Your Overhead Has a Junk Drawer. There’s Money in It.

Your bank account is paying for decisions you forgot making

The software nobody uses. The phone line belonging to someone who quit. The advertising package you renewed because canceling required a conversation.

That’s not strategy. That’s expensive archaeology.

Overhead is the cost of keeping your business operating that you don’t assign directly to a particular job or sale. Rent. Office payroll. Insurance. Bookkeeping. The stuff that keeps billing you whether Tuesday is packed or dead.

Materials and technician wages tied to jobs generally belong in direct costs. Their treatment affects gross margin. Overhead sits elsewhere. Some expenses need splitting: job-related vehicle costs might be direct, while an office vehicle belongs in overhead. Pick a sensible method with your bookkeeper and stay consistent.

We’ll tear apart an illustrative monthly overhead list for an established service business doing $1.8 million annually. These aren’t someone’s disclosed financial records. They’re concrete example numbers you can replace with your own.

Monthly revenue: $150,000. Monthly overhead: $34,600.

That’s $34,600 ÷ $150,000 = 23.1% of revenue. Not automatically good or bad. Your business model determines what’s reasonable. The useful question is what each dollar actually buys.

The first six lines: expensive doesn’t mean wasteful

• Rent: $4,200. Check usable space, not just square footage. Are you storing obsolete equipment in a room you’re paying to heat? Review renewal dates, increases, and permitted subleasing. Moving costs money, too. Example immediate savings: $0. Don’t manufacture a saving by ignoring moving costs.

• Office payroll, including employer taxes and benefits: $10,500. Map who handles dispatch, invoicing, collections, and customer calls. Don’t fire your dispatcher because a spreadsheet looks prettier without them. First remove duplicate entry and broken handoffs with clear SOPs. Example immediate savings: $0. Better collections may improve cash flow without reducing payroll.

• Owner management salary: $6,500. This example includes compensation for running the company, separate from distributions. Your bookkeeping treatment depends on your entity and role. For internal planning, recognize the cost of replacing your management work. Example savings: $0. Working unpaid doesn’t make the business efficient.

• Utilities: $900. Look for billing errors, unnecessary services, and equipment running overnight. Suppose correcting schedules and removing an unused service saves $100 monthly. Keep the lights. Stop lighting the empty warehouse all weekend.

• Business insurance: $1,800. Review payroll estimates, classifications, insured assets, deductibles, and duplicate coverage with your broker. Suppose updated information produces equivalent suitable coverage for $1,650. Savings: $150. A cheap policy with the wrong exclusions is a future invoice wearing a disguise.

• Software: $1,100. Export every subscription and seat. Match each one to a current employee and an actual task. Suppose unused licenses and an overlapping scheduling tool total $350. Cancel after checking contracts and exporting needed records. Don’t delete your customer history to save forty bucks.

The next six lines: where autopay gets comfortable

• Phones and internet: $650. Audit every number, device payment, add-on, and connection. Suppose dead lines and unnecessary upgrades account for $200. Keep the backup connection if an outage would stop dispatch or card payments. Redundancy can be useful. Forgotten phone lines aren’t.

• Marketing: $4,500. Separate channels and connect spending to booked work. Cost per lead alone won’t tell you whether those leads buy. Check completed jobs, average ticket, and contribution after direct costs. Suppose a $900 directory package produces no attributable work during a properly tracked test covering the buying cycle. Example savings: $900, after confirming cancellation terms.

• Fixed vehicle costs: $2,200. Here, this covers leases and other fixed fleet costs; job-related operating costs are tracked separately. Suppose disposing of an unnecessary leased spare at renewal removes $400 monthly. Check replacement needs and exit costs first. A spare that prevents canceled jobs may earn its parking spot.

• Accounting and bookkeeping: $800. Read the invoice. Suppose you’re paying $150 for a duplicate reporting package nobody uses. Remove that deliverable, not reconciliations or tax preparation. Accurate books aren’t decorative. They’re how you know this teardown is real.

• Office expenses and bank fees: $850. Open every transaction in this junk-drawer category. Suppose unused storage, avoidable account fees, and recurring supply overorders total $150. Give recurring purchases an approver. “Miscellaneous” is a label, not permission.

• Interest: $600. List balances, rates, fees, and maturity dates. Compare refinancing by total remaining cost, not just monthly payment. A longer loan can lower the payment while costing more overall. Example immediate savings: $0. Remember that loan principal also uses cash, even though it isn’t an overhead expense.

Add it up without lying to yourself

The example reductions total:

$100 + $150 + $350 + $200 + $900 + $400 + $150 + $150 = $2,400 per month.

Overhead falls from $34,600 to $32,200. At unchanged revenue, that’s 21.5% instead of 23.1%.

Annualized savings: $28,800, once every change is effective. Cancellation fees and renewal timing reduce first-year savings. Assuming revenue and other costs stay unchanged, those reductions improve pretax net profit dollar for dollar.

But don’t count canceled advertising as a win if profitable bookings disappear. Don’t celebrate cheaper staffing if missed calls, turnover, and bad reviews follow. That’s bullshit accounting by omission.

This cleanup also won’t rescue broken pricing. It fixes waste, not every problem.

Monday morning: fix the forgotten charges first

Pull 12 months of bank, card, and vendor transactions. Annual subscriptions hide from one-month reviews.

• List every recurring charge, its owner, renewal date, and purpose.
• Start with unused subscriptions, duplicate services, and avoidable fees.
• Assign each change a person and deadline.
• Verify the reduction on the next bill and in the books.

Fix expenses nobody can explain before cutting things customers depend on.