Maitaa e overhead expense: Overhead growth is bad only when it is faster than revenue growth

摘要

The key to making big money in any industry is growing revenues faster than overhead. The way you do this is to manage organizational overhead dollars. Organizational overhead is defined as the payroll for all employees other than the foremen and crews. The reason we focus on these dollars is because they comprise 60% of all overhead costs in contracting companies. It's important to measure the relationship between revenues and overhead using the overhead leverage ratio. This ratio has the greatest potential impact on net profit. The ratio is calculated as revenue dollars divided by overhead dollars. The higher your ratio, the better.