Do You Know Your Break Even?

The query I usually ask them, do you know your numbers? And in particular, do you know your break even point?

Lately I get lots of feedback from business owners that they are struggling financially. They say they work hard, have great staff but not very make any money.

Usually it gets silent after that. The answer I usually get is: 'My account knows the numbers', 'I don't know' or worst yet 'What is break even'?

As a business owner, you ought to always have a glance at your numbers. If not every week, at least every month. 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 funds 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.



 of the essential numbers and ratio's you ought to always know is your break even. Hence lots of business owners don't even know what break even is.

I will portray it to you in simple language. Break even is a very important number for somebody 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 need to make from which point your company starts making money. Companies use this to calculate for large projects the worst case scenario in the event that 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.


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.

How to calculate your break even.

If your fixed costs are $20,000, you need to sell five,000 units to break even. After this you make $4 profit for each product you sell. The formula is:

Fixed Costs / (Sales Cost - Variable Costs) = break even

Ways to Improve Your Break Even

There's several ways to improve your break even point. You can do this by:

Lowering your variable costs

Lowering your fixed expenses

Bart Milatz is an international business consultant who helps business owners to understand the numbers in their business to earn extra money, lower expenses and improve the quality of their lives. To book a free profit strategy session, free video's, useful weblog articles and support,

Increasing your sales by adding a portion of your fixed costs to your quote to be positive you make an overall profit for your company than for the project only!!!