Why Every Business Must Know Its Breakeven Point
Most business owners are busy.
But ask them:
“How much must you sell just to survive?”
They don’t know.
That is dangerous.
What Breakeven Means
Your breakeven point is:
The level of sales where you cover all your costs
Below that:
- You lose money
Above that:
- You make profit
Why This Matters
Most businesses:
- Price too low
- Carry too many costs
Result:
They work hard just to stand still
The Key Drivers
Fixed Costs
Rent, salaries, insurance
Gross Profit
The most important factor
Small improvements in margin:
Dramatically improve profit
Formula
Breakeven = Fixed Costs ÷ (Selling Price – Variable Cost)
If your breakeven is too high, your business is under pressure.
We help businesses:
- Calculate breakeven
- Improve margins
- Reduce pressure
Contact us today.
The Breakeven Point is one of many useful numbers you will find in our management accounts.
