It's a New Year – re-calculate your break even point


Break-even point for a retail business

Business Operating Expenses ÷ Gross Margin % = Break-even

Example: $12,000(operating expenses) ÷ 25% (gross margin %) = $48,000 (break-even sales)

1. You need to know your break-even point for a month.
2. If your expenses go up, so does your break-even point.
3. If your Gross Margin % goes up, your break-even point comes down.
4. If your Gross Margin % comes down, your break-even point goes up.

Break-even point for a service business

Operating Expenses ÷ Hourly Charge Out Rate = Break-even point

$12,000(operating expsnses) ÷ $100(charge out rate per hour) = 120 charge out hours need to be sold to break even

1. If you sell your time, your break-even number of hours will be your monthly operating expenses (including your salary) divided by your hourly charge-out rate.
2. If your expenses go up, so does your break-even point.
3. If your charge out rate goes up, your break-even point comes down.
4. If your charge out rate falls, your break-even point goes up.

Know your numbers if you want to succeed in your own business. For free small business webinars visit: www.bizlaunch.com

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