What is Overhead?

Overhead is the cost of simply existing as a business: rent, insurance, subscriptions, accounting fees, salaries, utilities, the phone line nobody calls. It arrives every month at the same size, whether you had a record quarter or served nobody at all.

That's what makes overhead dangerous in a way variable costs aren't. Materials scale down when sales drop; a lease does not. Every fixed cost you add raises your break-even point and shortens your runway, which is why staying lean is a superpower for a young business.

The discipline is asking, of each recurring cost, what it produces. Most businesses accumulate overhead the way a hard drive accumulates files — never deliberately, always steadily, and nobody ever schedules the cleanup. Many fail not because they can't sell, but because overhead grew faster than sales.