Determine the point in the year when your business will break even or begin to earn profit from sales.
View the Example: Break-Even Analysis
Action
To complete this Element, you will need to have completed the first version of all or most of the other Financial Elements to enable you to calculate different scenarios, then:
- Calculate your Total Sales for Year One.
- Calculate your Total Cost of Goods Sold for Year One.
- Calculate your Total Gross Margin for Year One (#1 Minus #2).
- Calculate your Gross Margin Percentage for Year One (#3 Divided by #1).
- Calculate your Total Operating Expenses for Year One.
- Determine your Break-Even Point for Year One (#2 Plus #5).
- Repeat the above steps 1 through 6 for Years Two and Year Three.