MESLO — Overhead
Capture true operating cost. Price with clarity. Protect margin.
Overhead is where most businesses lose control. When it’s unclear or under-allocated, every job is mispriced.
MESLO treats overhead as a defined, measurable system, not a percentage guess.
What “Overhead” Covers
- Office and administrative costs
- Salaries not tied to specific jobs
- Rent, utilities, and software
- Insurance, licenses, and compliance
- Vehicles, fuel, and general operations
- Owner compensation (non-production)
Why It Matters
When overhead is not structured:
- Bids look profitable—but aren’t
- True cost of doing business is hidden
- Profit gets confused with overhead
- Cash flow becomes inconsistent
- Growth increases risk instead of margin
A structured system ensures:
- Every job carries its share of overhead
- Pricing reflects real operating cost
- Profit is separated and visible
- Financial decisions are based on reality
Common Failure Points
- Using arbitrary markup percentages
- Not separating overhead from profit
- Ignoring indirect costs in estimating
- No clear allocation method across jobs
- Treating overhead as “whatever is left”
What a Structured System Looks Like
A MESLO-aligned overhead system includes:
- Defined overhead categories across the business
- Monthly cost baseline for operations
- Allocation method applied consistently to jobs
- Clear separation between overhead and profit
- Regular review tied to revenue and capacity
This creates a system where:
- costs are fully captured
- pricing is accurate
- profit is intentional
For CPAs and Advisors
Overhead is the foundation of margin clarity.
A structured approach allows you to:
- Validate whether pricing covers full operating cost
- Identify gaps between revenue and true expense load
- Separate profit from overhead leakage
- Improve forecasting and financial reporting
How It Connects to MESLO
Overhead impacts everything:
- Materials, labor, equipment, subcontractors → all depend on accurate total cost
- Pricing → determines whether jobs are truly profitable
- Cash flow → driven by coverage of fixed costs
- Growth → requires overhead scaling with control
If overhead is unclear, margin is an illusion.
Outcome
When overhead is structured correctly:
- Pricing reflects real business cost
- Profit becomes visible and consistent
- Cash flow stabilizes
- Growth becomes sustainable
Next Step
Define your overhead clearly and price your work with confidence.