Operating expenses are the costs a business incurs to run its day-to-day operations. These expenses include things like salaries for employees, rent for office space, utilities, and supplies. Essentially, they are the necessary costs that keep the business functioning and allow it to provide its products or services. Managing operating expenses is crucial for a company's profitability. If a business spends too much on operating expenses, it can eat into profits, making it harder to invest in growth or pay dividends to shareholders. Keeping these costs in check helps ensure that the business remains financially healthy and competitive in its market.