Perform an Internet search using the phrase “reducing overhead costs”. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor's lecture notes or a class assignment from the results of your search.) Summarize the case study or article, and relate the ideas of the article to what you have learned this week in this course.
Overhead Costs are “An accounting term that refers to all ongoing business expenses not including or related to direct labor, direct materials or third-party expenses that are billed directly to customers. Overhead must be paid for on an ongoing basis, regardless of whether a company is doing a high or low volume of business. It is important not just for budgeting purposes, but for determining how much a company must charge for its products or services to make a profit.”(Investopedia, 2013) According to Deena Kaye, of Lyons Solutions reducing overhead costs can be simple. She says that “Reducing overhead costs by 10% could yield your business a 20% increase in net profit. You would need a 20% increase in sales revenue to net the same profit. (Only assuming overhead rises exactly with revenue). And, it’s one of the fastest and easiest ways to improve earnings because every dollar saved goes straight to the bottom line. Particularly in a sluggish economy when increasing profits through sales and price hikes proves to be more challenging.” (Kaye, 2010) There are five areas that should be focused on to help reduce overhead. The five areas are 1. “Insurances
5. Telecoms and IT “(Kaye, 2010)
Once these areas have been looked at there are seven steps that need to be completed in order to reduce the costs. The seven steps are “Step 1 - Analyze Spending Patterns
Step 2 - Conduct Needs Analysis
Step 3 - Gather Market and Competitive Knowledge
Step 4 - Solicit Suggestions
Step 5 - Write a Request for...