2 min read
Definition
Overheads are the ongoing costs of running a business that are not tied directly to producing a specific product or sale — rent, salaries, insurance, utilities, software and administration.
In plain terms
They are the costs you carry whether you sell one unit or a thousand. Take them off gross profit and you reach operating profit — the profit from actually running the business.
Why it matters for your company
Overhead creep is a silent killer: costs that rise quietly while revenue flatlines squeeze profit. Watching overheads as a share of revenue in your management accounts catches the drift early.
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