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’?
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.
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) Download your copy of 3 Proven Tactics That Give You 5 Hours Back in Your Week
This totally free guide includes tips, time-savers, and expert advice on how to immediately claim back 5 hours of your time each week. Inside you’ll discover 3 proven tactics to stop time being wasted in your day so you get more done each week. To access the guide click here
2) Watch the Business Freedom Formula Video
In the video you’ll to discover the step by step blueprint we use to help small businesses create their version of business freedom. This could be simply streamlining your business so it runs more efficiently, increasing your profits so you have more choices or setting your business up so you can have time off without worrying that it is all going to fall apart. Click here now to watch
3) Book a 10 Minute Exploration Call
If you would like to explore how Biznostics can help you run and build your business, then book your 10 minute exploration call. On the call we’ll find out a little bit about your business and work out if and how we can help you. Book your call here
4) Join our Business Freedom Program
The Business Freedom Program is designed for business owners who feel stuck in the day to day running of their business and their business is not running as efficiently as they like. It helps you make your business much more profitable, much more efficient and much more enjoyable to work at. We are putting a new group together next month so if you would like to build a strong and successful business email us here with ‘Business Freedom’ in the subject line.