overhead recovery, pricing
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