Operating expenses are the everyday costs a business faces to stay up and running. Think rent, employee salaries, utility bills, and marketing expenses. These essential costs keep the doors open and business flowing, even though they don’t directly go into making products or services.
Note: Operating expenses cover both overhead and direct costs related to production.
Operating expenses reveal the difference between staying profitable and running into the red. When these expenses are too high, they slice into profits, leaving less room for growth, investments, or staying competitive. However, with effective expense oversight, a business can lift its profits and maintain the agility to jump on exciting opportunities.
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