The Power of Ten - 10 steps to understanding OPEX
Andrew Hulbert MSc FIWFM
Founder | Non Exec | Speaker | Private Equity | Author | ESG Pioneer | 35? Awards Winner | AI Engineer |
Here's a simplified explanation of OPEX (Operating Expense) in ten easy-to-understand steps:
1. OPEX stands for "Operating Expense."
2. It refers to the ongoing costs that a company incurs to run its day-to-day operations and generate revenue.
3. OPEX includes expenses like employee salaries, rent, utilities, marketing, office supplies, and maintenance costs.
4. These expenses are necessary to keep the company running smoothly and to deliver its products or services.
5. OPEX is different from CAPEX (Capital Expenditure) because it does not involve long-term investments in assets like buildings or equipment.
6. OPEX is considered a regular part of the company's operations and is typically incurred on a recurring basis.
7. OPEX expenses are recorded on the company's income statement and directly impact its profitability.
8. Managing OPEX efficiently is important for maintaining a healthy financial position and maximizing profits.
9. Companies often strive to control and optimize their OPEX by finding ways to reduce costs without sacrificing quality or productivity.
10. Analysing OPEX helps assess the efficiency of a company's operations, identify areas for cost-saving opportunities, and evaluate its overall financial performance.
Remember, while this explanation simplifies the concept of OPEX, it's always recommended to consult financial professionals or resources for a more detailed understanding in real-world situations.
Note about the author: Andrew Hulbert is a multi-award winning entrepreneur, non-exec director, speaker, author, platelet donor and philanthropist. The ‘Power of Ten’ summarises Andrew’s learnings across the last decade and looks to share some of the valuable mistakes, lessons and learnings during that time. For a succinct summary of Andrew’s career you can visit: https://www.iwfmawards.org/previous-winners/winner-outstanding-contribution-to-workplace-and-facilities-management-2022/. If you’d like to start a conversation, please direct message on LinkedIn.