Look at Your Break-Even Point Differently to Make More Profit

Look at Your Break-Even Point Differently to Make More Profit
June 7, 2017 Biznostics

 

As a business owner, calculating your break-even point is an important number for you to know.

 So what is the break-even point?

Break-even is when your profit is zero, you’re not making money and you’re not losing money. Knowing your break-even point can be helpful in deciding prices, setting sales budgets and preparing your business plan.  

So how do you calculate ‘break-even’?

Wondering how you calculate your break-even point? Well quite simply, it’s the average monthly expenses that you have in the business divided by the average gross margin of the product or service that you sell.

This will give you the revenue or sales target that you need to hit each month just to cover those expenses… to break-even.

Which is where the problem lies … if you’re just covering expenses, well then you’re not actually getting ahead in your business.

 

What if you looked at break-even this way?

What if instead you calculated a profit break-even, which would mean adding the profit that you wanted to make as a business owner into the equation. This makes sense considering all the risk and hard work that you’re putting into your business.

So how do you calculate ‘profit break-even’?

Your profit break-even needs to include your wage and the profit that you want to make as a business owner.

So you take your expenses and add to that the profit number you’d like to target, then divide that by the average margin of the product or services that you sell to give you a new sales or revenue target to aim for.

And by going for that number, you’re more likely to do more than just break-even in your business.

Your mission…

Start by knowing and focusing more on your profit break-even instead of your break-even alone.

 

P.S. Whenever you are ready here are 4 ways we can help you build and grow your business:

1) Join the Construction Business Owners Network

It’s our new Facebook Community where business owners in the construction industry learn how to make their business more efficient, more profitable and more enjoyable to work at.   Click here to join

2) Watch the ‘From Business Slavery to Freedom’ Video Training

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3) Book Your 30 Minute Game Plan Session

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4) Join our Business Freedom Program

If you’d like to work with us directly to create a business that makes the money you want and gives you choice of how much you work… email us here with the word ‘Freedom’ in the subject line and we’ll get you all the details.