How to add Break-Even Analysis to Your Business Plan?

Identifying the Break-Even point is fundamental for any business strategy, revealing when income equals expenses. We enhance this analysis with tools that simplify calculating how many units you need to sell to meet your financial obligations, guiding you toward effective pricing and cost management strategies.

How to Calculate Break-Even with an Example:

Example Scenario: Bike Wash

Fixed Costs: Suppose fixed costs (like the rental and permits) total $1000 per month.

Variable Costs per Service: Water and Utilities, Let’s say it costs $10 per service,  price of the Bike Wash service: $50

Break-Even calculation: To find out how many Bike Wash services you need to sell to Break-Even, you can use the formula:

Break-Even Quantity = Fixed Cost / (Selling Price per Unit−Variable Cost per Unit)

Break-Even Quantity = $1000 / ($50 - $10) = 25

This calculation shows that You need to sell 25 Bike Wash services each month to cover your fixed and variable costs. Once sells more than 25 services, will begin making a profit.

Steps to Add Break-Even Analysis:

NOTE: Before adding Break-Even analysis, ensure that all necessary financial streams, such as revenue, cost of sales (COS), and expenses, are accurately configured in the ‘Finance Forecasting' module. This data is crucial as it directly impacts the Break-Even calculation.

1

Open the business plan builder and click on the ‘Finance’ section. This is where all financial data, including your revenue streams, costs, and expenses, are managed and analyzed.

2

In the Finance section, look for the ‘Break-Even’ option. Utilize the drag-and-drop feature to add a Break-Even Analysis to your business plan.

NOTE: You can integrate the "Break Even" analysis into your business plan either in the form of a detailed report or as a visual chart.

Moreover, You can also view the Break-Even Analysis on the dashboard section of the Finance Forecast module. This visualization helps you understand at a glance when your business is expected to start generating profit, beyond just covering expenses.

By following these steps, you ensure that the Break-Even Analysis in your business plan is both informative and reflective of your current financial planning. This tool will be invaluable in helping you and potential investors or stakeholders understand the financial trajectory of your business.