"These are costs ... that a business has that are going to be unrelated to how much of the product they sell. We call them also fixed costs, and they are going to be things like rent on a building or equipment, insurance, some part of the power bill," says Dr. Walden, a North Carolina Cooperative Extension economist.

"The point here is that overhead costs a company has to pay whether they sell anything or not. And if they don't sell, this can be a big problem for them –- and in fact it can drive a company out of business," he adds. "And it's also I think very daunting to look at overhead costs especially for a new person starting as a small business because they will look at these costs and say, 'My gosh, I have to meet these overhead costs even before I think about producing and selling anything.'

"So certainly overhead is a key concept in business economics –- one that must be reckoned with."