Do You Know Your Break Even?

Lately I receive a lot of feedback from business owners that they are struggling financially. They say they work hard, have great staff but hardly make any money.
The question I usually ask them, do you know your numbers? And in particular, do you know your break even point?
Usually it gets silent after that. The answer I usually get is: ‘My account Bakery Consultant Fees knows the numbers’, ‘I don’t know’ or worst yet ‘What is break even’?
As a business owner, you should always have a look at your numbers. If not weekly, at least monthly. The more you know your numbers and understand them, the more instant feedback you get for your company to make it run better, to make more money and to free up your time. The key is to make it a must every week to look at your financials, sit down with a consultant, or your team to get feedback on how well you are doing.
One of the essential numbers and ratio’s you should always know is your break even. Hence many business owners don’t even know what break even is.
I will explain it to you in simple language. Break even is a very important number for anyone who is in business, who invests in projects or owns a business. This number shows you where revenues and expenses equal out, so you don’t make a profit nor a loss. This is the MINIMUM amount of sales you have to make from which point your company starts making money. Companies use this to calculate for big projects the worst case scenario if they invest in the project. The worst case in their eyes is to reach the level below break even, at which they make a loss.
How to calculate your break even.
If your product sells for $15 each and has variable costs of $11 per unit, each unit that you sell has a $4 contribution margin.
If your fixed costs are $20,000, you have to sell 5,000 units to break even. Deloitte Indonesia Salary After this you make $4 profit for each product you sell. The formula is:
Fixed Costs / (Sales Price – Variable Costs) = break even
Ways to Improve Your Break Even
There are several ways to improve your break even point. You can do this by:
Lowering your fixed expenses
Lowering your variable costs
Increasing your sales by adding a portion of your fixed costs to your quote to ensure you make an overall profit for your company than just for the project only!!!

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