Business Best Practice: Taking Control of Your Overheads
Managing your overhead costs is critical to ensuring your business is profitable. Review your business practices against best practice business benchmarks to identify gaps that may be holding you back or putting your business at risk.
Overheads are business costs that relate to the day-to-day running of the business. Unlike operating expenses, overheads cannot be traced to a specific cost unit or business activity. Instead, they support the overall activities of the business.
These are usually “Fixed” and do not increase significantly with volumes.
As overheads are largely not related to volumes, these are reviewed against past trends and strict budgets. Also awareness of technology changes may bring the opportunity of introducing new systems which can improve the effectiveness of sales and administration activities and reduce costs.
Knowing your overhead costs is vital in determining how much you need to charge for for your products or services in order to make a profit.
Managing your overhead costs on an ongoing basis is critical to ensuring your business is profitable.
Watch the video or review the checklist to see how you’re doing.
Taking Control of Your Overheads: The Business Best Practice Benchmarks Checklist
- Do you review your overhead expense trends against budgets on a monthly basis?
- Do you ensure your overhead costs are recorded in the time period in which they are incurred?
- Do you review the opportunity to outsource work which is not core to your business at least once a year?
- Do you review the opportunity to use technology to reduce your overheads at least once a year?
- Do you monitor phone, power and other overhead costs against current prices available in the market at least once a year?
- Do you review indirect staffing costs at least once a year to ensure they are adding value to the business in the work they are performing?
What are Best Practice Benchmarks?
Also known as generic or process benchmarks.
As the names suggests Best Practice Benchmarking involves identification of best practices across generic functions, processes or operations, identifying the most effective operating practices from other businesses that perform similar functions.
Best Practice Benchmarking is effective across the full range of generic business operations: branding, marketing, sales, operations, financial management, technology, human resources, risk mitigation and strategic planning.
The Better Business for Good Company BIPlan System® is an example of Best Practice Benchmarking. Developed by a team of small business specialists the BIPlan System enables every small business to benchmark their business against over 200 individual benchmarks covering areas as diverse as brand identity, financial management, management of people and risk, customer relationships and environmental impact. Each item is important in their own right, some take longer to implement than others, but taken as a whole they help a business to become more profitable as well as a good corporate citizen.
Other types of business benchmarking include performance, functional, operational, industry and competitive. Learn more about how the different forms of benchmarking can help your business.
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Measure, manage and improve your business against more best practice checklists like this.
Developed by small business specialists, the BIPlan System is the most credible tool a small business can use to measure, manage and improve their business practices against best practice standards.
- Assess how your business performs against dozens of best practice checklists. Taking the Assessment alone will be a valuable, eye-opening experience.
- Compare your answers to best practice standards developed, tested and proven by Australian small business specialists
- Create and implement a customized improvement plan for your business with our best practice guides and the support of our business advisors and specialists to help you implement