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It may be that he thinks of overhead as fixed costs (as opposed to variable costs). If you have very low fixed costs, your business can scale up and down on a
by CompelTechnic 8y ago
It may be that he thinks of overhead as fixed costs (as opposed to variable costs). If you have very low fixed costs, your business can scale up and down on a whim, without terrible consequences.
- josefresco 8y agoGood point. My father operated the business out of his home, the most expensive thing he "needed" was a heated garage which prevented his machine/lines from freezing. Before this, he used space heaters inside his van. Machine maintenance was his largest cost, and because he had to perform most repairs himself (due to financial restraints), it kept him up at night. When he started the business again after we moved, he saved enough to buy a new truck/machine which helped ease him mind. However a machine you use everyday stops being "new" rather quickly.
- klank 8y agoOr his profit margin is large enough he's never needed to actually consider his costs. If that's the case, I'm guessing he learns a thing or two if he ever expands to the point where his margin gets compressed enough to need to be managed.