Strategies for Treating Overhead

In dealing with overhead, my experience has been that it is not generally helpful to try to allocate overhead to projects. For example, one might ask how you apply your expensive marketing guy against a project that does not need oversight or constant attention. My answer to this dilemma is simply not to try. Just putting it all in a bucket and trying to manage each expense as it comes along is a wiser strategy.

The one exception to this strategy is that you should continually monitor the amount of overhead compared to the growth in revenue. If your overhead is growing faster than revenue, then you are probably building for the future, which is often a bad idea. Only buy the things that you need right now; never build for the future because the future may not happen. This is not the same as having a spendthrift philosophy. When you need something, and you know you need it, go ahead and spend. But when you start saying things like this will be good for the future, pinch yourself and remind yourself that every dollar you spend on overhead is a dollar that will not reach your pocket.