From the numbers to the change
- Your numbers sayOverheads up 22% in two years; sales up 9%
- The cause underneathHiring ahead of revenue, costs that stepped up and never came down
- What changesReview each line against what it earns; cut or freeze the non-earning, protect the earning
- What to expectOverheads falling back as a share of sales
An illustration of how the thinking runs, not a client result.
The numbers to open first
List every overhead line, by month, for two years.
| Number | How to get it | What worries us |
|---|---|---|
| Overheads as % of sales | Total overheads / sales | Rising year on year |
| Largest 10 lines | Share of total overhead | Lines that grew faster than sales |
| Headcount and revenue per employee | Sales / employees | Falling |
| Fixed vs variable | Which costs move with sales | Costs that never fell when sales dipped |
Likely causes, and how the numbers test each
| Possible cause | What you would see in the numbers |
|---|---|
| Hiring ahead of revenue | Staff cost up sharply; sales follow later or not at all |
| A step cost that stayed | Rent, software, vehicle or other costs added in a good year |
| Unreviewed small spends | Many lines slightly up with no owner |
| Expenses booked for convenience | Personal or non-business items in the books |
What to change, in order of effect
Rank lines by size and growth.
The top ten usually hold most of the issue.
Ask of each cost:
what revenue or protection does it provide?
Freeze before you cut:
a hiring and discretionary spend freeze buys time cheaply.
Renegotiate
rent, software, vendors and insurance, which often respond to a firm review.
Protect revenue-producing roles
and the systems that collect cash.
Business under pressure? Let a CFO read your numbers.
A senior CFO reads them with you and tells you what is really going on. No cost, no obligation.
What to expect, and when
A freeze and renegotiations can show within one to two months. Structural changes in headcount take longer and have to be handled carefully. The measure is overheads as a share of sales, tracked monthly.
Mistakes that make it worse
- Across-the-board percentage cuts that hurt revenue and keep waste.
- Cutting the customer-facing and collection roles first.
- Treating a salary freeze as a plan.
- Cutting costs when the real problem is margin.
CFOAvatar complements every turnaround
A human CFO sees your business at the review. Problems do not wait for the meeting. CFOAvatar is connected to your accounting data and checks your numbers every day, so the scoreboard in a turnaround is always current. Ask it what an owner in trouble would ask:
What owners say after the numbers started talking
Working with CFOSurge has truly transformed how we look at our business finances. They helped us set up monthly business plans right down to the bottom line, which has given us so much more clarity and control. Highly recommend them to any business looking to get a real grip on their numbers!
Their regular monitoring of production expenses, including contract labor and overtime, has given us a granular view of our operations, paving the way for efficiency and cost savings.
We now prepare monthly business plans that clearly show revenue, costs, and final profit. This has helped us plan better and avoid last-minute surprises.
Quoted word for word from our clients. Read more client words →
Questions owners ask us
What counts as overheads?
Costs that do not vary directly with each sale: salaries, rent, software, utilities, marketing and administration.
How much should overheads be as a share of sales?
It varies by industry. The test is the trend and what the cost earns, not a single ratio.
Is cutting costs enough for a turnaround?
Rarely. Without fixing margin and cash, cost cuts delay the problem.